Comprehension PYQ — Page 15

‘Price is not the same thing as value. Suppose that on a day the price of everything, viz., coal, bread, postage stamps, a day’s labour, the rent of houses, etc. were to double. Prices then would certainly rise, but values of all things except one would not.’ The writer wants to say that if prices of all things were doubled

Read the following passage and answer the item that follows. Answers to these should be based on the passage only. In recent times, India has grown fast not only compared to its own past but also in comparison with other nations. But there cannot be any room for complacency because it is possible for the Indian economy to develop even faster and also to spread the benefits of this growth more widely than has been done thus far. Before going into details of the kinds of microstructural changes that we need to conceptualize and then proceed to implement, it is worthwhile elaborating on the idea of inclusive growth that constitutes the defining concept behind this Government’s various economic policies and decisions. A nation interested in inclusive growth views the same growth differently depending on whether the gains of the growth are heaped primarily on a small segment or shared widely by the population. The latter is cause for celebration but not the former. In other words, growth must not be treated as an end in itself but as an instrument for spreading prosperity to all. India’s own past experience and the experience of other nations suggest that growth is necessary for eradicating poverty but it is not a sufficient condition. In other words, policies for promoting growth need to be complemented with policies to ensure that more and more people join the growth process and, further, that there are mechanisms in place to redistribute some of the gains to those who are unable to partake in the market process and, hence get left behind. A simply way of giving this idea of inclusive growth a sharper form is to measure a nation’s progress in terms of the progress, of its poorest segment, for instance, the bottom 20 per cent of the population. One could measure the per capita income of the bottom quintile of the population and also calculate the growth rate of income, and evaluate our economic success in terms of these measures that pertain to the poorest segment. This approach is attractive because it does not ignore growth like some of the older heterodox criteria did. It simply looks at the growth of income of the poorest sections of the population. It also ensures that those who are outside of the bottom quintile do not get ignored. If that were done, then those people would, in all likelihood, drop down into the bottom quintile and so would automatically become a direct target of our policies. Hence, the criterion being suggested here is a statistical summing up of the idea of inclusive growth, which in turn, leads to two corollaries: to wish that India must strive to achieve high growth and that we must work to ensure that the weakest segments benefit from the growth. Consider the following statements: According to the author, India’s economy grown but there is no room for complacency as: 1. growth eradicates poverty. 2. growth has resulted in prosperity for all. Which of the statements given above is/are correct?

Read the following passage and answer the items that follow. Your answers to these items should be based on the passage only. Many nations now place their faith in capitalism and governments choose it as the strategy to create wealth for their people. The spectacular economic growth seen in Brazil, China and India after the liberalization of their economies is proof of its enormous potential and success. However, the global banking crisis and the economic recession have left many bewildered. The debates tend to focus on free market operations and forces, their efficiency and their ability for self-correction. Issues of justice, integrity and honesty are rarely elaborated to highlight the failure of the global banking system. The apologists of the system continue to justify the success of capitalism and argue that the recent crisis was a blip. Their arguments betray an ideological bias with the assumptions that an unregulated market is fair and competent, and that the exercise of private greed will be in the larger public interest. Few recognize the bidirectional relationship between capitalism and greed: that each reinforces the other Surely, a more honest conceptualization of the conflicts of interest among the rich and powerful players who have benefited from the system, their biases and ideology is needed; the focus on the wealth creation should also highlight the resultant gross inequity. The apologists of the ‘Free Market System’, according to the passage, believe in:

