UPSC Prelims 2015 CSAT Paper II · Q61 of 74 Comprehension medium

Passage

Directions for the following 7 (seven) items : Read the following four passages and answer the items that follow. Your answers to these items should be based on the passages only. Passage – 1 India has suffered from persistent high inflation. Increase in administered prices, demand and supply imbalances, imported inflation aggravated by rupee depreciation, and speculation — have combined to keep high inflation going. If there is an element common to all of them, it is that many of them are the outcomes of economic reforms. India's vulnerability to the effects of changes in international prices has increased with trade liberalisation. The effort to reduce subsidies has resulted in a continuous increase in the prices of commodities that are administered.

What is the most logical, rational and crucial message that is implied in the above passage ?

  1. (a) Under the present circumstances, India should completely avoid all trade liberalisation policies and all subsidies.
  2. (b) Due to its peculiar socio-economic situation, India is not yet ready for trade liberalisation process.
  3. (c) There is no solution in sight for the problems of continuing poverty and inflation in India in the near future.
  4. (d) Economic reforms can often create a high inflation economy. ✓ UPSC's answer

Why the answer is (d)

• The passage explicitly states that persistent high inflation in India is driven by factors such as administered price increases, demand-supply imbalances, and imported inflation.

• It identifies a common element among these causes: many are outcomes of economic reforms.

• Specifically, trade liberalization increased vulnerability to international price changes, and subsidy reduction led to higher administered prices.

• Therefore, the central implication is that the process of economic reform itself can lead to or sustain high inflation.

• Option (d) accurately captures this causal link between economic reforms and high inflation without adding external assumptions.

Why the other options are wrong

(a) Under the present circumstances, India should completely avoid all trade liberalisation…
The passage does not advocate for completely avoiding trade liberalization or subsidies, but rather explains their role in causing inflation.
(b) Due to its peculiar socio-economic situation, India is not yet ready for trade…
The text does not claim India is 'not yet ready' for liberalization; it only notes that liberalization increased vulnerability to international price changes.
(c) There is no solution in sight for the problems of continuing poverty and inflation in…
The passage does not state that there is no solution in sight; it merely identifies the causes of inflation as being linked to reforms.

Asked in the CSAT Paper II of the UPSC Civil Services Preliminary Examination 2015, held on 23 August 2015. Question and answer key: Union Public Service Commission. Explanation: UPSC Answer Check.

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