UPSC Prelims 2023 CSAT Paper II · Q62 of 77 Comprehension medium

Passage

Household finance in India is unique. We have a tendency to invest heavily in physical assets such as gold and property. Steps to encourage the financialization of savings are critical. A populace accustomed to traditional processes will not simply jump into financialization. Hurdles to change include onerous bureaucracy, a scepticism of organized financial institutions, a lack of basic information about which of the myriad services and providers is best for each family, and how (and even if) one can make the transition between them if necessary.

Regarding the financialization of household savings, which of the following statements best reflect the solutions that are implied by the passage ? 1. A flexible environment is needed to develop solutions. 2. Households need customised solutions. 3. Innovations in financial technology are required. Select the correct answer using the code given below :

  1. (a) 1 and 2 only
  2. (b) 2 and 3 only
  3. (c) 1 and 3 only
  4. (d) 1, 2 and 3 ✓ UPSC's answer

Why the answer is (d)

• The passage identifies 'onerous bureaucracy' as a hurdle, implying that a 'flexible environment' is needed to develop solutions, supporting statement 1.

• It highlights the 'lack of basic information about which of the myriad services and providers is best for each family,' indicating that households require 'customised solutions' tailored to their specific needs, supporting statement 2.

• The text mentions the need to overcome 'scepticism of organized financial institutions' and the difficulty of transitioning between services, which implies the necessity of 'innovations in financial technology' to simplify access and build trust, supporting statement 3.

• Since all three statements are logically derived from the hurdles and needs described in the passage, the correct combination is 1, 2, and 3.

Why the other options are wrong

(a) 1 and 2 only
This option incorrectly excludes statement 3, as the passage's emphasis on overcoming scepticism and transition hurdles implies the need for financial technology innovations.
(b) 2 and 3 only
This option incorrectly excludes statement 1, as the passage explicitly cites onerous bureaucracy as a hurdle, implying the need for a flexible regulatory environment.
(c) 1 and 3 only
This option incorrectly excludes statement 2, as the passage notes the lack of information on which services are best for each family, implying the need for customized solutions.

Asked in the CSAT Paper II of the UPSC Civil Services Preliminary Examination 2023, held on 28 May 2023. Question and answer key: Union Public Service Commission. Explanation: UPSC Answer Check.

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