General Comprehension (UPSC) (Part-III)

31. With regards to developing countries, it can be inferred from the passage that climate change is likely to have implications on their : [2015-11]

1. domestic finances.

2. capacity for multilateral trade.

Select the correct answer using the code given below:

Climate change is a complex policy issue with major implications in terms of finance. All actions to address climate change ultimately involve costs. Funding is vital for countries like India to design and implement adaptation and mitigation plans and projects. Lack of funding is a large impediment to implementing adaptation plans. The scale and magnitude of the financial support required by developing countries to enhance their domestic mitigation and adaptation actions are a matter of intense debate in the multilateral negotiations under the United Nations Framework Convention on Climate Change (UNFCCC). The Convention squarely puts the responsibility for provision of financial support on the developed countries, taking into account their contribution to the stock of greenhouse gases (GHGs) in the atmosphere. Given the magnitude of the task and the funds required, domestic finances are likely to fall short of the current and projected needs of the developing countries. Global funding through the multilateral mechanism of the Convention will enhance their domestic capacity to finance the mitigation efforts.

(a) 1 only
(b) 2 only
(c) Both 1 and 2
(d) Neither 1 nor 2

Correct Answer: (a) 1 only

Solution:Refer the second last sentence, 'Given the magnitude of the task and the funds required, domestic finances are likely to fall short of the current and projected needs of the developing countries', which clearly shows that climate change is likely to have implications on their domestic finances. 2 is not mentioned in the passage.

32. Which one of the following is essentially discussed in the passage? [2015-11]

Climate change is a complex policy issue with major implications in terms of finance. All actions to address climate change ultimately involve costs. Funding is vital for countries like India to design and implement adaptation and mitigation plans and projects. Lack of funding is a large impediment to implementing adaptation plans. The scale and magnitude of the financial support required by developing countries to enhance their domestic mitigation and adaptation actions are a matter of intense debate in the multilateral negotiations under the United Nations Framework Convention on Climate Change (UNFCCC). The Convention squarely puts the responsibility for provision of financial support on the developed countries, taking into account their contribution to the stock of greenhouse gases (GHGs) in the atmosphere. Given the magnitude of the task and the funds required, domestic finances are likely to fall short of the current and projected needs of the developing countries. Global funding through the multilateral mechanism of the Convention will enhance their domestic capacity to finance the mitigation efforts.

(a) Conflict between developed and developing countries regarding support for mitigation.
(b) Occurrence of climate change due to excessive exploitation of natural resources by the developed countries.
(c) Lack of political will on the part of all the countries to implement adaptation plans.
(d) Governance problems of developing countries as a result of climate change.

Correct Answer: (a) Conflict between developed and developing countries regarding support for mitigation.

Solution:The passage clearly depicts the tussle between developed and developing countries regarding support for mitigation. The developing nations need financial support to adapt to the new measures and they want the developed nations to bear the expense of what they have caused. (b), (c) and (d) are wrong because the passage does not mention either of exploitation of natural resources, Lack of political will or Governance problems.

33. Which among the following is the most logical corollary to the above passage? [2015-11]

Climate change is already making many people hungry all over the world, by disrupting crop yields and pushing up prices. And it is not just food but nutrients that are becoming scarcer as the climate changes. It is the poorest communities that will suffer the worst effects of climate change, including increased hunger and malnutrition as crop production and livelihoods are threatened. On the other hand, poverty is a driver of climate change, as desperate communities resort to unsustainable use of resources to meet current needs.

(a) Government should allocate more funds to poverty alleviation programmes and increase food subsidies to the poor communities.
(b) Poverty and climate impacts reinforce each other and therefore we have to re-imagine our food systems.
(c) All the countries of the world must unite in fighting poverty malnutrition and treat poverty as a global problem.
(d) We must stop unsustainable agricultural practices immediately and control food prices.

Correct Answer: (b) Poverty and climate impacts reinforce each other and therefore we have to re-imagine our food systems.

Solution:A corollary is a proposition that follows from one already proved. (b) is the most appropriate as the passage clearly states that poverty and climate impacts reinforce each other. Poverty leads to climate deterioration (due to unsustainable use of resources, refer last line) and climate change leads to poverty.

(a) and (c) are wrong as they talk about poverty alleviation, increase in food subsidies, etc. in alienation. They have got nothing to do with climate change.

(d) is wrong as it suggests solution to curb climate change (stop unsustainable agricultural practices) and poverty (control food prices). It does not talk about their inter-dependence.

