SSC CGL 2024 Tier-I · 11 September 2024, Shift 2 · General Awareness · Question 24 of 100

Text as printed on a candidate's response sheet for this shift; answer per SSC's tentative key as marked on that sheet. Solution last reviewed 6 September 2026.

Where this paper and its answers come from

SSC does not publish CGL question papers or a public answer key. The questions and options here are reproduced as printed on a candidate's own response sheet for this shift — the Commission's text, unchanged. Each answer is SSC's tentative key as marked on that sheet; SSC allowed challenges to it and never publishes a final key. The solutions are written by UnlockIAS.

The Government of India allowed automatic approval of _____% of FDI by Reserve Bank of India in nine categories of industries.

(a)Up to 74
(b)Up to 41
(c)Up to 51
(d)Up to 60

Answer

Why

Correct - A. The figure the question wants is up to 74 per cent.

As the post-1991 reforms widened, the Reserve Bank of India was allowed to clear foreign direct investment automatically, with no case-by-case government approval.

The highest of those automatic ceilings, 74%, applied to a list of nine categories of industries, while longer lists of industries carried lower ceilings. Option (a) is that top slab.

Why the others are wrong

(b)
Up to 41 — 41% is not a ceiling used anywhere in India's FDI policy. The figures worth remembering from the liberalisation years are 51, 74 and later 100 per cent.
(c)
Up to 51 — 51% is the real trap - it is the automatic-approval ceiling announced in the New Industrial Policy of 1991 for high-priority industries. The nine-category list belongs to the later widening, at the higher ceiling.
(d)
Up to 60 — 60% was never an announced automatic-route ceiling. The slabs moved in steps - 51, then 74, then 100 per cent in most sectors - and 60 is not one of them.

Concept

Before 1991 foreign investment was tightly rationed. Under FERA 1973 foreign equity in most companies had to be diluted to 40 per cent, and each proposal needed government clearance.

The 1991 reforms created the automatic route, operated by the RBI: if a proposal fell within the sectoral ceiling, the investor simply filed with the RBI instead of seeking approval.

Everything outside that route went to the approval route, handled by the Foreign Investment Promotion Board until it was abolished in 2017.

The stem leaves out the year. The 51% ceiling is the 1991 headline, and the nine-category list at 74% comes from the later 1990s widening of the automatic route.

Key facts

The New Industrial Policy of 1991 introduced automatic approval for FDI up to 51 per cent in high-priority industries.
The Reserve Bank of India operates the automatic route, under which no prior government approval is required.
Under FERA 1973, foreign equity in most Indian companies had to be brought down to 40 per cent.
The Foreign Investment Promotion Board, which cleared approval-route proposals, was abolished in 2017.

Study next

New Industrial Policy 1991: delicensing, MRTP changes and the shrinking of public-sector reservationFDI today: automatic route versus government route, and prohibited sectorsFERA 1973 to FEMA 1999 and what changed

Common traps

Reaching for 51% because that is the 1991 headline figure, when the stem asks about the nine-category list.
Confusing the automatic route, run by the RBI, with the government approval route.

Economy questions here stay close to the textbook wording of the 1991 reforms, so the numbers matter more than the argument.

The policy that began liberalisation is asked directly on 24 Sep 2024, 16:00, General Awareness Q.17.

Related PYQs

No directly related past PYQ was found.