Net profits are only 2.2 per cent of their total assets for central public sector undertakings, lower than for the private corporate sector. While the public sector or the state-led entrepreneurship played an important role in triggering India’s industrialization, our evolving development needs, comparatively less-than satisfactory performance of the public sector enterprises, the maturing of our private sector, a much larger social base now available for expanding entrepreneurship and the growing institutional capabilities to enforce completion policies would suggest that the time has come to review the role of public sector. What should the portfolio composition of the government be? It should not remain static all times. The airline industry works well as a purely private affair. At the opposite end, rural roads, whose sparse traffic makes tolling unviable, have to be on the balance sheet of the state. If the government did not own rural roads, they would not exist. Similarly, public health capital in our towns and cities will need to come from the public sector. Equally, preservation and improvement, of forest cover will have to be a new priority for the public sector assets. Take the example of steel. With near-zero tariffs, India is a globally competitive market for the metal. Indian firms export steel into the global market, which demonstrates there is no gap in technology. Indian companies are buying up global steel companies which show there is no gap in capital availability. Under these conditions, private ownership works best. Private ownership is clearly desirable in regulated industries, ranging from finance to infrastructure, where a government agency performs the function of regulation and multiple competing firms are located in the private sector. Here, the simple and clean solution—government as the umpire and the private sector as the players is what works best. In many of these industries, we have a legacy of government ownership, where productivity tends to be lower, fear of bankruptcy is absent, and the risk of asking for money from the taxpayer is ever present. There is also the conflict of interest between government as an owner and as the regulator. The formulation and implementation of competition policy will be more vigorous and fair if government companies are out of action. The portfolio composition of the government refers to:

It is essential that we mitigate the emissions of greenhouse gases and thus avoid some of the worst impacts of climate change that would take place in coming years and decades. Mitigation would require a major shift in the way we produce and consume energy. A shift away from overwhelming dependence on fossil fuels in now long overdue, but unfortunately technological development has been slow and inadequate largely because government policies have not promoted investments in research and development, myopically as a result of relatively low prices of oil, It is now, therefore, imperative for a country like India treating the opportunity of harnessing renewable energy on a large scale as a national imperative. This country is extremely well endowed with solar, wind and biomass sources of energy. Where we have lagged, unfortunately, is in our ability to develop and to create technological solutions for harnessing these resources. One particular trajectory for carrying out stringent mitigation of greenhouse gas emissions assessed by the Intergovernmental Panel on Climate Change (IPCC) clearly shows the need for ensuring that global emissions of greenhouse gases peak no later than 2015 and reduce rapidly thereafter. The cost associated with such a trajectory is truly modest and would amount, in the estimation of IPCC, to not more than 3 per cent of the global GDP in 2030. In other words, the level of prosperity that the world would have reached without mitigation would at worst be postponed by a few months or a year at the most. This is clearly not a very high price to pay for protecting hundreds of millions of people from the worst risk associated with climate change. Any such effort, however, would require lifestyles to change appropriately also. Mitigation of greenhouse gas emissions is not a mere technological fix, and clearly requires changes in lifestyles and transformation of a country’s economic structure, whereby effective reduction in emissions is brought about such as through the consumption of much lower quantities of animal protein. The Food and Agriculture Organization (FAO) has determined that the emissions from the liver stock sector amount to 18 per cent of the total. The reduction of emissions from this source is entirely in the hands of human beings, who have never questioned the impacts that their dietary habits of consuming more and more animal protein are bringing about. Mitigation overall has huge co-benefits such as lower air pollution and health benefits, higher energy security and greater employment. According to the passage, how does mitigation of greenhouse gases help us? 1. Reduces expenditure on public health 2. Reduces dependence on livestock 3. Reduces energy requirements 4. Reduces rate of global climate change Select the correct answer using the code given below:

