Industry and Service Sectors Questions and Answers AP Inter 2nd Year Economics Chapter 9

Reviewing AP Inter 2nd Year Economics Study Material Chapter 9 Industry and Service Sectors Questions and Answers can help students prepare confidently for exams.

AP Inter 2nd Year Economics 9th Lesson Industry and Service Sectors Questions and Answers

Very Short Answer Questions

Question 1.
Describe Ratna categories of PSUs
Answer:
The Ratna categories are a classification system for Central Public Sector Enterprises (CPSEs) in India, designed to grant well-performing companies greater financial and operational autonomy based on specific criteria.
The three main categories are:

• Maharatnas (introduced in 2010) -14 companies
• Navaratnas (introduced in 1997) – 25 companies
• Miniratnas (introduced in 1997) – 73 companies, further divided into Miniratna I and II.

Question 2.
State the objectives of Atma Nirbhar Bharat Abhiyan
Answer:
Objectives of Atma Nirbhar Bharat Abhiyan:
The Atma Nirbhar Bharat Abhiyan (2020) aims to support MSMEs during the pandemic through collateral-free loans, equity infusion and support to stressed units. It also focuses on modernising MSME classification and boosting domestic production through schemes like PLI, with the broader goal of achieving self-reliance and transforming India into a global manufacturing hub.

Question 3.
Explain the forms of FDI.
Answer:
Foreign Direct Investment (FDI) in India can take several forms:

1. Buying Shares – Purchasing shares in an Indian company to gain ownership or control.
2. Acquisition-Taking over an existing Indian company.
3. Partnership – Entering into a partnership with an Indian firm.
4. lnvestment Instruments – Investing through debentures, bonds, or venture capital funds.

Question 4.
Explain Maritime Waterways with examples
Answer:
Maritime waterways refer to sea or ocean routes used for domestic and international shipping, carrying about 95% of India’s trade volume and 70% of its value. They are managed by the Ministry of Ports, Shipping and Waterways, with major and minor ports handling trade.
Ex: Transportation of coal, iron ore, crude oil, LPG, machinery and food grains, along with activities like cruise shipping.

Question 5.
How does UDAN scheme achieve its objective?
Answer:
The Ude Desh ka Aam Nagrik (UDAN) scheme 2017, achieves its objective of affordable regional air connectivity by capping airfares at ₹ 2,500 for one-hour flights and providing viability gap funding to airlines. It also focuses on developing unserved and underserved airports and expanding routes, thereby connecting remote areas to the national network.

Question 6.
Differentiate between General Insurance and Life Insurance.
Answer:

Short Answer Questions

Question 1.
Mention any four aspects of Indian industry.
Answer:
Aspects of Indian Industry:
1) Broad Scope of Activities: Industry involves the processing of raw materials and the production of goods, encompassing sectors such as manufacturing, construction, and the supply of electricity, gas, and water. This shows that industry is not limited to factories alone but includes a wide range of productive activities.

2) Economic Support and Growth: It plays a vital role in economic development by supporting agriculture, boosting trade, and creating significant employment opportunities. Thus, industry acts as a key driver of overall economic progress.

3) Foundational Requirements: The success and growth of the industrial sector are heavily dependent on technology, innovations, and competitiveness, as well as access to resources and a workforce of skilled labor and efficient technicians. These factors ensure higher productivity and efficiency.

4) Infrastructure-Based Core industries: A critical segment of the industrial landscape consists of the eight core industries—coal, crude oil, natural gas, refinery products, fertilizers, steel, cement, and electricity, which are considered the backbone of the country’s infrastructure.

Question 2.
Write any four measures taken to promote MSME in India.
Answer:
Measures to Promote MSMEs in India:

1) Credit and Financial Support: The government established specialized institutions and schemes to improve access to finance, including the Small Industries Development Bank of India (SIDBI) (1990) and the Credit Guarantee Scheme (CGTMSE) (2000), which provides collateral-free bank loans up to ₹2 crores. This ensures MSMEs get adequate financial assistance.

2) Digital Registration (Udyam Registration): In 2020, the registration process was simplified and digitalized through the Udyam Registration System, which includes a self-declaration facility, making it easier for MSMEs to register and access government incentive schemes.

3) Public Procurement and E-Market Reforms: The Public Procurement Policy (2012) mandates that 25% of government procurement must be sourced from MSMEs. The Government e-Marketplace (GeM) enables MSMEs to sell products directly to government departments, improving market access.

4) Atmanirbhar Bharat Package (2020): This package supports MSMEs through ₹3 lakh crore collateral-free automatic loans, equity infusion via a Fund of Funds, and support for stressed MSME units, helping them sustain and grow.

Question 3.
Explain the significance of Communications sector in Indian economy.
Answer:
Significance of Communication Sector in Indian Economy:
1) Foundation for Development: The communications sector is essential for areas like education, governance, trade, and commerce, as it facilitates the transmission of information through enhanced connectivity. Information and Communications Technology (ICT) has made communication faster and more accessible, transforming how individuals and organization’s function.

2) Support for Other Sectors: It acts as a driving force for agriculture, manufacturing, and services by providing necessary infrastructure. It enables activities such as marketing and efficient logistical coordination, thereby improving overall productivity.

3) Modernization and Technology Adoption: India’s telecom sector has shifted from analog to digital transmission, leading to increased tele-density and widespread use of mobile phones and broadband. It is now adopting advanced technologies like 5G, cloud computing, and virtualization.

4) Global Leadership and Social Development: India’s IT services sector is a major global player, contributing significantly to exports. Additionally, communication technologies improve governance (transparency and efficiency) and support social services like telemedicine, e- health records, and digital education, along with growth in media and broadcasting.

Question 4.
Comment on Make-in India programme.
Answer:
1) The Make in India programme, launched in 2014, is a major initiative aimed at transforming India into a global manufacturing and innovation hub. It encourages both domestic and multinational companies to expand manufacturing in India, covering 25 focus sectors (17 manufacturing and 8 services).

2) The primary objectives are to boost manufacturing output and generate employment opportunities, with targets such as increasing manufacturing’s share in GDP to 25% and creating 100 million jobs.

3) The programme also aims to attract FDl, develop infrastructure, promote innovation and technology, improve ease of doing business, and achieve self-reliance and sustainable development.

4) It is supported by initiatives like Skill India, Startup India, Digital India, PLI Scheme, and infrastructure proiects like NIP and PM Gati Shakti, which together strengthen industrial growth.

Question 5.
Explain the importance of service sector in India.
Answer:
Importance of Service Sector in India:

1. Significant Contribution to GDP: The service sector, also known as the tertiary sector, is a dominant contributor, accounting for more than 55% of India’s GVA. Its growth rate often exceeds the overall economic growth, making it a key driver of the economy.
2. Employment Generation: Although its share in employment is less than 30%, it provides a substantial number of jobs, with strong potential for further employment in areas like IT, tourism, and healthcare.
3. Supporting Other Sectors: The service sector supports agriculture and manufacturing by providing essential services such as logistics, banking, communication, and credit, thereby improving efficiency and productivity.
4. Boosting Exports and Development: It contributes significantly to export earnings, attracts FDI inflows, promotes technological advancement, and improves quality of life through services like education, healthcare, and transport, while also integrating India into the global economy.

Question 6.
Explain India’s Tourism at a glance.
Answer:
India’s Tourism-At a Glance:
1) Growth and Economic Importance: India’s tourism sector is a fast-growing part of the economy that generates direct and indirect employment, foreign exchange, and promotes trade in logistical services. Its growth depends on the availability of high-quality infrastructure such as transport, hotels, and hospitality services.

2) Performance and Key Data: India improved its global ranking from 54th (2021) to 39th (2024) in the Travel and Tourism Development Index. In 2022, foreign tourist arrivals were 6.19 million, domestic visits reached 1,731 million, and foreign exchange earnings were US $16.928 billion, placing India 14th in world tourism receipts.

3) Major Destinations and Contributors: Top source countries include the USA, Bangladesh, and the UK, while Indians travel mainly to the UAE, Saudi Arabia, and USA. Domestically, Uttar Pradesh, Tamil Nadu, and Andhra Pradesh receive the highest visits, and popular monuments include the Taj Mahal, Agra Fort, and Fatehpur Sikri.

4) Government Initiatives: The sector is promoted through measures like ITDC (1966), Tourism Policy (2002), Incredible India campaign, Swadesh Darshan Yojana (2015), E-Visa facilities, railway tourism packages, and tourism awards, which enhance infrastructure and global promotion.

Long Answer Questions

Question 1.
Explain the Industrial Policy, 1991.
Answer:
Industrial Policy, 1991: The New Industrial Policy, announced on July 24,1991, was a landmark reform that shifted India’s economy towards Liberalization, Privatization, and Globalization (LPG).

It aimed to reduce government control, increase efficiency, and integrate India with the global economy.

I) Objectives of the Policy: The policy was designed to achieve the following goals:

1. Building on past gains already made within the industrial sector.
2. Correcting distortions or weaknesses in the pattern of industrial growth.
3. Maintaining sustained growth in productivity and gainful employment.
4. Attaining technological dynamism and international competitiveness.

II) Key Features and Decisions

1. Delicensing: Industrial licensing was abolished for almost all industries, except a few such as alcohol, explosives, hazardous chemicals, and defence-related equipment, reducing government control.
2. De-reservation for Public Sector: Industries reserved for the public sector were drastically reduced, with only Atomic Energy and Railways remaining, allowing greater private sector participation.
3. Removal of MRTP Restrictions: Pre-approval under the MRTP Act was removed, and it was later replaced by the Competition Act, with the Competition Commission of India (CCI) ensuring fair competition.
4. Foreign Investment & Technology: FDI limits were increased (from 40% to 51 % and later up to 100% in some sectors), along with automatic approval for foreign technology agreements, encouraging global integration.
5. Public Sector Reforms: Efficient PSUs were given greater autonomy (leading to Ratna categories), while sick units were referred to BIFR for revival or closure.
6. Financial & Location Policy: Industrial location restrictions were relaxed, and the mandatory convertibility clause of loans into equity was abolished, improving financial flexibility.

III. Impact of the Policy (1991-2000):

1. Accelerated Growth: Industries expanded rapidly, especially in sectors like automobiles, pharmaceuticals, IT, and consumer goods, leading to higher production and modernization.
2. Increased Investment: There was a sharp rise in FDI and FII inflows, bringing capital, technology, and global business practices into India.
3. Diversification: New industries such as software and IT services emerged, and private participation increased in sectors like telecom, banking, and insurance, transforming the industrial landscape.
4. Challenges: Despite its success, the policy led to some issues such as jobless growth (growth without sufficient employment), regional imbalances, and unequal distribution of income and wealth.

Question 2.
Explain problems of MSMEs in India.
Answer:
Challanges Faced by MSMEs

1. Financial Constraints

• Limited Access to Credit: MSMEs often struggle to obtain loans from formal institutions due to lack of collateral, strict lending norms, and complex procedures. Many depend on costly informal sources, limiting growth and modernization.
• Delayed Payments: Delays in payments from large companies and government agencies disrupt cash flow and create working capital shortages.
• High Cost of Credit: Even when loans are available, higher interest rates increase financial burden and reduce profitability.

2. Infrastructure Deficiencies

• Poor Infrastructure: Inadequate roads, irregular power supply, water shortages, and weak internet connectivity increase production costs and delay deliveries.
• Limited Access to Resources: MSMEs often face shortages of quality raw materials, skilled labour, and modern technology, restricting expansion.

3. Technological Backwardness

• Outdated Technologies: Use of old machinery and traditional methods results in low efficiency, poor quality, and higher wastage.
• Limited Adoption of New Technologies: High costs and lack of technical knowledge hinder modernization and competitiveness.

4. Skills Gap

• Lack of Skilled Labour: Shortages of workers trained in advanced machinery, digital tools, and modern techniques affect productivity.
• Training and Development Issues: Limited access to skill-development programmes restricts workforce upgradation.

5. Regulatory and Compliance Issues

• Complex Regulations: Compliance with multiple laws is often costly and time-consuming for small enterprises.
• Bureaucracy: Excessive paperwork and delays in approvals hinder business operations and growth.

6. Marketing and Sales Challenges

• Limited Marketing Capabilities: Lack of funds and expertise in branding, advertising, and market research limits market reach.
• Intense Competition: MSMEs face strong competition from large industries, multinational companies, and online retailers.

7. Other Challenges

• Low Productivity: Small-scale production often leads to higher costs and lower efficiency.
• Lack of Standardization: Inconsistent quality control affects product reliability and operational efficiency.
• Limited Information Access: Lack of awareness about market trends, technologies, and government schemes restricts growth.
• External Shocks: Economic crises, pandemics, and natural disasters can severely disrupt MSME operations.

Question 3.
Evaluate the post 2000 scenerio of manufacturing sector.
Answer:
Manufacturing Sector Reforms in India Since 2000: The post-2000 period witnessed a major shift in India’s manufacturing strategy from restrictive policies to infrastructure development, policy reforms, and incentive-based growth.

1. Shift from EPZs to Special Economic Zones (SEZs)

• Export Processing Zones (EPZs) achieved limited success due to rigid regulations. To address this, the government introduced the SEZ Policy (2000) and SEZ Act (2005).
• SEZs offered better infrastructure, tax incentives, and simplified procedures, attracting domestic and foreign investment.
• As a result, 276 operational SEZs generated exports worth 4.47 lakh crore (2024-25) and provided employment to about 31 lakh people.

2. Large-Scale Infrastructure:

• Industrial corridors integrate transport, power, and logistics networks to improve efficiency and reduce costs.
• The National Industrial Corridors Development Corporation (NIDDC) was established in 2016. By 2023, 11 industrial corridors had been announced, including Delhi-Mumbai (DMIC) and Vizag-Chennai (VCIC).
• The PM MITRA Scheme (2021) promotes world-class textile parks with modern infrastructure.

3. National Manufacturing Policy (NMP), 2011

• The NMP aimed to raise manufacturing growth to 12-14%, increase its GDP share to 25%, and create 100 million jobs.
• It introduced National Investment and Manufacturing Zones (NIMZs) with advanced infrastructure.
• These zones encourage industrial investment and employment generation.

4. Make in India and NIIF

• Make in India (2014) seeks to transform India into a global manufacturing hub by promoting investment, innovation, and skill development across 25 sectors.
• National Investment and Infrastructure Fund (NIIF) (2015) was established to finance long-term infrastructure projects.
• Together, they strengthen industrial capacity and attract global investors.

5. PLI Scheme and Infrastructure Support

• Production Linked Incentive (PLI) Scheme (2020-21) provides financial incentives for increased production in 14 key sectors, including electronics and pharmaceuticals.
• Initiatives such as the National Infrastructure Pipeline (NIP) and PM Gati Shakti improve infrastructure and logistics.
• These measures reduce costs and enhance global competitiveness.

6. Current Standing and Challenges

• Despite reforms, India’s share in global manufacturing is about 2.8%, much lower than China’s.
• Infrastructure gaps, skill shortages, and employment challenges continue to limit the sector’s full potential.

Multiple Choice Questions

Question 1.
Industry Sector includes;
1) Manufacturing
2) Construction
3) Electricity, Gas and Water Supply
4) All the above
Answer:
4) All the above

Question 2.
Which of the following industry does not require to get License:
1) Ammunition
2) Hazardous Chemicals
3) Small Scale Industries
4) Industrial Explosives
Answer:
3) Small Scale Industries

Question 3.
Which of the following Authority regulates Insurance in Indias:
1) RBI
2) IRDA
3) NABARD
4) SIDBI
Answer:
2) IRDA

Question 4.
Make in India Scheme was launched in the year:
1) 2014
2) 2018
3) 2021
4) 2024
Answer:
1) 2014

Question 5.
Limit of MUDRA loan amount to SISHU category:
1) Rs.0.5 lakhs
2) Rs.2.0 lakhs
3) Rs.5.0 lakhs
4) Rs. 10.00 lakhs
Answer:
1) Rs.0.5 lakhs

Question 6.
In which year Golden Quadrangle Programme was lauched?
1) 1999
2) 2001
3) 2014
4) 2024
Answer:
2) 2001

Question 7.
Which is not a core industry?
1) Refinery
2) Cement
3) Fertilisers
4) Textiles
Answer:
4) Textiles

Question 8.
Which of the following statements is correct?
1) MRTP Act was repealed by FEMA
2) The functions of MRTP Act were taken over by CCI
3) Prior to MRTPA restricted Public Sector expansion
4) MRTP companies limits were enhanced in 2002
Answer:
2) The functions of MRTP Act were taken over by CCI

Question 9.
Who are the beneficiaries of Stand-up Scheme?
1) Women entrepreneurs
2) SC and ST entrepreneurs
3) Both (1) and (2)
4) Backward entrepreneurs
Answer:
3) Both (1) and (2)

Question 10.
Number of sectors covered by Production Linked Incentive Scheme covers
1) 8
2) 10
3) 12
4) 14
Answer:
4) 14

Fill in the Blanks

Question 1.
PM MITRA is related to ___________ parks
Answer:
Industrial textile

Question 2.
The investment limit for Micro enterprises under 2025 definition is Rs. ?___________ crores.
Answer:
2.5

Question 3.
The newest Railway zone, South Coast Railways, established with as ___________ headquarters.
Answer:
Visakhapatnam

Question 4.
According to Travel and Tourism Index (TTDI) 2024 Report, published by World Economic Forum, India has ranked ___________ among 119 countries
Answer:
39th

Question 5.
Expansion of MUDRA is ___________ Development and Refinance Agency.
Answer:
Micro Unit Development and Refinance Agency

One Word Answers

Question 1.
What is the purpose of Special Economic Zones?
Answer:
Export promotion

Question 2.
In which year P.M Jandhan Yojana introduced?
Answer:
2014

Question 3.
In which fund are the disinvestment proceeds deposited?
Answer:
National Investment Fund

Question 4.
What does Start-up scheme aims to,promote?
Answer:
Promotion of innovations

Question 5.
What is the function of DIPAM?
Answer:
Management of disinvestment