Improve your English with English quiz. English Quiz to help you improve your score for exams like SBI, IBPS PO, IBPS Clerk and other govt exams.
Directions (1-10): Read the following passage carefully and answer the questions given below it. Certain words have been printed in bold to help you locate them, while answering some of the questions.
It is difficult to imagine the extraordinary number of controls on Indian industry before 1991. Entrepreneurs needed permission to invest and could be penalized for exceeding production capacity. Even with the given investment capacity they had, entering certain areas was prohibited as these were reserved for the public sector, it they had to import anything they required licenses. To get these licenses was tough. They had to persuade a bureaucrat that the item was required but even so permission was unavailable if somebody was already producing it in India. The impact of the reforms was not instantaneously and permanently wonderful. In India’s case it began to show after about a year-and-a –half. After 1993 then came three years of rapid industrial growth of about 8% or so. But, in the second half of the 10s, there was a tapering of industrial growth and investment. After 1997 and the East Asian crisis there was global slowdown, which had an impact on the Indian industry, But, in the last few years there has been a tremendous upturn. With the rise of investment industrial growth has reached double digits or close.
However, even during the period when industrial growth was not that rapid there is a lot of evidence that positive results of the reforms were seen. There were companies that didn’t look at all internally but instead performed remarkably in the highly competitive global market. For instance, the software sector’s performance was outstanding in an almost totally global market. Reliance built a world- class refinery. Tata’s developed an indigenously designed car. The success of the software sector has created much higher expectations from and much higher confidence in what the India industry can do. On the governments’ side it’s a vindication that the liberalization of both domestic and external policies, including the inflow of Foreign Direct investment, has created an environment in which industry can do well, has done well and is preparing to do even better. What they need is not sops, but good quality infrastructure. For the 11th Plan an industrial growth rate of around 12% projected. It will have methods of developing infrastructure, which will close the deficit. This can be done through increased investment in public sector for those infrastructure areas, which cannot attract private investment, and through efforts to improve private participation in different ways of public-private participation.
In the early stages of reforms, the liberalization of trade policies and a shift to a market-determined exchange rate had the effect of removing constraints on agriculture in terms of depressed prices. The removal of protection on industry helped to produce a more level-playing field, because the earlier system was extremely unfair to agriculture. The lesson to be learnt from the reforms process is to persevere in reforming the strategic parts of the economy, which will lead to even higher growth rate. India has to do better than its current average growth rate of 8% and ensure that benefits from this higher growth go beyond industry and urban areas and extend to agriculture.
Q1. Which of the following was not a restriction on Indian industry prior to 1991?
- A Private business needed government sanction to invest in any sector.
- Industrial growth had to be maintained at a certain percentage fixed by the government.
- It was difficult to obtain licenses.
(a) All (A), (B) & (C)
(b) Only (B)
(c) Only (C)
(d) Both (A) & (C)
(e) None of the above
Q2. Which of the following factors was responsible for the fall in India’s growth rate in the late 1910s?
(a) The implementation of economic reforms was too rapid
(b) It was expected after achieving a high growth rate of 10%
(c) There was a slowdown in the global economy.
(d) There were sanctions against East Asian countries by WTO.
(e) None of these.
Q3. Which of the following can be said about the reforms of 1991?
(a) They benefited Indian industry immediately.
(b) All Indian companies began to focus on indigenous development instead of looking for opportunities abroad.
(c) They were targeted only at the software sector.
(d) They encouraged foreign direct investment in India.
(e) None of the above
Q4. What was the impact of the flourishing Indian software sector?
(a) Other companies were unable to be competitive in the global market.
(b) It fuelled expectations of a good performance from the Indian economy.
(c) Growth rate rose to 12%
(d) It created cut-throat competition among software companies which would hinder the sector in the long run
(e) None of the above
Q5. Why was investment by private businesses disallowed in certain sectors?
(a) To ensure proper development in these sectors
(b) To prevent corruption in key sectors like infrastructure
(c) To ensure steady not inconsistent growth in key sectors
(d) To protect the interests of the public sector in these sectors
(e) None of the above
Q6. What is the author’s opinion about the government’s decision to liberalize the economy in 1991?
(a) It was beneficial because it created confidence in the Indian economy.
(b) The timing was wrong since the economy experienced a slowdown in growth rate.
(c) It led to a focus on software and other sectors were neglected.
(d) Foreign companies took advantage of the new policies and exploited certain sectors.
(e) None of the above
Q7. How did software companies deal with slow industrial growth in an open Indian economy?
(a) They focused on strengthening their position in the domestic market.
(b) They campaigned for infrastructure development.
(c) They diversified into different sectors.
(d) They entered into partnerships with public sector enterprises in resaved sectors.
(e) They targeted global market
Q8. Which of the following is NOT true in the context of the passage?
- India experienced a slowdown in growth during the late 1910s because initially the economic growth rate was too rapid.
- There were a few stringent regulations on Indian industries which kept economic growth below 12%
- Companies did not get import licenses for goods if they were being indigenously produced.
(a) Only (A)
(b) Both (B) &(C)
(c) Both (A) & (B)
(d) All (A), (B) &(C)
(e) None of the above
Q9. What does the author recommend to ensure that the industrial sector continues to perform better?
(a) Subsidies should be provided in infrastructure development.
(b) Government should keep control of and monitor all infrastructure projects.
(c)Wipe out any infrastructure deficit by transferring responsibility of these projects to the private sector.
(d) Ensure a combination of public and private involvement in developing infrastructure.
(e) None of the above
Q10. How did the economic reforms affect the agriculture sector?
(a) A system of market determined exchange rate was introduced.
(b) Constraints in agriculture increased.
(c) Prices were depressed because there was a removal of protection on the sector.
(d) Agriculture growth rate doubled.
(e) None of the above
Solutions
- Ans. (b)
Option (a) was a restriction because “entrepreneurs needed permission to invest”. Option (c) was also a restriction as “to get these licenses was tough.”
- Ans. (c)
The passage says: “After 1997 and the East Asian crisis there was global slowdown, which had an impact on the Indian industry.
- Ans. (d)
All other choices can be rules out and the only option which we can say about the reforms of 1991 is the “Encouragement of foreign direct investment in India”.
- Ans. (b)
The passage says: “the success of the software sector has created much higher expectations from … what Indian Industry can do”.
- Ans. (d)
Entering certain areas was prohibited for “the private sector” as these were reserved for the public sector”.
- Ans. (a)
The author was of opinion that it was beneficial as this is the optimistic tone that runs through the passage and it creates confidence in the Indian economy after 1991.
- Ans. (e)
The passage says: “…However, even during the period when industrial growth was not that rapid there is a lot of evidence that positive results of the reforms were seen. There were companies that didn’t look at all internally but instead performed remarkably in the highly competitive global market”.
- Ans. (c)
Option (a) is not true: the reason lay in global economic slowdown. Option (b) is not true: 12% is the growth rate projected for the future. The passage doesn’t even mention it as a past benchmark. It true the passage says: “. Permission was unavailable if somebody was already producing it in India.
- Ans. (d)
Read the last sentence of the second paragraph, “It will have methods of developing infrastructure, which will close the deficit. This can be done through increased investment in public sector for those infrastructure areas, which cannot attract private investment, and through efforts to improve private participation in different ways of public-private participation”.
- Ans. (a)
From the 1st and 2nd line of last paragraph, “In the early stages of reforms, the liberalization of trade policies and a shift to a market-determined exchange rate had the effect of removing constraints on agriculture in terms of depressed prices. The removal of protection on industry helped to produce a more level-playing field, because the earlier system was extremely unfair to agriculture”.
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