Net profits are only 2.2 per cent of their total assets for central public sector undertakings, lower than for the private corporate sector. While the public sector or the state-led entrepreneurship played an important role in triggering India’s industrialization, our evolving development needs, comparatively less-than satisfactory performance of the public sector enterprises, the maturing of our private sector, a much larger social base now available for expanding entrepreneurship and the growing institutional capabilities to enforce completion policies would suggest that the time has come to review the role of public sector. What should the portfolio composition of the government be? It should not remain static all times. The airline industry works well as a purely private affair. At the opposite end, rural roads, whose sparse traffic makes tolling unviable, have to be on the balance sheet of the state. If the government did not own rural roads, they would not exist. Similarly, public health capital in our towns and cities will need to come from the public sector. Equally, preservation and improvement, of forest cover will have to be a new priority for the public sector assets. Take the example of steel. With near-zero tariffs, India is a globally competitive market for the metal. Indian firms export steel into the global market, which demonstrates there is no gap in technology. Indian companies are buying up global steel companies which show there is no gap in capital availability. Under these conditions, private ownership works best. Private ownership is clearly desirable in regulated industries, ranging from finance to infrastructure, where a government agency performs the function of regulation and multiple competing firms are located in the private sector. Here, the simple and clean solution—government as the umpire and the private sector as the players is what works best. In many of these industries, we have a legacy of government ownership, where productivity tends to be lower, fear of bankruptcy is absent, and the risk of asking for money from the taxpayer is ever present. There is also the conflict of interest between government as an owner and as the regulator. The formulation and implementation of competition policy will be more vigorous and fair if government companies are out of action. According to the passage, what is/are the reason/reasons for saying that the time has come to review the role of public sector? 1. Now public sector has lost its relevance in the industrialization process. 2. Public sector does not perform satisfactorily. 3. Entrepreneurship in private sector is expanding. 4. Effective competition policies are available now. Which of the statements given above is/are correct in the given context?

Read the following passage and answer the item that follows. Answers to these should be based on the passage only. In recent times, India has grown fast not only compared to its own past but also in comparison with other nations. But there cannot be any room for complacency because it is possible for the Indian economy to develop even faster and also to spread the benefits of this growth more widely than has been done thus far. Before going into details of the kinds of microstructural changes that we need to conceptualize and then proceed to implement, it is worthwhile elaborating on the idea of inclusive growth that constitutes the defining concept behind this Government’s various economic policies and decisions. A nation interested in inclusive growth views the same growth differently depending on whether the gains of the growth are heaped primarily on a small segment or shared widely by the population. The latter is cause for celebration but not the former. In other words, growth must not be treated as an end in itself but as an instrument for spreading prosperity to all. India’s own past experience and the experience of other nations suggest that growth is necessary for eradicating poverty but it is not a sufficient condition. In other words, policies for promoting growth need to be complemented with policies to ensure that more and more people join the growth process and, further, that there are mechanisms in place to redistribute some of the gains to those who are unable to partake in the market process and, hence get left behind. A simply way of giving this idea of inclusive growth a sharper form is to measure a nation’s progress in terms of the progress, of its poorest segment, for instance, the bottom 20 per cent of the population. One could measure the per capita income of the bottom quintile of the population and also calculate the growth rate of income and evaluate our economic success in terms of these measures that pertain to the poorest segment. This approach is attractive because it does not ignore growth like some of the older heterodox criteria did. It simply looks at the growth of income of the poorest sections of the population. It also ensures that those who are outside of the bottom quintile do not get ignored. If that were done, then those people would, in all likelihood, drop down into the bottom quintile and so would automatically become a direct target of our policies. Hence, the criterion being suggested here is a statistical summing up of the idea of inclusive growth, which in turn, leads to two corollaries: to wish that India must strive to achieve high growth and that we must work to ensure that the weakest segments benefit from the growth. The author supports policies which will help:

In front of us was walking a bare-headed old man in tattered clothes. He was driving his beasts. They were all laden with heavy loads of clay from the hills and looked tired. The man carried a long whip which perhaps he himself had made. As he walked down the road he stopped now and then to eat the wild becomes that grew on bushes along the uneven road, when he threw away the seeds, the bold birds would fly to peck at them. Sometimes a stray dog watched the procession philosophically and then began to bark. When this happened, my two little sons would stand still holding my hands firmly. A dog can sometimes be dangerous indeed. The author's children held his hands firmly because

