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IBPS PO 2016, IPPB Exam, IBPS RRB Exam: Reading Comprehension Quiz based on ‘Business Line' Article

Oct 6, 2016 10:36 IST

    English is a one of the most important section to crack competitive examinations these days and as far as banking exams are concerned, you have Reading Comprehension in the English section from leading newspapers such as The Times of India, The Indian Express, The Hindu, The Business Line etc. these days. Here the banking team of Jagranjosh.com, the leading website for banking preparation, is bringing to you passages from these famous newspapers and questions on those passages in the latest pattern so that we can help you add that extra zing to your preparation. Follows is a passage from The Business Line (dated October 3, 2016) for Reading Comprehension questions. Go through it to give your preparation a boost .

    Question (1-10): Read the following passage and answer the questions that follow. Some words / phrases are printed in bold in the passage in order to help you locate them while answering some of the questions asked.

    The economic reforms record of the NDA government in the past two years has recently been the subject of media headlines. The trigger was rating agency Moody’s decision to retain India’s rating at the lowest investment level.

    The rating agency says it would consider an upgrade if “tangible reforms” were undertaken in the next two years in the following areas - land acquisition, labour laws, tax administration and public sector banks revival along with significant infrastructure investments.

    The government, of course, seems to be seriously disappointed with Moody’s decision. It has highlighted the fact that the GST Bill has been passed and its implementation is now work-in-progress. The government side also has pointed out that its overall reforms record of the past few years is impeccable for its depth and unidirectional nature. It is quite clear from the foregoing that there is a big gulf between the government’s and Moody’s perception of reforms. Even without a ratings objective, it would be interesting to list out the NDA government’s reforms record, the cornerstone of which is the GST.

    Such an exercise would be particularly relevant in the backdrop of comments on the economy by no less a person than the Prime Minister himself. In a recent TV interview, the PM says that he refrained, in the larger public interest, from issuing a White Paper on the precarious state of the economy in mid-2014 when he assumed office. In the past two years, apart from ending big-ticket corruption, the PM says his government has brought about the biggest tax reform, the GST. Given these comments from the PM, it would help to do the following: understand the precarious state of the economy as it was in mid-2014; and examine the “reforms” that have been introduced to consider if India would not land in a precarious state again.

    If the NDA government’s reforms in the last two years can be seen as ensuring that India would not land in a macro-economic crisis again, then one can accept the measures as impeccable. On the contrary, if it is not so, then there is nothing to claim credit for.

    In other words, the benchmark for assessing the government’s reforms record should not be what Moody’s says is “tangible” or what the Finance Ministry claims is “deep, continuous and unidirectional reforms”.

    The sole yardstick for evaluating the reforms record would be whether they can ensure that India does not go through a macro-economic crisis of the 2013 type again. That is implicit from the PM’s observations.

    For seven years till 2013, India experienced inflation perilously close to double digits. In the period prior to 2006, it was in the high single digits. For an economy exposed to global instability, running this fundamental macro-economic imbalance for such a long time inevitably culminated in a run on the Indian currency in the summer of 2013. The CAD was at a record high and relative prices in India were completely out of kilter with global prices.

    The US Federal Reserve’s “taper” was just a trigger. The rupee fell 50 per cent between 2011 and 2013. India was teetering on the edge of a macro-economic crisis.

    It was almost a repeat of 1990-91. The contributory causes too were the same: rampant government budget deficits and their unbridled monetization by the central bank through the 2000s. At one point, the RBI even funded oil imports by buying the oil bonds issued to oil companies. Note that central banks can buy just about anything, as the western central banks are doing only now.

    The source of the budget deficits — large negative supply shocks in key commodities such as oil, the resultant large subsidies and their accommodation by the RBI and significantly enhanced other discretionary spending by the government.

    Indeed, a White Paper should have been issued in 2014.

