Insta–DART (Daily Aptitude and Reasoning Test) 27 February 2021

Economic liberalization in India was shaped largely by the economic problems of the government than by the economic priorities of the people or by the long-term development objectives. Thus, there were limitations in conception and design which have been subsequently validated by experience. Jobless growth, persistent poverty and rising inequality have mounted as problems since economic liberalization began. And all these years later, four quiet crises confront the economy; industrialization and agriculture, infrastructure, education as constraints on the country’s future prospects. These problems must be resolved if economic growth has to be sustained and transformed into meaningful development

Which of the following is/are the most rational and logical inference/inferences that can be made from the passage?

• It is essential to rethink and redefine the economic role of the state in the quest Tor for development.
• India has not made effective implementation of its policies in social sectors nor made sufficient investments in them.

Select the correct answer using the codes given below.

Economic liberalization in India was shaped largely by the economic problems of the government than by the economic priorities of the people or by the long-term development objectives. Thus, there were limitations in conception and design which have been subsequently validated by experience. Jobless growth, persistent poverty and rising inequality have mounted as problems since economic liberalization began. And all these years later, four quiet crises confront the economy; industrialization and agriculture, infrastructure, education as constraints on the country’s future prospects. These problems must be resolved if economic growth has to be sustained and transformed into meaningful development

With reference to the above passage, the following assumptions have been made.

• India’s economy needs to be greatly integrated with global economy so as to create large number of jobs and to sustain its growth momentum.
• Economic liberalization would cause large economic growth which would reduce poverty and create sufficient employment in the long run.

Which of the above assumptions is/are valid?

Private investment in general is volatile. Foreign private investment is more volatile because the available investment avenues are significantly greater (i.e., the entire world). Therefore, the responsibility of providing employment cannot be left to Foreign Direct Investment (FD). The current FDI inflows are volatile over time and across sectors and regions, which is a necessary consequence of their search for the highest returns. The adverse consequences are unstable employment and an accentuation of income and regional inequalities. A probable positive consequence of foreign investment is the inflow of new technology and its subsequent diffusion. However, the technology diffusion is not at all certain because the existing state of physical and human capital in India may prove inadequate for the diffusion.

With reference to the above passage, the following assumptions have been made.

• Relying on foreign investment in the long run is not an economically sound policy.
• Policies must be undertaken to reduce volatility in foreign private investment.
• Policies must be undertaken to strengthen domestic private investment.
• Public investment should be given priority over private investment.
• Substantial public investment in education and health should be undertaken.

Which of the above assumptions is/are valid?

Many opportunities to harness the highly skewed, seasonal and spatial distribution of monsoon flows, which occur in a four-month period from June to September annually, have been lost. Since these few months account for most of the rainfall and consequent freshwater availability, the need for holding rainwater in reservoirs, for subsequently releasing it for use over the year, is necessity nobody can afford to overlook. Climate change will continue to affect weather conditions and create water shortages and excesses. While millions suffer from droughts and floods, water in the country’s many rivers flow unutilized are discharged into the sea every year.

With reference to the above passage, which of the following could be the most rational and practical implications for India?

• Inter-linking of rivers should be undertaken
• A network of dams and canals should be built across the country for proper distribution of water.
• Farmers should be provided easy loans for digging borewells.
• Usage of water for agriculture should be regulated by law.
• Distribution of river water among regions should be regulated by the Union Government.

Select the correct answer using the codes given below.

People will invest in education whenever they are granted the economic freedom to fully enjoy its benefits. Again, this is for the obvious reason that the return on education increases as the level of economic freedom rises. When people, thanks to lower tax rates, are allowed to higher income that they gain from each incremental level of education, it makes eminent sense to invest in education. On the other hand, when the government decides to tax the higher income of educated individuals at even higher rates, it makes very little sense to invest in educating oneself further. The same   incentives apply to parents who decide on whether to invest in their children’s education.

With reference to the above passage, the following assumptions have been made.

• Lower tax rates in a country invariably translate into greater investments in higher yon education.
• Investment in the education of children ensures their economic freedom.
• Economic freedom has a positive impact on building up human capital.

Which of the above assumptions is/are valid?