It is easy for the government to control state-owned companies through nods and winks. So, what really needs to be done as a first step is to be done as a first step is to put petrol pricing on a transparent formula—if the price of crude is x and the exchange rate y, then every month or fortnight, the government announces a maximum price of petrol, which anybody can work out from the x and y. The rule has to be worked out to make sure that the oil-marketing companies can, in general, cover their costs. This will mean that it one company can innovate and cut costs, it will make greater profits. Hence, firms will be more prone to innovate and be efficient under this system. Once the rule is announced, there should be no interference by the government. If this is done for a while, private companies will re-enter this market. And once a sufficient number of them are in the fray, we can remove the rule-based pricing and leave it truly to the market (subject to, of course, the usual regulations of anti-trust and other competition laws). Consider the following statements: According to the passage, an oil company can make greater profits, if a transparent, formula for petrol pricing is announced every fortnight or month by: 1. promoting its sales. 2. undertaking innovation. 3. cutting costs. 4. selling its equity shares at higher prices. Which of the statements given above is/are correct?

Read the following passage and answer the item that follow. Your answers to these items should be based on the passage only. Climate change poses potentially devastating effects on India’s agriculture. While the overall parameters of climate change are increasingly accepted—a 1 °C average temperature increase over the next 30 years, sea level rise of less than 10 cm in the same period, and regional monsoon variations and corresponding droughts—the impacts in India are likely to be quite site and crop-specific. Some crops may respond favourably to the changing conditions, others may not. This emphasizes the need to promote agricultural research and create maximum flexibility in the system to permit adaptations. The key ingredient for ‘drought proofing’ is the managed recharge of aquifers. To ensure continued yields of important staple crops (e.g., wheat), it may also be necessary to shift the locations where these crops are grown, in response to temperature changes as well as to water availability. The latter will be a key factor in a making long-term investment decisions. For example, water run-off from the Himalayas is predicted to increase over the next 30 years as glaciers melt but then decline substantially thereafter. It will be critical to provide incentives to plan for these large-scale shifts in agro-ecological conditions. Indian needs to make long-term investments in research and development in agriculture. India is likely to experience changed weather patterns in future. Consider the following statements: Climate change may force the shifting of locations of the existing crops due to: 1. melting of glaciers. 2. water availability and temperature suitability at other locations. 3. poor productivity of crops. 4. wider adaptability of crop plants. Which of the statements given above are correct?

It is essential that we mitigate the emissions of greenhouse gases and thus avoid some of the worst impacts of climate change that would take place in coming years and decades. Mitigation would require a major shift in the way we produce and consume energy. A shift away from overwhelming dependence on fossil fuels in now long overdue, but unfortunately technological development has been slow and inadequate largely because government policies have not promoted investments in research and development, myopically as a result of relatively low prices of oil, It is now, therefore, imperative for a country like India treating the opportunity of harnessing renewable energy on a large scale as a national imperative. This country is extremely well endowed with solar, wind and biomass sources of energy. Where we have lagged, unfortunately, is in our ability to develop and to create technological solutions for harnessing these resources. One particular trajectory for carrying out stringent mitigation of greenhouse gas emissions assessed by the Intergovernmental Panel on Climate Change (IPCC) clearly shows the need for ensuring that global emissions of greenhouse gases peak no later than 2015 and reduce rapidly thereafter. The cost associated with such a trajectory is truly modest and would amount, in the estimation of IPCC, to not more than 3 per cent of the global GDP in 2030. In other words, the level of prosperity that the world would have reached without mitigation would at worst be postponed by a few months or a year at the most. This is clearly not a very high price to pay for protecting hundreds of millions of people from the worst risk associated with climate change. Any such effort, however, would require lifestyles to change appropriately also. Mitigation of greenhouse gas emissions is not a mere technological fix, and clearly requires changes in lifestyles and transformation of a country’s economic structure, whereby effective reduction in emissions is brought about such as through the consumption of much lower quantities of animal protein. The Food and Agriculture Organization (FAO) has determined that the emissions from the liver stock sector amount to 18 per cent of the total. The reduction of emissions from this source is entirely in the hands of human beings, who have never questioned the impacts that their dietary habits of consuming more and more animal protein are bringing about. Mitigation overall has huge co-benefits such as lower air pollution and health benefits, higher energy security and greater employment. What is the essential message of the passage?

