Reading Comprehension for SBI Clerk Prelims: 14th May 2018

Today is the Day 23 of the SBI Clerk 60 Days Study Plan. This section can be easy as pie if your basics are clear. Sometimes, even those who can communicate very well in English, fail to perform to the best of their ability in the banking exams. So, instead of boiling the ocean, try building up a strong vocabulary, an effective knowledge of grammar, and efficient comprehension skills so as to be on the ball to face this particular section. Here is a quiz on Reading Comprehension being provided by Adda247 to let you practice the best of latest pattern English Questions.

Directions (1-10): Read the following passage carefully and answer the questions given below them. Certain words/phrases have been printed in bold to help you locate them while answering some of the questions.
The Indian rupee touched a 14-month low last week. Most analysts expect it to continue to depreciate in the near term. There are multiple reasons for the fall in the rupee. For instance, the condition in the international financial market is tightening with yields on 10-year US government bonds touching 3%. This is one of the reasons foreign investors sold Indian stocks and bonds worth about $2 billion in April. Further, global crude oil prices have gone up by over 10% since the beginning of the year and are expected to remain elevated in the foreseeable future. Crude prices have gone up by over 40% over the last one year and are putting pressure on India’s current account deficit, which is expected to have expanded from about $15 billion in FY17 to about $50 billion in FY18. Higher crude prices are also affecting bond prices, which in any case were under pressure due to the higher expected supply of government bonds. Higher crude prices, weakness in rupee, and rising bond yields have complicated policy choices for the Reserve Bank of India (RBI).

The central bank received bids for only a fraction of bonds on offer recently due to weak investor interest. However, if the central bank decides to manage bond yields through market intervention, as it is also responsible for executing the government borrowing programme, it might end up hurting its own policy objectives in other areas, such as currency management and containing inflation. If the RBI intervenes in the market heavily, it will infuse liquidity into the system, which can affect outcomes on the inflation front and put further pressure on the rupee. If the central bank defends the rupee by selling foreign exchange, it could end up draining liquidity from the system, which will put pressure on bond prices and make government borrowing more difficult. The latest minutes of the monetary policy committee (MPC) meeting suggest that the committee might raise rates sooner than expected. While higher policy rates—apart from anchoring inflationary expectations—could be handy in attracting foreign debt capital, it will increase the cost of money and make government borrowing more difficult.

So, what should the RBI do in the present circumstances? It has decided to ease tenure restrictions for foreign investors in both government and corporate bonds. Theoretically, greater flexibility, leading to higher capital inflow in the bond market, will not only reduce pressure on yields but will also help support the rupee. However, greater dependence on short-term foreign debt is inherently risky and can further complicate currency management in the short-to-medium term, as interest rates in the international market are expected to go up. Therefore, it is extremely important that the central bank doesn’t act in haste. All policy options should be carefully examined. In the currency market, the RBI would do well to stick to the stated policy of not targeting any level and should avoid throwing foreign currency from its reserves, or aggressively opening up foreign investment in debt. It should only intervene to avoid excessive volatility. The latest real effective exchange rate data shows that the rupee is overvalued and a healthy correction should help exports. Also, the depreciation of the rupee will serve as an automatic stabilizer. Not allowing the currency to depreciate at a time when the current account deficit is increasing will only create problems in the future. The RBI did well by accumulating large reserves in recent years, which will give confidence to market participants and help avoid excessive volatility.

The central bank should also stay away from managing yields. The government should accept that higher borrowings will increase the cost of money in the market. This will also underline the importance of fiscal discipline and is in line with the long-term idea of reducing financial repression. In terms of rate action, the latest monetary policy statement highlighted the upside risks to the RBI’s revised inflation forecast. However, the MPC would be well-advised to maintain a pause for now and wait for actual information on things, such as the increase in the minimum support price. Further, the monsoon is expected to be normal this year which will help contain inflation and inflationary expectations. Also, a rate hike at this stage could disproportionately raise the cost of money and affect economic growth, which is otherwise expected to strengthen. Rising international crude prices are putting pressure on India’s macroeconomic indicators and have complicated policy choices for the RBI. However, as we have argued in this space in the past, policymakers—including the central bank—should avoid doing too many things at this stage.

Q1. What are the reasons highlighted in the passage that are responsible for complication of policy choices for the RBI?
(I) Rise in bond yields.
(II) Weakening of the Indian Rupee.
(III) Rise in price of crude oil.
(a) Only (I)
(b) Both (II) and (III)
(c) Both (I) and (III)
(d) All of the Above
(e) None of the above

Q2. Which of the following are correct in context to the passage?
(I) Global crude oil prices have gone up by over 10% since the beginning of the year and are expected to remain elevated in the future.
(II) The condition in the international financial market is tightening with yields on 10-year US government bonds touching 3%.
(III) Crude prices have gone up by over 40% over the last one year and are putting pressure on India’s current account deficit.
(a) Only (I)
(b) Only (II)
(c) Only (III)
(d) Both (I) and (II)
(e) All are correct.

