Reading Comprehension for SBI PO Main 2018 : 19 July
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.
Black money or illicit money has been defined by the Ministry of Finance in its report ‘White Paper on Black Money’ as assets or resources that have neither been reported to the public authorities at the time of their generation nor disclosed at any point of time during their possession. This would include money earned from crime (such as drug trafficking, smuggling, arms trafficking, sexual exploitation and prostitution etc), corruption and commercial tax evasion (such as underreporting revenues and inflating expenses). Although the focus of the black money debate in the country has been mainly on corrupt money, according to a report on black money by the Central Board of Direct Taxes, “Measures to Tackle Black Money in India and Abroad”, the main method for generation of black money in India is through commercial tax evasion by underreporting revenues and inflating expenses adopted by a range of business entities.
While estimating the scale of illicit or black economy in the country is difficult, some attempts have been made to measure this globally. According to Global Financial Integrity (GFI), a Washington DC-based organisation, from 2002 to 2011, developing countries lost US$ 5.9 trillion to illicit outflows. China leads the list with a loss of US$ 1.08 trillion from 2002 to 2011. India was the fifth largest country with cumulative outflows worth US$ 343.9 billion from 2002 to 2011, which they claim is a conservative estimate. These estimates do not include the movement of illegal money through the hawala system, smuggling and cross-border cash transactions – all of which are significant in the Indian context. GFI estimates that for every $1 that poor nations receive in foreign aid, $10 in illicit money flows offshore. This movement of money out of developing countries, including India, is facilitated by a network of over 60 tax havens which enables setting up of benami trusts or corporations ensuring that the real owners of the business remain unknown. According to Tax Justice Network, an international coalition of researchers, the global super-rich have at least $21 trillion hidden in secret tax havens at the end of 2012. In 2011, Government of India had commissioned three national-level institutes – National Institute of Public Finance and Policy (NIPFP). National Institute of Financial Management (NIFM) and National Council of Applied Economic Research (NCAER) – to assess and provide estimates of the extent of black money in India. Once the reports are published, there might be additional clarity on the scale of this problem in the country. While the methodology and data from different studies can certainly be debated for their accuracy, there is no denying the magnitude and importance of addressing the issue. It is especially significant in developing countries where there is a substantial need to expand public revenues to meet the growing needs for developmental expenditure.
Adding to the complexity of this outflow of unaccounted money is that this wealth is not simply lying in foreign bank accounts to be recovered or brought back to the country. In reality, a large portion of this money comes back into India by a process known as ’round tripping’, ie the money that left the country and ended up in a tax haven is invested back into the country as ‘white’ money. But there is no data or analysis on how much of the black money is round-tripped and comes back into the country.
1. What, according to the Ministry of Finance, is black money? Give your answer in the context of the passage.
(A) Black money refers to funds earned in the black market.
(B) Assets or resources that have neither been reported to the public authorities at the time of their generation nor disclosed at any point in time during their possession.
(C) Black money comprises money earned from crimes such as drug trafficking, smuggling and arms trafficking, corruption and commercial tax evasion.
1) Only (A)
2) Only (B)
3) Only (A) and (B)
4) Only (B) and (C)
5) All (A), (B) and (C)
2. What is the main method for generation of black money in India?
1) Drug trafficking and smuggling of gold
2) Commercial tax evasion
3) Underreporting of incomes by private institutions
4) Bribe received by politicians for helping bureaucrats
5) All the above
3. Find the incorrect statement on the basis of the given passage.
1) According to GFI, from 2002 to 2011, developing countries lost US$ 5.9 trillion to illicit outflows.
2) During 2002 to 2011, China topped the list of losers due to illicit outflows.
3) During 2002 to 2011, India stood at the fifth place in the list of losers with cumulative outflows worth US $343.9 bn.
4) The estimate of loss excludes the movement of illegal money through hawala system.
5) None of these
4. How does the movement of money out of developing countries takes place? Give your answer in the context of the passage.
1) The movement of money takes place only through double-entry bookkeeping system.
2) The movement of money is facilitated by a network of tax havens which enables setting up of benami trusts or corporations.
3) The movement of money takes place in the from of either cash or in the form of gold biscuits.
4) The movement of money takes place by means of electronic funds transfer.
5) None of these
5. What is round tripping? Answer in the context of the passage.
1) Round tripping is a legal process of converting black money by paying fixed amount of tax as per the tax laws of the country where the black money is deposited.
2) This is a process of converting money of a country either into USD or into Euro.
3) This is a process in which the money leaving the country and ending up in a tax haven is invested back into the country as white money.
4) This is a process of brining back black money into the country to which it belongs.
5) All 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. Evasion
1) openness 2) excavation 3) dodging 4) exchange 5) attacking
7. Offshore
1) relentlessly 2) unaccounted 3) middle east 5) outward 5) overseas
8. Facilitated
1) expedited 2) blocked 3) impeded 4) obstructed 5) poised
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. Commissioned
1) nominated 2) cancelled 3) entrusted 4) empowered 5) enabled
10. Complexity
1) perplexity 2) multiplicity 3) ramification 4) simplicity 5) intricacy
Answers:
- 4
- 2
- 5
- 2
- 3
- 3
- 5
- 1
- 2
- 4