Read the following passage and answer the items that follow each passage. Your answers to these items should be based on the passage only. The Himalayan ecosystem is highly vulnerable to damage, both due to geological reasons and on account of the stress caused by increased pressure of population, exploitation of natural resources and other related challenges. These aspects may be exacerbated due to the impact of climate change. It is possible that climate change may adversely impact the Himalayan ecosystem through increased temperature, altered precipitation patterns, episodes of drought and biotic influence. This would impact not only the very sustenance of the indigenous communities in uplands but also the life of downstream dwellers across the country and beyond. Therefore, there is an urgent need for giving special attention to sustain the Himalayan ecosystem. This would require conscious efforts for conserving all the representative systems. Further, it needs to be emphasized that the endemics with restricted distribution, and most often with specialized habitat requirements, are among the most vulnerable elements. In this respect the Himalayan biodiversity hotspot, with rich endemic diversity, is vulnerable to climate change. The threats include possible loss of genetic resources and species, habitats and concomitantly a decrease in ecosystem services. Therefore, conservation of endemic elements in representative ecosystems/habitats assumes a great significance while drawing conservation plans for the region. Towards achieving the above, we will have to shift towards contemporary conservation approaches, which include a paradigm of landscape level interconnectivity between protected area systems. The concept advocates a shift from the species-habitat focus to an inclusive focus on expanding the biogeographic range so that natural adjustments to climate change can proceed without being restrictive. Which one of the following statements best implies the need to shift towards contemporary conservation approach?

In front of us was walking a bare-headed old man in tattered clothes. He was driving his beasts. They were all laden with heavy loads of clay from the hills and looked tired. The man carried a long whip which perhaps he himself had made. As he walked down the road he stopped now and then to eat the wild becomes that grew on bushes along the uneven road, when he threw away the seeds, the bold birds would fly to peck at them. Sometimes a stray dog watched the procession philosophically and then began to bark. When this happened, my two little sons would stand still holding my hands firmly. A dog can sometimes be dangerous indeed. The expression ‘a stray dog watched the procession philosophically’ means that

It is often forgotten that globalization is not only about policies on international economic relationships and transactions but has equally to do with domestic policies of a nation. Policy changes necessitated by meeting the internationally set conditions (by WTO, etc.) of free trade and investment flows obviously affect domestic producers and investors. But the basic philosophy underlying globalization emphasizes absolute freedom to markets to determine prices and production and distribution patterns, and government interventions as processes that create distortions and bring in inefficiency. Thus, public enterprises have to be privatized through disinvestments and sales; sectors and activities hitherto reserved for the public sector have to be opened to the private sector. This logic extends to the social services like education and health. Any restrictions on the adjustments in workforce by way of retrenchment of workers should also be removed and exit should be made easier by removing any restriction on closures. Employment and wages should be governed by free play of market forces, as any measure to regulate them can discourage investment and also create inefficiency in production. Above all, in line with the overall philosophy of reduction in the role of the State, fiscal reforms should be undertaken to have generally low levels of taxation and government expenditure should be kept to the minimum to abide thy the principle of fiscal prudence. All these are policy actions on the domestic front and are not directly related to the core items of the globalization agenda, namely free international flow of goods and finance. According to the passage, which of the following is/are necessary for ensuring globalization? 1. Privatization of public enterprises 2. Expansionary policy of public expenditure 3. Free play of market forces to determine wages and employment 4. Privatization of social services like education and health

Cynthia was a shy girl. She believed that she was plain and untalented. One day her teacher ordered the entire class to show up for audition for the school play. Cynthia nearly died of fright when she was told that she would have to stand on stage in front of the entire class and deliver dialogues. The mere thought of it made her feel sick. But a remarkable transformation occurred during the audition. A thin, shy girl, her knees quaking, her stomach churning in terror, began to stun everyone with her excellent performance. Her bored classmates suddenly stopped their noisy chat to stare at her slender figure on the stage. At the end of her audition, the entire room erupted in thunderous applause. Cynthia's knees were quaking because