Q3. According to the passage, what will be the effects of selling foreign exchange?e passage, what
(a) Bond yield will increase,
(b) Reduce pressure on bond prices.
(c) Government borrowing will become difficult.
(d)  both (b) and (c)
(e)  both (a) and (b)

Q4. As per the passage, what has the RBI decided in the present circumstances to support the rupee?
(a) To ease tenure restrictions for foreign investors in both government and corporate bonds.
(b) To reduce the import of crude oil.
(c) To sell foreign exchange.
(d) Both (a) and (b)
(e) Both (b) and (c)

Q5. Which of the following could be a suitable title for the passage?
(a) The target to reduce inflation
(b) The Dilemma of the Foreign Investors
(c) The right policy path for the Indian central bank
(d) Relation of inflation and bond yield
(e) None of the above

Q6. Which of the following statements is/are incorrect?
(I) The Indian rupee is expected to continue to depreciate in the near term.
(II) The committee is expected to raise rates sooner than expected as per latest MPC meeting minutes.
(III) RBIs step of accumulating large reserves in recent years was not effective.
(a) Only (a)
(b) Only (b)
(c) Only (c)
(d) Both (a) and (b)
(e) Both (b) and (c)

Q7. Choose the word which is MOST SMILAR to the word given in passage.
HASTE
(a) Leisure
(b)Alacrity
(c) Linger
(d) Abscond
(e) Maul

Q8. Choose the word which is MOST SMILAR to the word given in passage.
TENURE
(a) Surmise
(b) Picayune
(c) Fluke
(d) Regime
(e) None of the Above

Q9. Choose the word which is most opposite to the following word given in bold in the passage
INFUSE
(a) Imbue
(b) Impregnate
(c) Dehydrate
(d) Inculcate
(e) Pervade

Q10. Choose the word which is most opposite to the following word given in bold in the passage
ANCHOR
(a) Dock
(b) Detach
(c) Fasten
(d) Secure
(e) Imbed

Directions (11-15): Read the following passage carefully and answer the questions given below them. Certain words/phrases have been printed in bold to help you locate them while answering some of the questions.

Weather over northern States in India has killed at least 124 people and caused much misery, mostly in Rajasthan and Uttar Pradesh. The residents of this ‘weather hotspot’ region are used to annual storms carrying natural dust clouds in the pre-monsoon season, from the Thar desert and further west. But they have been hit by a particularly destructive version this year, one that combined hot western winds and moisture from the east. Record April temperatures in parts of Pakistan, at one place exceeding 50°C, are thought to have added to the ferocity of the dust-laden winds. This could be a recurring feature, and there is a need to develop accurate forecasting methods and protocols to mitigate the impact. Many of the casualties in the recent storms were caused by collapsing infrastructure, such as electricity transmission lines that were not built to withstand such weather. Good housing could have saved many.

India’s vulnerability to such storms has always been underscored by scientific estimates of the flow of aerosols, or dust particles. Their presence in the country is three times the global average due to sheer abundance of mineral dust. There is also a body of research that points to altered climate patterns due to accumulation of dust particles, which affect even the Himalayan glaciers. Considering the large population in the Indo-Gangetic Plain, where the impact of weather on public health and agriculture is massive, the Central and State governments should do everything possible to cut loss of life and property. Globally, the major dust-producing regions pump 1,000-3,000 teragrams of particles into the atmosphere annually, with the Sahara alone responsible for a third of this, according to the UN Environment Programme. India is at the receiving end of winds from West Asia, although some scientists reported recently an overall reduction in dust volumes in the pre-monsoon season due to a pattern of increased rainfall.

Even if that were to be true, unexpected surges such as the recent one pose a challenge. The Centre has to raise its game in forecasting, and broadcast early warnings. In fact, as the World Meteorological Organisation points out, clarity and frequency of warnings are key to saving lives. In the wake of the storm on May 2, State governments have blamed the India Meteorological Department for not providing clear warnings, while the IMD claims to have conveyed the forecast of the coming storm to the Centre several days ahead. This clearly points to lack of coordination, that affects disaster-preparedness. Millions of people who are in the path of extreme weather each year expect better from official agencies. On the ground, strong public infrastructure and adequate capacity among administrators and personnel to handle rescue and rehabilitation must be ensured.

Q11.  As per the passage, which region is regarded as ‘weather hotspot’?
(a) Northern region
(b) Western region
(c) Southern region
(d) Eastern region
(e) None of the above

Q12. Which of the folloeing statements are correct in context with the passage?
(I) India has three times the global avergae of aerosols and dust particles.
(II) Maximum number of casualities in the recent storem were due to infrastructure collapse
(III) hot western winds combined with the eastern moisture that resulted in extreme storm.
(a) only(I)
(b) only(II)
(c) only(III)
(d) Both (I) and (II)
(e) All are correct

Q13.  As per the passage, what are the keys to deal with extreme weather?
(I) Better infrastructure
(II) Targeted Forecasts
(III) Use of less polluting vehicles
(a) only (I)
(b) only (II)
(c) both (I) and (II)
(d) both (II) and (III)
(e) All are correct

Q14. Choose the word which best expresses the meaning of the following word given in bold in the passage
FEROCITY
(a) Serendipity
(b) Barbarity
(c) Enigmatic
(d) Tenebrous
(e)None of the above

Q15. As per the passage, an overall reduction in dust volumes in the pre-monsoon season is due to…..
(a) Melting of glaciers
(b) Decreased rainfall
(c) Increased rainfall
(d) All of the above
(e) None of the above