UPSC Prelims 2014·CSAT·Reading Comprehension·Passage Comprehension

Passage It is easy for the government to control State- owned companies through nods and winks. So what really needs to be done as first step is to put petrol pricing on a transparent formula - if the price of crude is x and the exchange rate y, then every month or fortnight, the government announces a maximum price of petrol, which anybody can work out from the x and Y. The rule has to be worked out to make sure that the oil- marketing can, in general, cover their costs. This will mean that if one company can innovate and cut costs, it will make greater profits. Hence, firms will be more prone to innovate and be efficient under this system. Once the rule is announced, there should be no interference by the government. If this is done for a while, private companies will re- enter this market. And once a sufficient number of them are in the fray, we can remove the rule- based pricing and leave it truly to the market (subject to, of course, the usual relations of anti- trust and other competition laws). Consider the following statements: According to the passage, private oil companies re- enter the oil producing market if 1. a transparent rule-based petrol pricing exists. 2. There is no government interference in the oil producing market. 3. subsidies are given by the government. 4. regulations of anti-trust are removed. Which of the statements given above are correct?

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Last updated 23 May 2026, 3:31 pm IST
  1. A1 and 2Correct
  2. B2 and 3
  3. C3 and 4
  4. D2 and 4

Explanation

The passage explicitly states two conditions for private companies to re-enter the market: 1. "first step is to put petrol pricing on a transparent formula" (transparent rule-based pricing). 2. "Once the rule is announced, there should be no interference by the government." Statement 1: "a transparent rule-based petrol pricing exists." This is directly mentioned as the "first step" and a prerequisite for private companies re-entering. Statement 2: "There is no government interference in the oil producing market." The passage states, "Once the rule is announced, there should be no interference by the government. If this is done for a while, private companies will re- enter this market." This directly supports statement 2. Statement 3: "subsidies are given by the government." The passage focuses on transparent pricing and efficiency, not subsidies. Subsidies are not mentioned as a condition for re-entry. Statement 4: "regulations of anti-trust are removed." The passage states that the market will be "subject to, of course, the usual relations of anti-trust and other competition laws," implying these laws will remain, not be removed. Therefore, only statements 1 and 2 are correct according to the passage. The final answer is A
Reading Comprehension: Passage It is easy for the government to control State- owned companies through nods and winks. So what really needs to
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