Read the following passage and answer the items that follow. Your answers to these items should be based on the passage only. Many nations now place their faith in capitalism and governments choose it as the strategy to create wealth for their people. The spectacular economic growth seen in Brazil, China and India after the liberalization of their economies is proof of its enormous potential and success. However, the global banking crisis and the economic recession have left many bewildered. The debates tend to focus on free market operations and forces, their efficiency and their ability for self-correction. Issues of justice, integrity and honesty are rarely elaborated to highlight the failure of the global banking system. The apologists of the system continue to justify the success of capitalism and argue that the recent crisis was a blip. Their arguments betray an ideological bias with the assumptions that an unregulated market is fair and competent, and that the exercise of private greed will be in the larger public interest. Few recognize the bidirectional relationship between capitalism and greed: that each reinforces the other Surely, a more honest conceptualization of the conflicts of interest among the rich and powerful players who have benefited from the system, their biases and ideology is needed; the focus on the wealth creation should also highlight the resultant gross inequity. With reference to ‘ideological bias’, the passage implies that:

Read the following passage and answer the item that follows. Answers to these should be based on the passage only. In recent times, India has grown fast not only compared to its own past but also in comparison with other nations. But there cannot be any room for complacency because it is possible for the Indian economy to develop even faster and also to spread the benefits of this growth more widely than has been done thus far. Before going into details of the kinds of microstructural changes that we need to conceptualize and then proceed to implement, it is worthwhile elaborating on the idea of inclusive growth that constitutes the defining concept behind this Government’s various economic policies and decisions. A nation interested in inclusive growth views the same growth differently depending on whether the gains of the growth are heaped primarily on a small segment or shared widely by the population. The latter is cause for celebration but not the former. In other words, growth must not be treated as an end in itself but as an instrument for spreading prosperity to all. India’s own past experience and the experience of other nations suggest that growth is necessary for eradicating poverty but it is not a sufficient condition. In other words, policies for promoting growth need to be complemented with policies to ensure that more and more people join the growth process and, further, that there are mechanisms in place to redistribute some of the gains to those who are unable to partake in the market process and, hence get left behind. A simply way of giving this idea of inclusive growth a sharper form is to measure a nation’s progress in terms of the progress, of its poorest segment, for instance, the bottom 20 per cent of the population. One could measure the per capita income of the bottom quintile of the population and also calculate the growth rate of income, and evaluate our economic success in terms of these measures that pertain to the poorest segment. This approach is attractive because it does not ignore growth like some of the older heterodox criteria did. It simply looks at the growth of income of the poorest sections of the population. It also ensures that those who are outside of the bottom quintile do not get ignored. If that were done, then those people would, in all likelihood, drop down into the bottom quintile and so would automatically become a direct target of our policies. Hence, the criterion being suggested here is a statistical summing up of the idea of inclusive growth, which in turn, leads to two corollaries: to wish that India must strive to achieve high growth and that we must work to ensure that the weakest segments benefit from the growth. The author’s central focus is on:

Read the following passage and answer the items that follow each passage. Your answers to these items should be based on the passage only. The Himalayan ecosystem is highly vulnerable to damage, both due to geological reasons and on account of the stress caused by increased pressure of population, exploitation of natural resources and other related challenges. These aspects may be exacerbated due to the impact of climate change. It is possible that climate change may adversely impact the Himalayan ecosystem through increased temperature, altered precipitation patterns, episodes of drought and biotic influence. This would impact not only the very sustenance of the indigenous communities in uplands but also the life of downstream dwellers across the country and beyond. Therefore, there is an urgent need for giving special attention to sustain the Himalayan ecosystem. This would require conscious efforts for conserving all the representative systems. Further, it needs to be emphasized that the endemics with restricted distribution, and most often with specialized habitat requirements, are among the most vulnerable elements. In this respect the Himalayan biodiversity hotspot, with rich endemic diversity, is vulnerable to climate change. The threats include possible loss of genetic resources and species, habitats and concomitantly a decrease in ecosystem services. Therefore, conservation of endemic elements in representative ecosystems/habitats assumes a great significance while drawing conservation plans for the region. Towards achieving the above, we will have to shift towards contemporary conservation approaches, which include a paradigm of landscape level interconnectivity between protected area systems. The concept advocates a shift from the species-habitat focus to an inclusive focus on expanding the biogeographic range so that natural adjustments to climate change can proceed without being restrictive. Consider the following statements: According to the passage, the adverse impact of climate change on an ecosystem can be a 1. permanent disappearance of some of its flora and fauna. 2. permanent disappearance of an ecosystem itself.