34. Which among the following is the most rational and critical inference that can be made from the above passage? [2015-11]

The Global Financial Stability Report finds that the share of portfolio investments from advanced economies in the total debt and equity investments in emerging economies has doubled in the past decade to 12 percent. The phenomenon has implications for Indian policy makers as foreign portfolio investments in the debt and equity markets have been on the rise. The phenomenon is also flagged as a threat that could compromise global financial stability in a chain reaction, in the event of United States Federal Reserve's imminent reversal of its "Quantitative Easing" policy.

(a) Foregin portfolio investments are not good for emerging economies.
(b) Advanced economies undermine the global financial stability.
(c) India should desist from accepting foreign portfolio investments in the future.
(d) Emerging economies are at a risk of shock from advanced economies.

Correct Answer: (d) Emerging economies are at a risk of shock from advanced economies.

Solution:The passage asks for the most rational and critical inference from the passage. (a) is wrong as it just portrays one part of the passage. The portfolio investments have both the good and bad effects. (b) is wrong as the passage suggests threat from the portfolio investments. It cannot be stated from the passage that advanced economies will always undermine the global financial stability. There are a lot of other external factors working simultaneously. For similar reasons (c) is wrong. (d) is the most rational and critical inference as portfolio investments definitely impacts emerging economies in certain cases so there is a risk.

Portfolio investments: Portfolio investments are passive investments, as they do not entail active management or control of the issuing company. Rather, the purpose of the investment is solely financial gain. This is in contrast to foreign direct investment (FDI), which allows an investor to exercise a certain degree of managerial control over a company. For international transactions, equity investments where the owner holds less than 10% of a company's shares are classified as portfolio investments. These transactions are also referred to as "portfolio flows" and are recorded in the financial account of a country's balance of payments. Portfolio investments include transactions in equity securities, such as common stock, and debt securities, such as banknotes, bonds, and debentures.

Quantitative Easing: Quantitative easing (QE) is a type of monetary policy used by central banks to stimulate the economy when standard monetary policy has become ineffective. A central bank implements quantitative easing by buying financial assets from commercial banks and other financial institutions, thus raising the prices of those financial assets and lowering their yield, while simultaneously increasing the money supply. This differs from the more usual policy of buying or selling short-term government bonds to keep interbank interest rates at a specified target value.
Quantitative easing can help ensure that inflation does not fall below a target. Risks include the policy being more effective than intended in acting against deflation (leading to higher inflation in the longer term, due to increased money supply), or not being effective enough if banks do not lend out the additional reserves.

35. Which among the following is the most critical inference that can be made from the above passage? [2015-11]

Open defecation is disastrous when practised in very densely populated areas, where it is impossible to keep away human faeces from crops, wells, food and children's hands. Groundwater is also contaminated by open defecation. Many ingested germs and worms spread diseases. They prevent the body from absorbing calories and nutrients. Nearly one-half of India's children remain malnourished. Lakhs of them die from preventable conditions. Diarrhoea leaves Indians' bodies smaller on average than those of people in some poorer countries where people eat fewer calories. Underweight mothers produce stunted babies prone to sickness who may fail to develop their full cognitive potential. The germs released into environment harm rich and poor alike, even those who use latrines.

(a) The Central and State governments in India do not have enough resources to afford a latrine for each household.
(b) Open defecation is the most important public health problem of India.
(c) Open defecation reduces the human capital of India's workforce.
(d) Open defecation is a public health problem in all developing countries.

Correct Answer: (c) Open defecation reduces the human capital of India's workforce.

Solution:The problem of open defecation has its ill effects on overall economy and society which is many a times not visible. This is the critical inference of the passage.

36. Which one of the following statements best sums up the above passage? [2015-11]

We generally talk about democracy but when it comes to any particular thing, we prefer a belonging to our caste or community or religion. So long as we have this kind of temptation, our democracy will remain a phoney kind of democracy. We must be in a position to respect a man as a man and to extend opportunities for development to those who deserve them and not to those who happen to belong to our community or race. This fact of favouritism has been responsible for much discontent and ill-will in our country.

(a) Our country has a lot of diversity with its many castes, communities and religions.
(b) True democracy could be established by providing equal opportunities to all
(c) So far none of us have actually understood the meaning of democracy.
(d) It will never be possible for us to establish truly democratic governance in our country.

Correct Answer: (b) True democracy could be established by providing equal opportunities to all

Solution:(b) is the most appropriate statement as it talks about providing equal opportunities to all irrespective of the caste or community or religion. That's what is a True democracy.

37. With reference to the above passage, consider the following statements: [2015-11]

1. Indian financial institutions do not offer any financial instruments to rural households to mobilise their savings.

2. Poor households tend to spend their earnings/savings due to lack of access to appropriate financial instruments.

Which of the statements given above is/are correct?

The existence/establishment of formal financial institutions that offer safe, reliable and alternative financial instruments is fundamental in mobilising savings. To save, individuals need access to safe and reliable financial institutions, such as banks, and to appropriate financial instruments and reasonable financial incentives. Such access is not always available to all people in developing countries like India and more so, in rural areas. Savings help poor households manage volatility in cash flow, smoothen consumption, and build working capital. Poor households without access to a formal savings mechanism encourage immediate spending temptations.

(a) 1 only
(b) 2 only.
(c) Both 1 and 2
(d) Neither 1 nor 2

Correct Answer: (b) 2 only.

Solution:Clearly only 2 is correct. 1 is wrong as the passage says that 'Such access is not always available to all people in developing countries like India and more so, in rural areas. This means that they are sometimes available.2 is correct as mentioned in the last sentence of the passage.

38. What is the crucial message conveyed in the passage? [2015-11]

The existence/establishment of formal financial institutions that offer safe, reliable and alternative financial instruments is fundamental in mobilising savings. To save, individuals need access to safe and reliable financial institutions, such as banks, and to appropriate financial instruments and reasonable financial incentives. Such access is not always available to all people in developing countries like India and more so, in rural areas. Savings help poor households manage volatility in cash flow, smoothen consumption, and build working capital. Poor households without access to a formal savings mechanism encourage immediate spending temptations.

(a) Establish more banks.
(b) Increase the Gross Domestic Product (GDP) growth rate
(c) Increase the interest rate of bank deposits
(d) Promote financial inclusion

Correct Answer: (d) Promote financial inclusion

Solution:The crucial message conveyed in the passage is to promote financial inclusion such that every citizen of the country has access to bank accounts and can save money so as to have better finances Establishing more banks is a route to financial inclusion. Increasing the interest rate of bank deposits would promote savings. So (d) is correct.

39. Which among the following is the most logical assumption that can be made from the above passage? [2015-11]

Governments may have to take steps which would otherwise be an infringement on the Fundamental Rights of individuals, such as acquiring a person's land against his will, or refusing permission for putting up a building, but the larger public interest for which these are done must be authorized by the people (Parliament). Discretionary powers to the administration can be done away with. It is becoming more and more difficult to keep this power within limits as the government has many number of tasks to perform. Where discretion has to be used, there must be rules and safeguards to prevent misuse of that power. Systems have to be devised which minimise, if not prevent, the abuse of discretionary power. Government work must be conducted within a framework of recognised rules and principles, and decisions should be similar and predictable.

(a) Government should always be given wide discretionary power in all matters of administration.
(b) The supremacy of rules and safeguards should prevail as opposed to the influence of exclusive discretion of authority.
(c) Parliamentary democracy is possible only if the Government has wider discretionary power.
(d) None of the above statements is a logical assumption that can be made from this passage.

Correct Answer: (b) The supremacy of rules and safeguards should prevail as opposed to the influence of exclusive discretion of authority.

Solution:(b) is correct as the passage talks about the supremacy of rules and safeguards, refer last sentence. Further the 3rd sentence, 'Where discretion has to be ........... misuse of that power' reinforces the prevalence of rules and safeguards as opposed to the influence of exclusive discretion of authority.

40. Which among the following is the most logical corollary to the above passage? [2016-11]

By killing transparency and competition, crony capitalism is harmful to free enterprise, opportunity and economic growth. Crony capitalism, where rich and the influential are alleged to have received land and natural resources and various licenses in return for payoffs to venal politicians, is now a major issue to be tackled. One of the greatest dangers to growth of developing economies like India is the middle-income trap where crony capitalism creates oligarchies that slow down the growth.

(a) Launching more welfare schemes and allocating more finances for the current schemes are urgently needed.
(b) Efforts should be made to push up economic growth by other means and provide licenses to the poor.
(c) Greater transparency in the functioning of the government and promoting the financial inclusion are needed at present.
(d) We should concentrate more on developing manufacturing sector than service sector.

Correct Answer: (c) Greater transparency in the functioning of the government and promoting the financial inclusion are needed at present.

Solution:Greater transparency in the functioning of the government and promoting the financial inclusion is mandatory because there have been instances where the elite are receiving land and natural resources by bribing the politicians. The middle class continues to struggle and is deprived of opportunity or economic development.