UPSC Prelims Practice Questions — NITI Aayog Launches Report on “Impact Assessment of PLI Schemes”

Q1. With reference to the design of India's Production Linked Incentive (PLI) schemes, consider the following statements: Which of the statements given above are correct?

  1. A firm earns the incentive only after it achieves additional output, instead of receiving it as an upfront payment when it begins investing.
  2. The incentive is calculated as a share of the capital a firm invests, whether or not the firm's output rises.
  3. The incentive accrues on goods manufactured in India, not on imported goods that are resold in the domestic market.
  4. The incentive is available for an indefinite period as long as the firm keeps adding to its output.
  • A. 1 and 3 only
  • B. 1, 2, 3 and 4
  • C. 2 and 4 only
  • D. 1, 3 and 4 only

Q2. A Production Linked Incentive scheme pays eligible manufacturers a fixed percentage of their incremental sales of goods manufactured in India over a base-year level, for a fixed number of years. Which of the following inferences can validly be drawn from this design?

  1. A new entrant with negligible base-year sales can earn the incentive on nearly all of its sales in a scheme year.
  2. An incumbent whose sales in a scheme year merely equal its base-year sales earns no incentive for that year, however large its output.
  3. The scheme necessarily raises domestic value addition, because only goods manufactured in India qualify for the incentive.
  • A. 1 only
  • B. 1, 2 and 3
  • C. 1 and 2 only
  • D. 2 and 3 only

Q3. With reference to measuring a country's participation in Global Value Chains, consider the following statements: Which of the statements given above is/are correct?

  1. A country's gross exports of a product can rise even while the domestic value-added share of those exports falls.
  2. The foreign value-added content of a country's exports is the value added generated abroad that is embodied in those exports.
  3. The domestic value-added content of exports includes value added by domestic upstream suppliers, not only by the final exporting industry.
  • A. 2 and 3 only
  • B. 1 and 3 only
  • C. 1 and 2 only
  • D. 1, 2 and 3

Q4. Consider the following assertion: 'Deeper participation of domestic MSMEs as suppliers to PLI beneficiary firms can raise the share of value retained in India from PLI-driven output.' Which of the following statements support/supports the above assertion?

  1. PLI incentives are calculated on the incremental sales of goods manufactured in India over a base year.
  2. Domestic suppliers of components can replace imported intermediates, which lowers the foreign value-added content of the final goods.
  3. When final assemblers import more of their components, the share of value retained within the domestic economy rises.
  • A. 1 and 2 only
  • B. 2 only
  • C. 1 only
  • D. 2 and 3 only

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

  1. NITI Aayog assessed the PLI schemes using firm-level data shared by the Ministries and Departments that implement them.
  2. NITI Aayog sanctions and disburses the incentives under each PLI scheme, which gives it direct access to data on beneficiary firms.
  • 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 hypothetical subsidies granted by a WTO member government to its manufacturers: Which of the above would fall in the 'prohibited' category under the WTO Agreement on Subsidies and Countervailing Measures?

  1. A payment to manufacturers equal to a fixed percentage of their export earnings.
  2. A payment to manufacturers linked to their incremental production, whether that output is sold at home or abroad.
  3. A grant to a car-maker on the condition that it uses domestically produced components in place of imported ones.
  • A. 1 and 3 only
  • B. 1, 2 and 3
  • C. 1 only
  • D. 2 and 3 only

Q7. Consider the following statements: Which of the following is correct in respect of the above statements?

  1. Under the WTO Agreement on Subsidies and Countervailing Measures, the 'non-actionable' category continues to shield subsidies such as regional and research subsidies from challenge.
  2. Under the same Agreement, a member challenging an actionable subsidy must show that the subsidy has an adverse effect on its interests.
  • 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