Test: Verbal Ability- 2 - CLAT MCQ

Images are the core of society today; they have become the means of massive communication and, therefore, the essence of daily life. Humans have become homus photographicus. Almost every person has a camera, whether it is in a cellphone, iPad, tablet, point and shoot or any other device. People have learned to express emotions, ideas and concepts through images regardless of its complexity. Photos may be digital images but not every image is a photograph. In general, the image is defined as a figure, the representation of something. That is, the copy of an object, a mental representation is subject to cognition and interpretation.
The material images, under their production scheme, are prone to depict the world on a canvas, the medium determines how people look, read, sing and tell stories. Additionally, the narratives are considered to be truthful because, in order to photograph an object, it has to exist; it has a referent, contrary to painting, where the artist may create chimeras based on imagination. Nonetheless, the veracity of a picture may be questioned since it could be staged or transformed into something else, even something that is not as it appears in reality. For example, a portrait may be an idealistic version of a person, an alter ego or simply not the subject as known in daily life. To illustrate further, the case of Hippolyte Bayard becomes interesting to mention. In 1840, Bayard photographed himself as a drowned man, and people who saw the picture believed it was real. At the time, these images were believed to be real because a mechanic device, a camera, had taken them. In this way, Bayard created an alternative reality, where he was found dead.

Which of the following is true in the context of the passage?

Images are the core of society today; they have become the means of massive communication and, therefore, the essence of daily life. Humans have become homus photographicus. Almost every person has a camera, whether it is in a cellphone, iPad, tablet, point and shoot or any other device. People have learned to express emotions, ideas and concepts through images regardless of its complexity. Photos may be digital images but not every image is a photograph. In general, the image is defined as a figure, the representation of something. That is, the copy of an object, a mental representation is subject to cognition and interpretation.
The material images, under their production scheme, are prone to depict the world on a canvas, the medium determines how people look, read, sing and tell stories. Additionally, the narratives are considered to be truthful because, in order to photograph an object, it has to exist; it has a referent, contrary to painting, where the artist may create chimeras based on imagination. Nonetheless, the veracity of a picture may be questioned since it could be staged or transformed into something else, even something that is not as it appears in reality. For example, a portrait may be an idealistic version of a person, an alter ego or simply not the subject as known in daily life. To illustrate further, the case of Hippolyte Bayard becomes interesting to mention. In 1840, Bayard photographed himself as a drowned man, and people who saw the picture believed it was real. At the time, these images were believed to be real because a mechanic device, a camera, had taken them. In this way, Bayard created an alternative reality, where he was found dead.

What is meant by the word ‘chimera’?

The Writ Jurisdiction of Supreme Court can be invoked under Article 32 of the Constitution for the violation of fundamental rights guaranteed under Part - III of the Constitution. Any provision in any Constitution for Fundamental Rights is meaningless unless there are adequate safeguards to ensure enforcement of such provisions. Since the reality of such rights is tested only through the judiciary, the safeguards assume even more importance. In addition, enforcement also depends upon the degree of independence of the Judiciary and the availability of relevant instruments with the executive authority. Indian Constitution, like most of Western Constitutions, lays down certain provisions to ensure the enforcement of Fundamental Rights. However, Article 32 is referred to as the “Constitutional Remedy” for enforcement of Fundamental Rights. This provision itself has been included in the Fundamental Rights and hence it cannot be denied to any person. Dr. B. R. Ambedkar described Article 32 as the most important one, without which the Constitution would be reduced to nullity. It is also referred to as the heart and soul of the Constitution. By including Article 32 in the Fundamental Rights, the Supreme Court has been made the protector and guarantor of these Rights. An application made under Article 32 of the Constitution before the Supreme Court, cannot be refused on technical grounds. In addition to the prescribed five types of writs, the Supreme Court may pass any other appropriate order. Moreover, only the questions pertaining to the Fundamental Rights can be determined in proceedings against Article 32. Under Article 32, the Supreme Court may issue a Writ against any person or government within the territory of India. Where the infringement of a Fundamental Right has been established, the Supreme Court cannot refuse relief on the ground that the aggrieved person may have remedy before some other court or under the ordinary law.
The relief can also not be denied on the ground that the disputed facts have to be investigated or some evidence has to be collected. Even if an aggrieved person has not asked for a particular Writ, the Supreme Court, after considering the facts and circumstances, may grant the appropriate Writ and may even modify it to suit the exigencies of the case. Normally, only the aggrieved person is allowed to move the Court. But it has been held by the Supreme Court that in social or public interest matters, any one may move the Court. A Public Interest Litigation can be filed before the Supreme Court under Article 32 of the Constitution or before the High Court of a State under Article 226 of the Constitution under their respective Writ Jurisdictions.

The main purpose of the passage is to

The Writ Jurisdiction of Supreme Court can be invoked under Article 32 of the Constitution for the violation of fundamental rights guaranteed under Part - III of the Constitution. Any provision in any Constitution for Fundamental Rights is meaningless unless there are adequate safeguards to ensure enforcement of such provisions. Since the reality of such rights is tested only through the judiciary, the safeguards assume even more importance. In addition, enforcement also depends upon the degree of independence of the Judiciary and the availability of relevant instruments with the executive authority. Indian Constitution, like most of Western Constitutions, lays down certain provisions to ensure the enforcement of Fundamental Rights. However, Article 32 is referred to as the “Constitutional Remedy” for enforcement of Fundamental Rights. This provision itself has been included in the Fundamental Rights and hence it cannot be denied to any person. Dr. B. R. Ambedkar described Article 32 as the most important one, without which the Constitution would be reduced to nullity. It is also referred to as the heart and soul of the Constitution. By including Article 32 in the Fundamental Rights, the Supreme Court has been made the protector and guarantor of these Rights. An application made under Article 32 of the Constitution before the Supreme Court, cannot be refused on technical grounds. In addition to the prescribed five types of writs, the Supreme Court may pass any other appropriate order. Moreover, only the questions pertaining to the Fundamental Rights can be determined in proceedings against Article 32. Under Article 32, the Supreme Court may issue a Writ against any person or government within the territory of India. Where the infringement of a Fundamental Right has been established, the Supreme Court cannot refuse relief on the ground that the aggrieved person may have remedy before some other court or under the ordinary law.
The relief can also not be denied on the ground that the disputed facts have to be investigated or some evidence has to be collected. Even if an aggrieved person has not asked for a particular Writ, the Supreme Court, after considering the facts and circumstances, may grant the appropriate Writ and may even modify it to suit the exigencies of the case. Normally, only the aggrieved person is allowed to move the Court. But it has been held by the Supreme Court that in social or public interest matters, any one may move the Court. A Public Interest Litigation can be filed before the Supreme Court under Article 32 of the Constitution or before the High Court of a State under Article 226 of the Constitution under their respective Writ Jurisdictions.