    Now, for the reforms since 2014, Economic Survey 2015 lists them:

    Auction mechanism for allocation of natural resources such as telecom spectrum and physical minerals such as coal; increasing FDI cap in defence; instituting the Expenditure Management Commission to recommend expenditure rationalization; de-regulation of diesel prices; replacing cooking gas subsidy by direct transfers on a national scale; increasing FDI cap in insurance; a major programme for financial inclusion called Jan Dhan; and pushing coverage under Aadhaar.

    The high point, of course, is the GST. But can any impartial observer say that these “reform” measures can ensure that India will not land in a precarious macro-economic state — of the 1990-91 and 2013 variety — again?

    You need root-canal kind of corrective economic policies to ensure that a country does not go through a macro-economic crisis it somehow survived in the past. Unfortunately, most of the measures listed above could be classified only as superficial, incremental and peripheral, relative to the over-riding objective of avoiding another crisis. For earth-shaking reform, the government should purposefully root out the causes of the 1990-91 and 2013 crises. That will call for a rigorous firewall and even an operational divorce between the government and the RBI.

    In such an arrangement, the government can run whatever deficits it wants to run. It, though, will finance itself completely in the markets — no recourse to the RBI. Hair-splitting about 3.5 or 3.6 per cent deficit will be irrelevant then. To be sure, the recent move to an inflation-targeting policy framework for the RBI is a step in the right direction. But, the framework is constrained by so many obstacles that it may be impossible to implement.

    So, how good is the performance relative to the benchmark?

    1. Which among the following is true regarding India’s latest grade with respect to Moody’s report as discussed in the passage?

    1. Moody’s has downgraded the investment grade of India in its latest report on the status of Indian economy
    2. Moody’s has not said anything regarding Indian economy in its latest report as it is yet to measure the growth of the economy
    3. Moody’s has maintained the same rating as was there in its last report regarding Indian economy
    4. Moody’s has upgraded the rating of Indian economy in the latest report because of the reforms carried out recently by the government
    5. Other than those given in options

    Solution: Option (3)

    Explantion: According to the passage, India has been kept at low investment grade by Moody’s in its latest report regarding the status of Indian economy. It has also suggested that it will consider upgrading the same if the government indulges in implementing tangible reforms in certain areas of economy.

    2. Which among the following is true regarding Moody’s suggestion on Indian economy for change in its outlook in future reports of the rating agency?

    1. Indian government should cut down on expenses on sectors such as infrastructure, railways etc in order to ensure low fiscal deficit
    2. Indian government needs to implement concrete reforms in certain areas of economy such as infrastructure investment, revival of public sector banks, land acquisition laws, labour laws etc
    3. Indian government should be more sensitive towards issues concerning environment
    4. Indian government should not be reliant on private investment in various sectors of agriculture because Indian government needs to generate enough revenue for development of agriculture
    5. Other than those given in options

    Solution: Option (2)

    Explantion: According to the passage, Moody’s has suggested that it will upgrade the rating of India if only the government implements tangible reforms in the country in the areas such as land acquisition laws, labour laws, revival of public sector banks along with significant investment on infrastructure sector of the country.

    3. Why is government not happy with the Moody’s report on Indian economy?

    1. The government wants Moody’s to give its status of highest profit making investment destination in the world
    2. India wants Moody’s to take note the growing GDP of the country and give its status of the fastest growing developing economy
    3. India wants Moody’s to take note of the reforms carried out by the Indian government in the recent years and take decision accordingly
    4. India wants Moody’s to take note of the fact that Indian economy is coming back on its feet after a lull for a decade
    5. Other than those given in options

    Solution: Option (3)

    Explantion: Moody’s has not taken into account various tax reforms carried out by Indian government in the recent years as the government has already implemented the GST reforms and the work is in progress to bring it into life. It seems that the perceptions of Moody’s and the government are completely different regarding reforms in an economy.