It is often forgotten that globalization is not only about policies on international economic relationships and transactions but has equally to do with domestic policies of a nation. Policy changes necessitated by meeting the internationally set conditions (by WTO, etc.) of free trade and investment flows obviously affect domestic producers and investors. But the basic philosophy underlying globalization emphasizes absolute freedom to markets to determine prices and production and distribution patterns, and government interventions as processes that create distortions and bring in inefficiency. Thus, public enterprises have to be privatized through disinvestments and sales; sectors and activities hitherto reserved for the public sector have to be opened to the private sector. This logic extends to the social services like education and health. Any restrictions on the adjustments in workforce by way of retrenchment of workers should also be removed and exit should be made easier by removing any restriction on closures. Employment and wages should be governed by free play of market forces, as any measure to regulate them can discourage investment and also create inefficiency in production. Above all, in line with the overall philosophy of reduction in the role of the State, fiscal reforms should be undertaken to have generally low levels of taxation and government expenditure should be kept to the minimum to abide thy the principle of fiscal prudence. All these are policy actions on the domestic front and are not directly related to the core items of the globalization agenda, namely free international flow of goods and finance. According to the passage, the basic philosophy of globalization is to:

Cynthia was a shy girl. She believed that she was plain and untalented. One day her teacher ordered the entire class to show up for audition for the school play. Cynthia nearly died of fright when she was told that she would have to stand on stage in front of the entire class and deliver dialogues. The mere thought of it made her feel sick. But a remarkable transformation occurred during the audition. A thin, shy girl, her knees quaking, her stomach churning in terror, began to stun everyone with her excellent performance. Her bored classmates suddenly stopped their noisy chat to stare at her slender figure on the stage. At the end of her audition, the entire room erupted in thunderous applause. The transformation that Occurred during the audition refers to

Net profits are only 2.2 per cent of their total assets for central public sector undertakings, lower than for the private corporate sector. While the public sector or the state-led entrepreneurship played an important role in triggering India’s industrialization, our evolving development needs, comparatively less-than satisfactory performance of the public sector enterprises, the maturing of our private sector, a much larger social base now available for expanding entrepreneurship and the growing institutional capabilities to enforce completion policies would suggest that the time has come to review the role of public sector. What should the portfolio composition of the government be? It should not remain static all times. The airline industry works well as a purely private affair. At the opposite end, rural roads, whose sparse traffic makes tolling unviable, have to be on the balance sheet of the state. If the government did not own rural roads, they would not exist. Similarly, public health capital in our towns and cities will need to come from the public sector. Equally, preservation and improvement, of forest cover will have to be a new priority for the public sector assets. Take the example of steel. With near-zero tariffs, India is a globally competitive market for the metal. Indian firms export steel into the global market, which demonstrates there is no gap in technology. Indian companies are buying up global steel companies which show there is no gap in capital availability. Under these conditions, private ownership works best. Private ownership is clearly desirable in regulated industries, ranging from finance to infrastructure, where a government agency performs the function of regulation and multiple competing firms are located in the private sector. Here, the simple and clean solution—government as the umpire and the private sector as the players is what works best. In many of these industries, we have a legacy of government ownership, where productivity tends to be lower, fear of bankruptcy is absent, and the risk of asking for money from the taxpayer is ever present. There is also the conflict of interest between government as an owner and as the regulator. The formulation and implementation of competition policy will be more vigorous and fair if government companies are out of action. According to the passage, rural roads should be in the domain of public sector only. Why?

