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CSAT 2020 paper

UPSC CSE CSAT 2020 · Question 21 · Reading comprehension

With reference to the above passage, the following assumptions have been made:

Directions for the following 7 (seven) items: Read the following five passages and answer the items that follow. Your answers to these items should be based on the passages only.

Passage—1

Private investment in general is volatile. Foreign private investment is more volatile because the available investment avenues are significantly greater (i.e., the entire world). Therefore, the responsibility of providing employment cannot be left to Foreign Direct Investment (FDI). The current FDI inflows are volatile over time and across sectors and regions, which is a necessary consequence of their search for the highest returns. The adverse consequences are unstable employment and an accentuation of income and regional inequalities. A probable positive consequence of foreign investment is the inflow of new technology and its subsequent diffusion. However, the technology diffusion is not at all certain because the existing state of physical and human capital in India may prove inadequate for the diffusion.

CSAT 2020 · Q21

Reading comprehension Medium

With reference to the above passage, the following assumptions have been made:

  1. 1.Relying on foreign investment in the long run is not an economically sound policy.
  2. 2.Policies must be undertaken to reduce volatility in foreign private investment.
  3. 3.Policies must be undertaken to strengthen domestic private investment.
  4. 4.Public investment should be given priority over private investment.
  5. 5.Substantial public investment in education and health should be undertaken.

Which of the above assumptions is/are valid?

Answer & explanation

Answer: (b) 1, 3 and 5

Because FDI is volatile by nature and its technology gains depend on India's own physical and human capital, the passage implies: do not lean on foreign investment in the long run (1), build up domestic investment to carry employment (3), and invest in education and health so that technology can spread (5).

  • ✓ 1. Employment 'cannot be left to' FDI, its volatility brings unstable jobs and wider inequalities, and even its technology benefit is 'not at all certain'.
  • ✗ 2. The passage calls volatility 'a necessary consequence' of FDI's search for the highest returns — something built in, not something policy is expected to remove.
  • ✓ 3. If employment cannot be entrusted to the more volatile foreign capital, the author must be counting on domestic investment to carry it.
  • ✗ 4. The passage never ranks public against private investment; it contrasts foreign with domestic.
  • ✓ 5. Technology diffusion may fail because India's 'physical and human capital' is inadequate; building human capital means investing in education and health.

Remember · In multi-statement items, settle the surest statements first; often only one option contains all of them.

Question and answer: UPSC's official GS Paper II (2020, Series A) — paper ↗ · answer key ↗. Explanation: Minimalist IAS, checked 30 Sept 2026 (how we verify). ·

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