UPSC Prelims Practice Questions — National Entrepreneurship Day

Q1. With reference to a fund-of-funds arrangement such as India's Fund of Funds for Startups, consider the following statements: Which of the statements given above is/are correct?

  1. Public money reaches a startup only after a regulated intermediary fund decides to invest in that startup.
  2. The decision on which startups receive the money rests with the government department that administers the scheme.
  3. The multiplier effect of the scheme depends on the intermediary funds mobilising private capital alongside the public commitment.
  • A. 1 and 3 only
  • B. 2 and 3 only
  • C. 1 and 2 only
  • D. 1, 2 and 3

Q2. With reference to the working of a partial credit guarantee such as the Credit Guarantee Scheme for Startups, consider the following statements: Which of the statements given above are correct?

  1. The guarantor's obligation to pay arises only if the borrower defaults on the loan.
  2. The guarantor disburses the guaranteed amount to the startup at the time the loan is sanctioned.
  3. Because the cover is less than full, the lender itself bears a part of the loss on a defaulted loan.
  4. The guarantee performs for the lender the function that collateral would otherwise perform.
  • A. 2 and 4 only
  • B. 1, 2, 3 and 4
  • C. 1 and 3 only
  • D. 1, 3 and 4 only

Q3. Suppose a government raises the per-borrower ceiling of a partial credit guarantee scheme for startups and halves the guarantee fee for priority sectors, other things remaining the same. Consider the following likely consequences: Which of the consequences given above is/are likely?

  1. Lenders become more willing to extend larger collateral-free loans to asset-light firms.
  2. The government's contingent exposure to loan defaults rises.
  3. Fee income per rupee of guarantee falls, making the guarantee fund more sensitive to default losses.
  • A. 2 and 3 only
  • B. 1, 2 and 3
  • C. 1 and 2 only
  • D. 1 and 3 only

Q4. With reference to two micro-enterprise support schemes in India, the Pradhan Mantri Mudra Yojana (PMMY) and the Prime Minister's Employment Generation Programme (PMEGP), consider the following statements: Which of the statements given above is/are correct?

  1. Under PMMY, the government meets part of the project cost through a margin-money subsidy on behalf of the borrower.
  2. Under PMEGP, the subsidy depends on a bank sanctioning a loan to the applicant, so the programme rests on the lender's credit appraisal.
  3. Under PMEGP, existing units are not eligible for the first loan, which is meant for setting up new micro-enterprises.
  • A. 1, 2 and 3
  • B. 1 and 3 only
  • C. 2 and 3 only
  • D. 1 and 2 only

Q5. Consider the following statements: Which of the following is correct in respect of the above statements?

  1. A demographic dividend is a time-bound opportunity and not a permanent feature of a country's age structure.
  2. Realising a demographic dividend requires the working-age population to be healthy, educated and productively employed.
  • A. Both Statement-I and Statement-II are correct and Statement-II explains Statement-I
  • B. Both Statement-I and Statement-II are correct, but Statement-II does not explain Statement-I
  • C. Statement-I is correct, but Statement-II is incorrect
  • D. Statement-I is incorrect, but Statement-II is correct

Q6. Consider the following statements: Which of the following is correct in respect of the above statements?

  1. As framed in the 2012 Regulations of the Securities and Exchange Board of India, venture capital funds are placed in the category of Alternative Investment Funds for which incentives or concessions may be considered.
  2. Venture capital funds are placed in that category because they trade for short-term returns with the aid of leverage.
  • A. Both Statement-I and Statement-II are correct and Statement-II explains Statement-I
  • B. Both Statement-I and Statement-II are correct, but Statement-II does not explain Statement-I
  • C. Statement-I is correct, but Statement-II is incorrect
  • D. Statement-I is incorrect, but Statement-II is correct