It is easy for the government to control state-owned companies through nods and winks. So, what really needs to be done as a first step is to be done as a first step is to put petrol pricing on a transparent formula—if the price of crude is x and the exchange rate y, then every month or fortnight, the government announces a maximum price of petrol, which anybody can work out from the x and y. The rule has to be worked out to make sure that the oil-marketing companies can, in general, cover their costs. This will mean that it one company can innovate and cut costs, it will make greater profits. Hence, firms will be more prone to innovate and be efficient under this system. Once the rule is announced, there should be no interference by the government. If this is done for a while, private companies will re-enter this market. And once a sufficient number of them are in the fray, we can remove the rule-based pricing and leave it truly to the market (subject to, of course, the usual regulations of anti-trust and other competition laws). Consider the following statements: According to the passage, private oil companies re-enter the oil-producing market. 1. A transparent rule-based petrol pricing exists. 2. There is no government interference in the oil producing market. 3. Subsidies are given by the government. 4. Regulations of anti-trust are removed. Which of the statements given above are correct?

It is often forgotten that globalization is not only about policies on international economic relationships and transactions, but has equally to do with domestic policies of a nation. Policy changes necessitated by meeting the internationally set conditions (by WTO, etc.) of free trade and investment flows obviously affect domestic producers and investors. But the basic philosophy underlying globalization emphasizes absolute freedom to markets to determine prices and production and distribution patterns, and government interventions as processes that create distortions and bring in inefficiency. Thus, public enterprises have to be privatized through disinvestments and sales; sectors and activities hitherto reserved for the public sector have to be opened to the private sector. This logic extends to the social services like education and health. Any restrictions on the adjustments in workforce by way of retrenchment of workers should also be removed and exit should be made easier by removing any restriction on closures. Employment and wages should be governed by free play of market forces, as any measure to regulate them can discourage investment and also create inefficiency in production. Above all, in line with the overall philosophy of reduction in the role of the State, fiscal reforms should be undertaken to have generally low levels of taxation and government expenditure should be kept to the minimum to abide thy the principle of fiscal prudence. All these are policy actions on the domestic front and are not directly related to the core items of the globalization agenda, namely free international flow of goods and finance. According to the passage, under the globalization, government interventions are viewed as processes leading to:

Net profits are only 2.2 per cent of their total assets for central public sector undertakings, lower than for the private corporate sector. While the public sector or the state-led entrepreneurship played an important role in triggering India’s industrialization, our evolving development needs, comparatively less-than satisfactory performance of the public sector enterprises, the maturing of our private sector, a much larger social base now available for expanding entrepreneurship and the growing institutional capabilities to enforce completion policies would suggest that the time has come to review the role of public sector. What should the portfolio composition of the government be? It should not remain static all times. The airline industry works well as a purely private affair. At the opposite end, rural roads, whose sparse traffic makes tolling unviable, have to be on the balance sheet of the state. If the government did not own rural roads, they would not exist. Similarly, public health capital in our towns and cities will need to come from the public sector. Equally, preservation and improvement, of forest cover will have to be a new priority for the public sector assets. Take the example of steel. With near-zero tariffs, India is a globally competitive market for the metal. Indian firms export steel into the global market, which demonstrates there is no gap in technology. Indian companies are buying up global steel companies which show there is no gap in capital availability. Under these conditions, private ownership works best. Private ownership is clearly desirable in regulated industries, ranging from finance to infrastructure, where a government agency performs the function of regulation and multiple competing firms are located in the private sector. Here, the simple and clean solution—government as the umpire and the private sector as the players is what works best. In many of these industries, we have a legacy of government ownership, where productivity tends to be lower, fear of bankruptcy is absent, and the risk of asking for money from the taxpayer is ever present. There is also the conflict of interest between government as an owner and as the regulator. The formulation and implementation of competition policy will be more vigorous and fair if government companies are out of action. The author prefers government as the umpire and private sector as players because: