Reading Comprehension for SBI PO/ Clerk 2018: 11 May
Directions (Q. 1-10): Read the passage carefully and answer the questions given below it. Certain words/phrases are given in bold to help you locate them while answering some of the questions.
If one digs deeper into the verbose 16,536-word speech of Finance Minister Arun Jaitley on the Budget for the current fiscal year, there appears a pleasantly surprising message on the troubled relationship between the government and the Reserve Bank of India.
The priorities and objectives laid out by the National Democratic Alliance government resonates far better with RBI governor Raghuram Rajan than that of the previous one under Manmohan Singh which handed the job to the former Chicago University finance professor.
Indeed, Jaitley’s speech should put to rest the speculation of petty minds on whether Rajan keeps his job with the Narendra Modi government that has come with a different agenda and approach to economy.
The economic road map laid out by Jaitley is dotted with ideas being propagated by Rajan, which includes moving the central bank towards sophistication achieved in the Western world and at the same time retaining the character of a vigilant regulator.
“It seems like that they are on a similar thought process,” says A Prasanna, economist at ICICI Securities Primary Dealership. “It is definitely a step forward in their relationship compared to the baseless speculation earlier. They have started on a good note.”
What could be a relief for Rajan and Co at the RBI is that Jaitley appears to have bought into the idea of inflation-targeting as suggested by a panel headed by Urjit Patel, a central bank deputy governor.
What appeared to be a Himalayan task in convincing the political class to buy the virtues of inflation-targeting, now seems to be a cakewalk.
“It is also essential to have a modern monetary policy framework to meet the challenges of an increasingly complex economy,” said Jaitley. “Government will, in close consultation with the RBI, put in place such a framework.”
Although there were no specifics, the new government is inclined towards freedom for the central bank on rates. That should be music to Rajan’s ears.
“It does suggest that we’re in for the first establishment of a monetary policy framework in India’s history,” says Ajay Shah, professor, National Institute of Public Finance and Policy. “This could be a CPI-inflation target. I would support that.”
The new government’s approach is in contrast with the stance of P Chidambaram, Jaitley’s predecessor. “Inflation-targeting is only one among the objectives,” Chidambaram had said after the Patel panel views were out.
“Another objective of the RBI must be to support growth.” Patel suggested a monetary policy framework which will target inflation, based on the consumer price index, at 4%, in a plus or minus 2% band.
It also suggested that the rate decision be taken by the Monetary Policy Committee headed by the governor and members nominated by him. This, some argued, would make the monetary stance rigid in a developing nation where economic growth should take precedence over price stability.
But Rajan, wedded to the idea of taming inflation and turning the real interest rates positive to make financial markets vibrant, has been marketing the idea at almost every possible platform.
“When the government talks in support of monetary policy, it lends a lot of credibility to fighting inflation,” says Siddhartha Sanyal, economist at Barclays. “When the overall support from government is strong, the RBI can be more balanced. If the government is not supportive, then the RBI has to be cautious.”
Developing trust between the government and the central bank was visible even before the first step was taken by the government on either fiscal prudence, or committing to eliminating subsidies. When Rajan last month cut the statutory liquidity ratio of banks, the proportion of deposits to be held in government bonds, it was a sign of buying into the new government’s promise.
1. What is/are true about the economic road map laid out by Finance Minister Arun Jaitley?
(A) The road map intends to retain the character of the RBI as a vigilant regulator of the country’s economy.
(B) The road map includes an attempt to shift the central bank towards the successful strategies of the Western world.
(C) The road map endeavours to strengthen the relationship between the government and the central bank.
1) Only (A) and (B) 2) Only (B) and (C)
3) Only (A) and (C) 4) All (A), (B) and (C)
5) Only (C)
2. Which of the following is not one of the views expressed by the Finance Minister in the Budget speech for the current fiscal year?
1) The Budget speech expresses an outstanding message on the troubled relationship between the govt and the State Bank of India.
2) The Budget speech expresses that the finance Minister buys into the idea of inflation-targeting.
3) The Budget speech proclaims that it is essential to have a modern monetary policy framework to meet the challenges of the economy.
4) The Budget speech propagated the idea that the central bank should emulate the ideology of the western world.
5) The Budget speech gave Rajan enough respect.
3. Which of the following is/are true according to the given passage?
(A) The new government is not in favour of the freedom of the central bank.
(B) One of the objectives of the new government is to contain inflation.
(C) One of the objective of the new government is to maintain a distant relation with the RBI.
1) Only (A) 2) Only (B)
3) Only (C) 4) Only (A) and (B)
5) Only (B) and (C)
4. Which of the following statements is not true regarding to the panel headed by Urjit Patel?
(A) The panel suggested a monetary policy framework which will target inflation.
(B) The panel suggested all the discussions regarding the rate should be taken by the monetary policy committee headed by the governor.
(C) The panel suggested that the relationship between the govt and RBI is not good as of now.
1) Only (A) and (B) 2) Only (B) and (C)
3) Only (A) and (C) 4) Only (C)
5) None of these
5. What is the meaning of the phrase ‘cakewalk’ as used in the given passage?
1) Easy activity 2) Incomprehensible
3) A difficult task 4) Liked by all
5) None of the above
Directions (Q. 6-8): Choose the word/group of words which is MOST SIMILAR in meaning to the word/group of words printed in bold as used in the passage.
6. Resonates
1) flashes 2) trembles 3) reflects
4) harmonises 5) quiver
7. Vigilant
1) negligent 2) impulsive 3) watchful
4) confident 5) successful
8. Speculation
1) conjecture 2) deliberation 3) knowledge
4) confirmation 5) assurance
Directions (Q. 9-10): Choose the word/group of words which is MOST OPPOSITE in meaning of the word/group of words printed in bold as used in the passage.
9. Vibrant
1) vivid 2) animated 3) lively
4) sluggish 5) energetic
10. Prudence
1) diligence 2) vigilance 3) providence
4) frugality 5) recklessness
Answers:
- 4
- 1
- 2
- 4
- 1
- 4
- 3
- 1
- 4
- 5
