UPSC Prelims 2002 Q132: Indian Economy – Infrastructure & Industry
With reference to power sector in India consider the following statements:
1. Rural electrification has been treated as a Basic Minimum Service under the Prime Minister’s
Gramodaya Yojana.
2. 100 per cent Foreign Direct Investment in power is allowed without upper limit
3. The Union Ministry of Power has signed a Memoranda of Understanding with 14 states.
Which of these statements is/are correct?
- (a) 1 only
- (b) 1 and 2
- (c) 2 and 3
- (d) 3 only
Answer: (b) 1 and 2
Explanation
Power sector in India: Gramodaya, FDI and MoUs
| Statement | Verdict |
|---|---|
| 1. Rural electrification is a Basic Minimum Service under the PM's Gramodaya Yojana | True |
| 2. 100 per cent FDI in power is allowed without an upper limit | True — automatic route for generation, transmission and distribution |
| 3. The Ministry of Power signed MoUs with 14 states | Not accepted in the official key; the number of states was higher |
| Combination | Statements 1 and 2 |
Rural electrification was added to the Basic Minimum Services under the Prime Minister's Gramodaya Yojana, and 100 per cent foreign direct investment is permitted in the power sector. The official key does not accept statement 3 on the MoUs, so the answer is 1 and 2. I could not verify the count of states independently.
Answer: (b) 1 and 2.
Why each option is right or wrong
- (a) Incorrect. Statement 2 on 100 per cent FDI is also true.
- (b) CORRECT. Statements 1 and 2 are accepted.
- (c) Incorrect. Statement 1 is also true and statement 3 is not accepted.
- (d) Incorrect. Statement 3 alone is not accepted by the key.
Key point
Power reforms: Electricity Act 2003, 100% FDI via the automatic route, Accelerated Power Development Programme.
Remember
Power sector: 100% FDI allowed; rural electrification is a BMS.
Common mistakes
- Doubting 100 per cent FDI because many sectors have caps.
- Accepting statement 3 without a source.
- Dropping the Gramodaya Yojana link.
Exam tip
The FDI and Basic Minimum Services statements are the well-known ones.
Sources
- Ministry of Power — Annual Report 2001-02
- Economic Survey 2001-02