    4. Which among the following is true regarding reforms carried out by the government since 2015?

    1. The government has implemented the auction route for sale of natural resources such as telecom waves, coal etc
    2. The government has implemented the financial inclusion drive such as Jan Dhan Yojana, Direct Benefit Transfer for cooking gas subsidies etc
    3. The government has implemented Goods and Services Tax and it has increased the GDP of the country
    4. Both (1) and (2)
    5. All the above

    Solution: Option (4)

    Explantion: According to the passage, Indian government has implemented policies such as auction of natural resources such as coal, telecom airwaves etc and along with that, Direct Benefit Transfer to the accounts of beneficiaries of cooking gas subsidies, Jan Dhan Yojana, de-regulation of diesel prices, formation of expenditure management commission to control expenditure in the country etc.

    5. Which among the following best describes the point of view of the author regarding the reform measures carried out by the present government?

    1. The author feels that the reforms will be able to bring Indian back to the path of GDP growth in the near future
    2. The author feels that the reforms are mainly peripheral in nature and the basic causes of economic crisis have not been addressed by the government
    3. The author feels that the government has a lot to do in the coming days since the reforms are in the right direction
    4. The author feels that the government does not care about the Indian economy and it is only interested in making a political statement
    5. Other than those given in options

    Solution: Option (2)

    Explantion: According to the author, the government should carry out root canal type of analysis regarding the causes of the macro economic crisis the country underwent in 2013 and the reforms should be carried out in the direction of making sure that those concerns are well addressed by the policies of the government.

    6.   According to the passage, which among the following best describes the economic position of Indian economy in the year 2013?

    1. The inflation of goods was at a perilously high level since the government failed to curb the same in its tenure
    2. The inflation of goods was at a perilously low level since the government wanted to impose deflationary measures on the economy
    3. The current account deficit went very high at the time because of trade imbalances
    4. Both (1) and (3)
    5. Both (2) and (3)

    Solution: Option (4)

    Explantion: According to the passage, the economic situation in 2013 regarding Indian economy was very bad since the government failed to curb inflation which was in high single digits and at the same time, Current Account Deficit became very high as RBI needed to buy oil bonds issued to oil companies at that point of time, Indian currency fell by around 50 percent between 2011 and 2013. All these resulted in the Indian economy going in a limbo at that period.

    7. Which among the following is similar in meaning to the word ‘benchmark’ as used in the passage?

    1. Standard
    2. Assure
    3. Quality
    4. Irresponsible
    5. Other than those given in options

    Solution: Option (1)

    Explantion: In the given passage, the word ‘benchmark’ has been used to imply that there are certain standards on which the impact of reforms on Indian economy is judged. This makes option (1) the right choice among the given options.

    8. Which among the following is similar in meaning to the word ‘rampant’ as used in the passage?

    1. Flagrant
    2. Intrusive
    3. Extensive
    4. Ripping
    5. Other than those given in options

    Solution: Option (1)

    Explantion: In the given passage, the word ‘rampant’ is used to indicate that the government budget deficit was huge in 2013 and this was one of the reasons of the Indian economy going into a limbo at that time. This makes option (1) the right choice among the given options as the synonym of the given word.

    9. Which among the following is opposite in meaning to the word ‘tangible’ as used in the passage?

    1. Incarnated
    2. Sensible
    3. Worthless
    4. Abstract
    5. Other than those given in options

    Solution: Option (4)

    Explantion: In the given passage, the word has been used to imply that India has been suggested by Moody’s to carry out some tangible reforms in order to bring the economy back in track. The right opposite to that should be ‘abstract’ among the given options and that makes option (4) the right choice.

    10. Which among the following is opposite in meaning to the word ‘implicit’ as used in the passage?

    1. Static
    2. Status quo
    3. Stated
    4. Imposter
    5. Other than those given in options

    Solution: Option (3)

    Explantion: The given word has been used in the passage to indicate that the PM has made unstated statements regarding the state of Indian economy and it is implied in his statement. That makes option (3) the right choice among the given options.

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