All of the following can be inferred from the passage except :-

The Writ Jurisdiction of Supreme Court can be invoked under Article 32 of the Constitution for the violation of fundamental rights guaranteed under Part - III of the Constitution. Any provision in any Constitution for Fundamental Rights is meaningless unless there are adequate safeguards to ensure enforcement of such provisions. Since the reality of such rights is tested only through the judiciary, the safeguards assume even more importance. In addition, enforcement also depends upon the degree of independence of the Judiciary and the availability of relevant instruments with the executive authority. Indian Constitution, like most of Western Constitutions, lays down certain provisions to ensure the enforcement of Fundamental Rights. However, Article 32 is referred to as the “Constitutional Remedy” for enforcement of Fundamental Rights. This provision itself has been included in the Fundamental Rights and hence it cannot be denied to any person. Dr. B. R. Ambedkar described Article 32 as the most important one, without which the Constitution would be reduced to nullity. It is also referred to as the heart and soul of the Constitution. By including Article 32 in the Fundamental Rights, the Supreme Court has been made the protector and guarantor of these Rights. An application made under Article 32 of the Constitution before the Supreme Court, cannot be refused on technical grounds. In addition to the prescribed five types of writs, the Supreme Court may pass any other appropriate order. Moreover, only the questions pertaining to the Fundamental Rights can be determined in proceedings against Article 32. Under Article 32, the Supreme Court may issue a Writ against any person or government within the territory of India. Where the infringement of a Fundamental Right has been established, the Supreme Court cannot refuse relief on the ground that the aggrieved person may have remedy before some other court or under the ordinary law.
The relief can also not be denied on the ground that the disputed facts have to be investigated or some evidence has to be collected. Even if an aggrieved person has not asked for a particular Writ, the Supreme Court, after considering the facts and circumstances, may grant the appropriate Writ and may even modify it to suit the exigencies of the case. Normally, only the aggrieved person is allowed to move the Court. But it has been held by the Supreme Court that in social or public interest matters, any one may move the Court. A Public Interest Litigation can be filed before the Supreme Court under Article 32 of the Constitution or before the High Court of a State under Article 226 of the Constitution under their respective Writ Jurisdictions.

According to the passage, article 32 has which of the following characteristics?
A. it is used for enforcement of fundamental rights.
B. The Supreme Court may issue a writ against any person or government of India.
C. Article 32 defines a fundamental right.

The Writ Jurisdiction of Supreme Court can be invoked under Article 32 of the Constitution for the violation of fundamental rights guaranteed under Part - III of the Constitution. Any provision in any Constitution for Fundamental Rights is meaningless unless there are adequate safeguards to ensure enforcement of such provisions. Since the reality of such rights is tested only through the judiciary, the safeguards assume even more importance. In addition, enforcement also depends upon the degree of independence of the Judiciary and the availability of relevant instruments with the executive authority. Indian Constitution, like most of Western Constitutions, lays down certain provisions to ensure the enforcement of Fundamental Rights. However, Article 32 is referred to as the “Constitutional Remedy” for enforcement of Fundamental Rights. This provision itself has been included in the Fundamental Rights and hence it cannot be denied to any person. Dr. B. R. Ambedkar described Article 32 as the most important one, without which the Constitution would be reduced to nullity. It is also referred to as the heart and soul of the Constitution. By including Article 32 in the Fundamental Rights, the Supreme Court has been made the protector and guarantor of these Rights. An application made under Article 32 of the Constitution before the Supreme Court, cannot be refused on technical grounds. In addition to the prescribed five types of writs, the Supreme Court may pass any other appropriate order. Moreover, only the questions pertaining to the Fundamental Rights can be determined in proceedings against Article 32. Under Article 32, the Supreme Court may issue a Writ against any person or government within the territory of India. Where the infringement of a Fundamental Right has been established, the Supreme Court cannot refuse relief on the ground that the aggrieved person may have remedy before some other court or under the ordinary law.
The relief can also not be denied on the ground that the disputed facts have to be investigated or some evidence has to be collected. Even if an aggrieved person has not asked for a particular Writ, the Supreme Court, after considering the facts and circumstances, may grant the appropriate Writ and may even modify it to suit the exigencies of the case. Normally, only the aggrieved person is allowed to move the Court. But it has been held by the Supreme Court that in social or public interest matters, any one may move the Court. A Public Interest Litigation can be filed before the Supreme Court under Article 32 of the Constitution or before the High Court of a State under Article 226 of the Constitution under their respective Writ Jurisdictions.

What is the tone of the author?

The Writ Jurisdiction of Supreme Court can be invoked under Article 32 of the Constitution for the violation of fundamental rights guaranteed under Part - III of the Constitution. Any provision in any Constitution for Fundamental Rights is meaningless unless there are adequate safeguards to ensure enforcement of such provisions. Since the reality of such rights is tested only through the judiciary, the safeguards assume even more importance. In addition, enforcement also depends upon the degree of independence of the Judiciary and the availability of relevant instruments with the executive authority. Indian Constitution, like most of Western Constitutions, lays down certain provisions to ensure the enforcement of Fundamental Rights. However, Article 32 is referred to as the “Constitutional Remedy” for enforcement of Fundamental Rights. This provision itself has been included in the Fundamental Rights and hence it cannot be denied to any person. Dr. B. R. Ambedkar described Article 32 as the most important one, without which the Constitution would be reduced to nullity. It is also referred to as the heart and soul of the Constitution. By including Article 32 in the Fundamental Rights, the Supreme Court has been made the protector and guarantor of these Rights. An application made under Article 32 of the Constitution before the Supreme Court, cannot be refused on technical grounds. In addition to the prescribed five types of writs, the Supreme Court may pass any other appropriate order. Moreover, only the questions pertaining to the Fundamental Rights can be determined in proceedings against Article 32. Under Article 32, the Supreme Court may issue a Writ against any person or government within the territory of India. Where the infringement of a Fundamental Right has been established, the Supreme Court cannot refuse relief on the ground that the aggrieved person may have remedy before some other court or under the ordinary law.
The relief can also not be denied on the ground that the disputed facts have to be investigated or some evidence has to be collected. Even if an aggrieved person has not asked for a particular Writ, the Supreme Court, after considering the facts and circumstances, may grant the appropriate Writ and may even modify it to suit the exigencies of the case. Normally, only the aggrieved person is allowed to move the Court. But it has been held by the Supreme Court that in social or public interest matters, any one may move the Court. A Public Interest Litigation can be filed before the Supreme Court under Article 32 of the Constitution or before the High Court of a State under Article 226 of the Constitution under their respective Writ Jurisdictions.

What is the correct meaning of the word ‘infringement’?

India’s delicately balanced current account wouldn’t be the only major casualty of costlier crude oil: Local travelers now have to pay more to fly within the country as expensive jet fuel propels airlines to raise domestic fares that had tracked global energy prices to plunge to record lows last year.
Higher consumer fares in January reflect the persistent rise in aviation-fuel prices, which increased 8% on-month in November at the New Delhi airport, the country’s busiest. After a brief lull in December, prices firmed in January and February, breaching the levels of 2015 when the cycle of declines began.
The trend has led carriers to pass additional fuel costs on to consumers, many of whom switched to airlines after the gap between air and upper-class train fares narrowed in 2016. A senior executive at Jet Airways, India’s second-biggest airline by market share, said that the airline has recently revived the practice of levying a fuel surcharge - a fare component linked to movements in jet fuel prices - on domestic flights.
“We used to charge between Rs 100 and Rs 300 depending on short- and long haul sectors. Now we charge as much as Rs 700,” he added. Jet-fuel is the biggest cost item for Indian carriers.
Prices of petroleum products began rising since the spring after the 2015-16 winter witnessed record lows for crude oil, with global prices breaching $30 a barrel on their way down to levels not seen since the 1980s. However, after a period of consolidation that analysts believed would have put many shale oil producers out of business, global crude oil prices began firming and have now stabilized around $55 a barrel, a level that some believe would be maintained over the medium term. Airlines had clubbed fuel surcharge with the base fare component in 2015 after an advisory from the Directorate General of Civil Aviation, the country’s aviation regulator. No-frills carrier SpiceJet has separated the two components over the last six months, although the fuel surcharge hasn’t been increased yet, said a spokesperson.
Travel company executives said overall fares have increased in January. According to data on Makemytrip, the country’s biggest online travel portal, average fares dropped in November and December but rose in January. Ticket prices for the Delhi-Mumbai sector rose to Rs 4,266 in January, compared with Rs 3,908 the same month last year, Rs 4,914 on the Mumbai- Bangalore sector compared with Rs 4,573 a year earlier, and Rs 4,473 on the Mumbai-Chennai route, compared with Rs 3,784 last January. Rival Cleartrip noticed divergent trends that showed those booking early stood to benefit. Last year, spot-booking fares too had fallen drastically.
“An analysis of the last three months of airfare data for the top 20 air travel sectors reveals that the increased cost to airlines, contributed by the fuel prices surge and the rupee’s depreciation, has resulted in a 15% increase in airfares for a booking window of 0-14 days,” said Samyukth Sridharan, president and chief operating officer of Cleartrip. “At the same time, we see that the airlines have been quite aggressive in offering deals to passengers who plan in advance, reflected in a 21% year on-year drop in fares on an average for travel bookings made over 14 days in advance.”
Last year, airlines had offered substantial discounts across sectors and made attractive offers for ticket-buyers who planned their travel in advance, resulting in lower yields. To be sure, the industry’s ability to charge more will depend on the direction in aviation fuel prices and seasonal changes in air-travel demand.
“February and March are lean months, and the airlines may not have room to increase so much. But there will be increases subsequently if jet fuel prices continue their climb,” said a senior executive of a budget carrier.

According to the passage, why have many passengers switched to air travel post 2016?

India’s delicately balanced current account wouldn’t be the only major casualty of costlier crude oil: Local travelers now have to pay more to fly within the country as expensive jet fuel propels airlines to raise domestic fares that had tracked global energy prices to plunge to record lows last year.
Higher consumer fares in January reflect the persistent rise in aviation-fuel prices, which increased 8% on-month in November at the New Delhi airport, the country’s busiest. After a brief lull in December, prices firmed in January and February, breaching the levels of 2015 when the cycle of declines began.
The trend has led carriers to pass additional fuel costs on to consumers, many of whom switched to airlines after the gap between air and upper-class train fares narrowed in 2016. A senior executive at Jet Airways, India’s second-biggest airline by market share, said that the airline has recently revived the practice of levying a fuel surcharge - a fare component linked to movements in jet fuel prices - on domestic flights.
“We used to charge between Rs 100 and Rs 300 depending on short- and long haul sectors. Now we charge as much as Rs 700,” he added. Jet-fuel is the biggest cost item for Indian carriers.
Prices of petroleum products began rising since the spring after the 2015-16 winter witnessed record lows for crude oil, with global prices breaching $30 a barrel on their way down to levels not seen since the 1980s. However, after a period of consolidation that analysts believed would have put many shale oil producers out of business, global crude oil prices began firming and have now stabilized around $55 a barrel, a level that some believe would be maintained over the medium term. Airlines had clubbed fuel surcharge with the base fare component in 2015 after an advisory from the Directorate General of Civil Aviation, the country’s aviation regulator. No-frills carrier SpiceJet has separated the two components over the last six months, although the fuel surcharge hasn’t been increased yet, said a spokesperson.
Travel company executives said overall fares have increased in January. According to data on Makemytrip, the country’s biggest online travel portal, average fares dropped in November and December but rose in January. Ticket prices for the Delhi-Mumbai sector rose to Rs 4,266 in January, compared with Rs 3,908 the same month last year, Rs 4,914 on the Mumbai- Bangalore sector compared with Rs 4,573 a year earlier, and Rs 4,473 on the Mumbai-Chennai route, compared with Rs 3,784 last January. Rival Cleartrip noticed divergent trends that showed those booking early stood to benefit. Last year, spot-booking fares too had fallen drastically.
“An analysis of the last three months of airfare data for the top 20 air travel sectors reveals that the increased cost to airlines, contributed by the fuel prices surge and the rupee’s depreciation, has resulted in a 15% increase in airfares for a booking window of 0-14 days,” said Samyukth Sridharan, president and chief operating officer of Cleartrip. “At the same time, we see that the airlines have been quite aggressive in offering deals to passengers who plan in advance, reflected in a 21% year on-year drop in fares on an average for travel bookings made over 14 days in advance.”
Last year, airlines had offered substantial discounts across sectors and made attractive offers for ticket-buyers who planned their travel in advance, resulting in lower yields. To be sure, the industry’s ability to charge more will depend on the direction in aviation fuel prices and seasonal changes in air-travel demand.
“February and March are lean months, and the airlines may not have room to increase so much. But there will be increases subsequently if jet fuel prices continue their climb,” said a senior executive of a budget carrier.

As per the passage, what is meant by fuel surcharge?

India’s delicately balanced current account wouldn’t be the only major casualty of costlier crude oil: Local travelers now have to pay more to fly within the country as expensive jet fuel propels airlines to raise domestic fares that had tracked global energy prices to plunge to record lows last year.
Higher consumer fares in January reflect the persistent rise in aviation-fuel prices, which increased 8% on-month in November at the New Delhi airport, the country’s busiest. After a brief lull in December, prices firmed in January and February, breaching the levels of 2015 when the cycle of declines began.
The trend has led carriers to pass additional fuel costs on to consumers, many of whom switched to airlines after the gap between air and upper-class train fares narrowed in 2016. A senior executive at Jet Airways, India’s second-biggest airline by market share, said that the airline has recently revived the practice of levying a fuel surcharge - a fare component linked to movements in jet fuel prices - on domestic flights.
“We used to charge between Rs 100 and Rs 300 depending on short- and long haul sectors. Now we charge as much as Rs 700,” he added. Jet-fuel is the biggest cost item for Indian carriers.
Prices of petroleum products began rising since the spring after the 2015-16 winter witnessed record lows for crude oil, with global prices breaching $30 a barrel on their way down to levels not seen since the 1980s. However, after a period of consolidation that analysts believed would have put many shale oil producers out of business, global crude oil prices began firming and have now stabilized around $55 a barrel, a level that some believe would be maintained over the medium term. Airlines had clubbed fuel surcharge with the base fare component in 2015 after an advisory from the Directorate General of Civil Aviation, the country’s aviation regulator. No-frills carrier SpiceJet has separated the two components over the last six months, although the fuel surcharge hasn’t been increased yet, said a spokesperson.
Travel company executives said overall fares have increased in January. According to data on Makemytrip, the country’s biggest online travel portal, average fares dropped in November and December but rose in January. Ticket prices for the Delhi-Mumbai sector rose to Rs 4,266 in January, compared with Rs 3,908 the same month last year, Rs 4,914 on the Mumbai- Bangalore sector compared with Rs 4,573 a year earlier, and Rs 4,473 on the Mumbai-Chennai route, compared with Rs 3,784 last January. Rival Cleartrip noticed divergent trends that showed those booking early stood to benefit. Last year, spot-booking fares too had fallen drastically.
“An analysis of the last three months of airfare data for the top 20 air travel sectors reveals that the increased cost to airlines, contributed by the fuel prices surge and the rupee’s depreciation, has resulted in a 15% increase in airfares for a booking window of 0-14 days,” said Samyukth Sridharan, president and chief operating officer of Cleartrip. “At the same time, we see that the airlines have been quite aggressive in offering deals to passengers who plan in advance, reflected in a 21% year on-year drop in fares on an average for travel bookings made over 14 days in advance.”
Last year, airlines had offered substantial discounts across sectors and made attractive offers for ticket-buyers who planned their travel in advance, resulting in lower yields. To be sure, the industry’s ability to charge more will depend on the direction in aviation fuel prices and seasonal changes in air-travel demand.
“February and March are lean months, and the airlines may not have room to increase so much. But there will be increases subsequently if jet fuel prices continue their climb,” said a senior executive of a budget carrier.

Since when have airlines started clubbing the fuel surcharge with the base fare component?

India’s delicately balanced current account wouldn’t be the only major casualty of costlier crude oil: Local travelers now have to pay more to fly within the country as expensive jet fuel propels airlines to raise domestic fares that had tracked global energy prices to plunge to record lows last year.
Higher consumer fares in January reflect the persistent rise in aviation-fuel prices, which increased 8% on-month in November at the New Delhi airport, the country’s busiest. After a brief lull in December, prices firmed in January and February, breaching the levels of 2015 when the cycle of declines began.
The trend has led carriers to pass additional fuel costs on to consumers, many of whom switched to airlines after the gap between air and upper-class train fares narrowed in 2016. A senior executive at Jet Airways, India’s second-biggest airline by market share, said that the airline has recently revived the practice of levying a fuel surcharge - a fare component linked to movements in jet fuel prices - on domestic flights.
“We used to charge between Rs 100 and Rs 300 depending on short- and long haul sectors. Now we charge as much as Rs 700,” he added. Jet-fuel is the biggest cost item for Indian carriers.
Prices of petroleum products began rising since the spring after the 2015-16 winter witnessed record lows for crude oil, with global prices breaching $30 a barrel on their way down to levels not seen since the 1980s. However, after a period of consolidation that analysts believed would have put many shale oil producers out of business, global crude oil prices began firming and have now stabilized around $55 a barrel, a level that some believe would be maintained over the medium term. Airlines had clubbed fuel surcharge with the base fare component in 2015 after an advisory from the Directorate General of Civil Aviation, the country’s aviation regulator. No-frills carrier SpiceJet has separated the two components over the last six months, although the fuel surcharge hasn’t been increased yet, said a spokesperson.
Travel company executives said overall fares have increased in January. According to data on Makemytrip, the country’s biggest online travel portal, average fares dropped in November and December but rose in January. Ticket prices for the Delhi-Mumbai sector rose to Rs 4,266 in January, compared with Rs 3,908 the same month last year, Rs 4,914 on the Mumbai- Bangalore sector compared with Rs 4,573 a year earlier, and Rs 4,473 on the Mumbai-Chennai route, compared with Rs 3,784 last January. Rival Cleartrip noticed divergent trends that showed those booking early stood to benefit. Last year, spot-booking fares too had fallen drastically.
“An analysis of the last three months of airfare data for the top 20 air travel sectors reveals that the increased cost to airlines, contributed by the fuel prices surge and the rupee’s depreciation, has resulted in a 15% increase in airfares for a booking window of 0-14 days,” said Samyukth Sridharan, president and chief operating officer of Cleartrip. “At the same time, we see that the airlines have been quite aggressive in offering deals to passengers who plan in advance, reflected in a 21% year on-year drop in fares on an average for travel bookings made over 14 days in advance.”
Last year, airlines had offered substantial discounts across sectors and made attractive offers for ticket-buyers who planned their travel in advance, resulting in lower yields. To be sure, the industry’s ability to charge more will depend on the direction in aviation fuel prices and seasonal changes in air-travel demand.
“February and March are lean months, and the airlines may not have room to increase so much. But there will be increases subsequently if jet fuel prices continue their climb,” said a senior executive of a budget carrier.

What was the observation of Cleartrip on airline ticket prices?

India’s delicately balanced current account wouldn’t be the only major casualty of costlier crude oil: Local travelers now have to pay more to fly within the country as expensive jet fuel propels airlines to raise domestic fares that had tracked global energy prices to plunge to record lows last year.
Higher consumer fares in January reflect the persistent rise in aviation-fuel prices, which increased 8% on-month in November at the New Delhi airport, the country’s busiest. After a brief lull in December, prices firmed in January and February, breaching the levels of 2015 when the cycle of declines began.
The trend has led carriers to pass additional fuel costs on to consumers, many of whom switched to airlines after the gap between air and upper-class train fares narrowed in 2016. A senior executive at Jet Airways, India’s second-biggest airline by market share, said that the airline has recently revived the practice of levying a fuel surcharge - a fare component linked to movements in jet fuel prices - on domestic flights.
“We used to charge between Rs 100 and Rs 300 depending on short- and long haul sectors. Now we charge as much as Rs 700,” he added. Jet-fuel is the biggest cost item for Indian carriers.
Prices of petroleum products began rising since the spring after the 2015-16 winter witnessed record lows for crude oil, with global prices breaching $30 a barrel on their way down to levels not seen since the 1980s. However, after a period of consolidation that analysts believed would have put many shale oil producers out of business, global crude oil prices began firming and have now stabilized around $55 a barrel, a level that some believe would be maintained over the medium term. Airlines had clubbed fuel surcharge with the base fare component in 2015 after an advisory from the Directorate General of Civil Aviation, the country’s aviation regulator. No-frills carrier SpiceJet has separated the two components over the last six months, although the fuel surcharge hasn’t been increased yet, said a spokesperson.
Travel company executives said overall fares have increased in January. According to data on Makemytrip, the country’s biggest online travel portal, average fares dropped in November and December but rose in January. Ticket prices for the Delhi-Mumbai sector rose to Rs 4,266 in January, compared with Rs 3,908 the same month last year, Rs 4,914 on the Mumbai- Bangalore sector compared with Rs 4,573 a year earlier, and Rs 4,473 on the Mumbai-Chennai route, compared with Rs 3,784 last January. Rival Cleartrip noticed divergent trends that showed those booking early stood to benefit. Last year, spot-booking fares too had fallen drastically.
“An analysis of the last three months of airfare data for the top 20 air travel sectors reveals that the increased cost to airlines, contributed by the fuel prices surge and the rupee’s depreciation, has resulted in a 15% increase in airfares for a booking window of 0-14 days,” said Samyukth Sridharan, president and chief operating officer of Cleartrip. “At the same time, we see that the airlines have been quite aggressive in offering deals to passengers who plan in advance, reflected in a 21% year on-year drop in fares on an average for travel bookings made over 14 days in advance.”
Last year, airlines had offered substantial discounts across sectors and made attractive offers for ticket-buyers who planned their travel in advance, resulting in lower yields. To be sure, the industry’s ability to charge more will depend on the direction in aviation fuel prices and seasonal changes in air-travel demand.
“February and March are lean months, and the airlines may not have room to increase so much. But there will be increases subsequently if jet fuel prices continue their climb,” said a senior executive of a budget carrier.

Out of the following options, which of the following comes closest in meaning to the word “breach”?

There is a controversy raging over the entry of giants such as Tesco and Wal-Mart into India after the government last week permitted foreign direct investment (FDI) in multi-brand retail. Most economic analysts look at it in terms of capital coming into India to oust local shopkeepers or in terms of capital coming in to offer better prices to farmers or set up distribution chains and storage facilities to help consumers. These arguments seem a little old. There is a technological dimension to this that may reveal that it is India that is behind the competitive edge of big retail chains.
In 2009, Wal-Mart picked Bangalore-based Infosys Technologies and India-centric Cognizant among three information technology service vendors for a $600 million multi-year contract. Finance is now easily available for retail companies from banks and equity markets. What sets the real smart retail giants apart is their ability to leverage software and IT to keep their competitive edge. Supply chain software can help lower costs by managing inventories. Data analytics and customer relations software can help them identify the more lucrative customers or choose discount strategies. Partners, employees and vendors of retail giants are now connected by software. Indian talent figures in all this. Infosys was an early adapter of Wal-Mart’s move to go in for radio-frequency identification (RFID) tags that helps the retail chain track inventories at low cost. Last year, Wal-Mart also acquired Kosmix, a cutting-edge search engine, founded by Indian-born Venky Harinarayan and Anand Rajaraman (who earlier co-founded Junglee.com that Amazon acquired). Now Kosmix is a part of Wal- Mart Labs. Its technology filters and aggregates information by topic from Twitter messages and the larger Web in real time. This is a new way to interact with shoppers. Tesco now owes its edge to its Bangalore IT facility called the “Hindustan Service Centre”. The British retail chain says 6,000-employee-strong HSC’s strategic initiatives cover the “IT, business, financial, commercial and property aspects.” In Bangalore, Indian techies develop tools like mobile applications for Tesco.

From the passage, it can be assumed that the author’s views on FDI in multi-brand retail are

There is a controversy raging over the entry of giants such as Tesco and Wal-Mart into India after the government last week permitted foreign direct investment (FDI) in multi-brand retail. Most economic analysts look at it in terms of capital coming into India to oust local shopkeepers or in terms of capital coming in to offer better prices to farmers or set up distribution chains and storage facilities to help consumers. These arguments seem a little old. There is a technological dimension to this that may reveal that it is India that is behind the competitive edge of big retail chains.
In 2009, Wal-Mart picked Bangalore-based Infosys Technologies and India-centric Cognizant among three information technology service vendors for a $600 million multi-year contract. Finance is now easily available for retail companies from banks and equity markets. What sets the real smart retail giants apart is their ability to leverage software and IT to keep their competitive edge. Supply chain software can help lower costs by managing inventories. Data analytics and customer relations software can help them identify the more lucrative customers or choose discount strategies. Partners, employees and vendors of retail giants are now connected by software. Indian talent figures in all this. Infosys was an early adapter of Wal-Mart’s move to go in for radio-frequency identification (RFID) tags that helps the retail chain track inventories at low cost. Last year, Wal-Mart also acquired Kosmix, a cutting-edge search engine, founded by Indian-born Venky Harinarayan and Anand Rajaraman (who earlier co-founded Junglee.com that Amazon acquired). Now Kosmix is a part of Wal- Mart Labs. Its technology filters and aggregates information by topic from Twitter messages and the larger Web in real time. This is a new way to interact with shoppers. Tesco now owes its edge to its Bangalore IT facility called the “Hindustan Service Centre”. The British retail chain says 6,000-employee-strong HSC’s strategic initiatives cover the “IT, business, financial, commercial and property aspects.” In Bangalore, Indian techies develop tools like mobile applications for Tesco.

According to the passage, which of the following are the essential elements in the success of retail giants?
1. The use of technology to maintain an advantage over others.
2. Sales and marketing strategies based on an analysis of customer data.
3. Maintenance of large inventories to bring the benefits of low cost to the customer.
Select the correct answer using the code given below.

There is a controversy raging over the entry of giants such as Tesco and Wal-Mart into India after the government last week permitted foreign direct investment (FDI) in multi-brand retail. Most economic analysts look at it in terms of capital coming into India to oust local shopkeepers or in terms of capital coming in to offer better prices to farmers or set up distribution chains and storage facilities to help consumers. These arguments seem a little old. There is a technological dimension to this that may reveal that it is India that is behind the competitive edge of big retail chains.
In 2009, Wal-Mart picked Bangalore-based Infosys Technologies and India-centric Cognizant among three information technology service vendors for a $600 million multi-year contract. Finance is now easily available for retail companies from banks and equity markets. What sets the real smart retail giants apart is their ability to leverage software and IT to keep their competitive edge. Supply chain software can help lower costs by managing inventories. Data analytics and customer relations software can help them identify the more lucrative customers or choose discount strategies. Partners, employees and vendors of retail giants are now connected by software. Indian talent figures in all this. Infosys was an early adapter of Wal-Mart’s move to go in for radio-frequency identification (RFID) tags that helps the retail chain track inventories at low cost. Last year, Wal-Mart also acquired Kosmix, a cutting-edge search engine, founded by Indian-born Venky Harinarayan and Anand Rajaraman (who earlier co-founded Junglee.com that Amazon acquired). Now Kosmix is a part of Wal- Mart Labs. Its technology filters and aggregates information by topic from Twitter messages and the larger Web in real time. This is a new way to interact with shoppers. Tesco now owes its edge to its Bangalore IT facility called the “Hindustan Service Centre”. The British retail chain says 6,000-employee-strong HSC’s strategic initiatives cover the “IT, business, financial, commercial and property aspects.” In Bangalore, Indian techies develop tools like mobile applications for Tesco.

Which of the following options best explains the purpose of the last four paragraphs?

There is a controversy raging over the entry of giants such as Tesco and Wal-Mart into India after the government last week permitted foreign direct investment (FDI) in multi-brand retail. Most economic analysts look at it in terms of capital coming into India to oust local shopkeepers or in terms of capital coming in to offer better prices to farmers or set up distribution chains and storage facilities to help consumers. These arguments seem a little old. There is a technological dimension to this that may reveal that it is India that is behind the competitive edge of big retail chains.
In 2009, Wal-Mart picked Bangalore-based Infosys Technologies and India-centric Cognizant among three information technology service vendors for a $600 million multi-year contract. Finance is now easily available for retail companies from banks and equity markets. What sets the real smart retail giants apart is their ability to leverage software and IT to keep their competitive edge. Supply chain software can help lower costs by managing inventories. Data analytics and customer relations software can help them identify the more lucrative customers or choose discount strategies. Partners, employees and vendors of retail giants are now connected by software. Indian talent figures in all this. Infosys was an early adapter of Wal-Mart’s move to go in for radio-frequency identification (RFID) tags that helps the retail chain track inventories at low cost. Last year, Wal-Mart also acquired Kosmix, a cutting-edge search engine, founded by Indian-born Venky Harinarayan and Anand Rajaraman (who earlier co-founded Junglee.com that Amazon acquired). Now Kosmix is a part of Wal- Mart Labs. Its technology filters and aggregates information by topic from Twitter messages and the larger Web in real time. This is a new way to interact with shoppers. Tesco now owes its edge to its Bangalore IT facility called the “Hindustan Service Centre”. The British retail chain says 6,000-employee-strong HSC’s strategic initiatives cover the “IT, business, financial, commercial and property aspects.” In Bangalore, Indian techies develop tools like mobile applications for Tesco.

Consider the following statements:
1. Anand Rajaraman was a manager of Junglee.com
2. Last year, Wal-Mart was bought by Kosmix. According to the above passage, which of the statements is/are valid?

There is a controversy raging over the entry of giants such as Tesco and Wal-Mart into India after the government last week permitted foreign direct investment (FDI) in multi-brand retail. Most economic analysts look at it in terms of capital coming into India to oust local shopkeepers or in terms of capital coming in to offer better prices to farmers or set up distribution chains and storage facilities to help consumers. These arguments seem a little old. There is a technological dimension to this that may reveal that it is India that is behind the competitive edge of big retail chains.
In 2009, Wal-Mart picked Bangalore-based Infosys Technologies and India-centric Cognizant among three information technology service vendors for a $600 million multi-year contract. Finance is now easily available for retail companies from banks and equity markets. What sets the real smart retail giants apart is their ability to leverage software and IT to keep their competitive edge. Supply chain software can help lower costs by managing inventories. Data analytics and customer relations software can help them identify the more lucrative customers or choose discount strategies. Partners, employees and vendors of retail giants are now connected by software. Indian talent figures in all this. Infosys was an early adapter of Wal-Mart’s move to go in for radio-frequency identification (RFID) tags that helps the retail chain track inventories at low cost. Last year, Wal-Mart also acquired Kosmix, a cutting-edge search engine, founded by Indian-born Venky Harinarayan and Anand Rajaraman (who earlier co-founded Junglee.com that Amazon acquired). Now Kosmix is a part of Wal- Mart Labs. Its technology filters and aggregates information by topic from Twitter messages and the larger Web in real time. This is a new way to interact with shoppers. Tesco now owes its edge to its Bangalore IT facility called the “Hindustan Service Centre”. The British retail chain says 6,000-employee-strong HSC’s strategic initiatives cover the “IT, business, financial, commercial and property aspects.” In Bangalore, Indian techies develop tools like mobile applications for Tesco.

Consider the following statements:
1. Wal-Mart picked Infosys Technologies in 2008.
2. Retail companies procure finance from banks and equity markets.
According to the above passage, which of the statements is/are valid?

The problem with backdating taxes is that the taxpayer will have to continuously guess how much of his current income will be taken away at a later date. This is the crux of the Parthasarathi Shome committee report on retrospective taxation of cross-border acquisition of Indian assets, like Vodafone’s $11.2 billion purchase of Hutchison’s stake in the country’s third largest telecom service provider in 2007.
The Supreme Court in January ruled against the taxman, who was claiming Rs. 11,200 crore in tax, penalty and interest. The court conceded that Indian law was incapable of plugging a widely used tax dodge by inbound foreign investment. The message for the government in the verdict was that the law needed to be changed to curb treaty shopping, the practice of routing investments through letter-box companies in havens like Mauritius to avoid paying taxes in India.
Presenting his last budget in March, the then finance minister Pranab Mukherjee, altered the Income Tax Act to tax such deals with retrospective effect. His argument was since the court felt the intent of the law was not clear, it had to be explicitly clarified for the entire past life of the Income Tax Act, which was enacted in 1962. This last bit - that deals done earlier could be taxed - raised a chorus of protest from the investing community, and the finance ministry under P Chidambaram sought an independent review of its stand. Mr Shome, a tax expert of international standing, has now told the government what it knew all this while: taxes in retrospect are best avoided.
Specifically, they must never be used to merely raise tax revenue. In the Vodafone case, the Shome committee is unequivocal: the company to claim tax from is Hutchison, which made the profit from the sale of its stake in the telecom company. Vodafone was not required by the extant law to withhold capital gains tax. Since Vodafone made no profit in the deal, the question of interest and penalties on back taxes does not arise.
Mr Chidambaram has indicated his desire to reverse the decision as soon as possible, even before the next budget when, normally, amendments to the Income Tax Act are undertaken. He reckons investors will return to the table once the fog over retrospective taxes is lifted.

Which one of these options best explains the reference the author makes to the practice of treaty shopping?

The problem with backdating taxes is that the taxpayer will have to continuously guess how much of his current income will be taken away at a later date. This is the crux of the Parthasarathi Shome committee report on retrospective taxation of cross-border acquisition of Indian assets, like Vodafone’s $11.2 billion purchase of Hutchison’s stake in the country’s third largest telecom service provider in 2007.
The Supreme Court in January ruled against the taxman, who was claiming Rs. 11,200 crore in tax, penalty and interest. The court conceded that Indian law was incapable of plugging a widely used tax dodge by inbound foreign investment. The message for the government in the verdict was that the law needed to be changed to curb treaty shopping, the practice of routing investments through letter-box companies in havens like Mauritius to avoid paying taxes in India.
Presenting his last budget in March, the then finance minister Pranab Mukherjee, altered the Income Tax Act to tax such deals with retrospective effect. His argument was since the court felt the intent of the law was not clear, it had to be explicitly clarified for the entire past life of the Income Tax Act, which was enacted in 1962. This last bit - that deals done earlier could be taxed - raised a chorus of protest from the investing community, and the finance ministry under P Chidambaram sought an independent review of its stand. Mr Shome, a tax expert of international standing, has now told the government what it knew all this while: taxes in retrospect are best avoided.
Specifically, they must never be used to merely raise tax revenue. In the Vodafone case, the Shome committee is unequivocal: the company to claim tax from is Hutchison, which made the profit from the sale of its stake in the telecom company. Vodafone was not required by the extant law to withhold capital gains tax. Since Vodafone made no profit in the deal, the question of interest and penalties on back taxes does not arise.
Mr Chidambaram has indicated his desire to reverse the decision as soon as possible, even before the next budget when, normally, amendments to the Income Tax Act are undertaken. He reckons investors will return to the table once the fog over retrospective taxes is lifted.

Consider the following assumptions.
1. The Supreme Court has ruled in favour of Vodafone mainly because the law does not allow for a case against the latter.
2. The tax claims that are being made should be rightfully made against Hutchison and not Vodafone.
With reference to the above passage which of the following assumptions is/are valid?

The problem with backdating taxes is that the taxpayer will have to continuously guess how much of his current income will be taken away at a later date. This is the crux of the Parthasarathi Shome committee report on retrospective taxation of cross-border acquisition of Indian assets, like Vodafone’s $11.2 billion purchase of Hutchison’s stake in the country’s third largest telecom service provider in 2007.
The Supreme Court in January ruled against the taxman, who was claiming Rs. 11,200 crore in tax, penalty and interest. The court conceded that Indian law was incapable of plugging a widely used tax dodge by inbound foreign investment. The message for the government in the verdict was that the law needed to be changed to curb treaty shopping, the practice of routing investments through letter-box companies in havens like Mauritius to avoid paying taxes in India.
Presenting his last budget in March, the then finance minister Pranab Mukherjee, altered the Income Tax Act to tax such deals with retrospective effect. His argument was since the court felt the intent of the law was not clear, it had to be explicitly clarified for the entire past life of the Income Tax Act, which was enacted in 1962. This last bit - that deals done earlier could be taxed - raised a chorus of protest from the investing community, and the finance ministry under P Chidambaram sought an independent review of its stand. Mr Shome, a tax expert of international standing, has now told the government what it knew all this while: taxes in retrospect are best avoided.
Specifically, they must never be used to merely raise tax revenue. In the Vodafone case, the Shome committee is unequivocal: the company to claim tax from is Hutchison, which made the profit from the sale of its stake in the telecom company. Vodafone was not required by the extant law to withhold capital gains tax. Since Vodafone made no profit in the deal, the question of interest and penalties on back taxes does not arise.
Mr Chidambaram has indicated his desire to reverse the decision as soon as possible, even before the next budget when, normally, amendments to the Income Tax Act are undertaken. He reckons investors will return to the table once the fog over retrospective taxes is lifted.

As per the information in the passage, the author is most likely to agree with which of the following?

The problem with backdating taxes is that the taxpayer will have to continuously guess how much of his current income will be taken away at a later date. This is the crux of the Parthasarathi Shome committee report on retrospective taxation of cross-border acquisition of Indian assets, like Vodafone’s $11.2 billion purchase of Hutchison’s stake in the country’s third largest telecom service provider in 2007.
The Supreme Court in January ruled against the taxman, who was claiming Rs. 11,200 crore in tax, penalty and interest. The court conceded that Indian law was incapable of plugging a widely used tax dodge by inbound foreign investment. The message for the government in the verdict was that the law needed to be changed to curb treaty shopping, the practice of routing investments through letter-box companies in havens like Mauritius to avoid paying taxes in India.
Presenting his last budget in March, the then finance minister Pranab Mukherjee, altered the Income Tax Act to tax such deals with retrospective effect. His argument was since the court felt the intent of the law was not clear, it had to be explicitly clarified for the entire past life of the Income Tax Act, which was enacted in 1962. This last bit - that deals done earlier could be taxed - raised a chorus of protest from the investing community, and the finance ministry under P Chidambaram sought an independent review of its stand. Mr Shome, a tax expert of international standing, has now told the government what it knew all this while: taxes in retrospect are best avoided.
Specifically, they must never be used to merely raise tax revenue. In the Vodafone case, the Shome committee is unequivocal: the company to claim tax from is Hutchison, which made the profit from the sale of its stake in the telecom company. Vodafone was not required by the extant law to withhold capital gains tax. Since Vodafone made no profit in the deal, the question of interest and penalties on back taxes does not arise.
Mr Chidambaram has indicated his desire to reverse the decision as soon as possible, even before the next budget when, normally, amendments to the Income Tax Act are undertaken. He reckons investors will return to the table once the fog over retrospective taxes is lifted.

Consider the following statements:
1. Vodafone bought Hutchison’s stake in the year 2008.
2. The then Finance Minister Pranab Mukherjee did not alter the Income Tax Act.
According to the above passage, which of the statements is/are valid?

The problem with backdating taxes is that the taxpayer will have to continuously guess how much of his current income will be taken away at a later date. This is the crux of the Parthasarathi Shome committee report on retrospective taxation of cross-border acquisition of Indian assets, like Vodafone’s $11.2 billion purchase of Hutchison’s stake in the country’s third largest telecom service provider in 2007.
The Supreme Court in January ruled against the taxman, who was claiming Rs. 11,200 crore in tax, penalty and interest. The court conceded that Indian law was incapable of plugging a widely used tax dodge by inbound foreign investment. The message for the government in the verdict was that the law needed to be changed to curb treaty shopping, the practice of routing investments through letter-box companies in havens like Mauritius to avoid paying taxes in India.
Presenting his last budget in March, the then finance minister Pranab Mukherjee, altered the Income Tax Act to tax such deals with retrospective effect. His argument was since the court felt the intent of the law was not clear, it had to be explicitly clarified for the entire past life of the Income Tax Act, which was enacted in 1962. This last bit - that deals done earlier could be taxed - raised a chorus of protest from the investing community, and the finance ministry under P Chidambaram sought an independent review of its stand. Mr Shome, a tax expert of international standing, has now told the government what it knew all this while: taxes in retrospect are best avoided.
Specifically, they must never be used to merely raise tax revenue. In the Vodafone case, the Shome committee is unequivocal: the company to claim tax from is Hutchison, which made the profit from the sale of its stake in the telecom company. Vodafone was not required by the extant law to withhold capital gains tax. Since Vodafone made no profit in the deal, the question of interest and penalties on back taxes does not arise.
Mr Chidambaram has indicated his desire to reverse the decision as soon as possible, even before the next budget when, normally, amendments to the Income Tax Act are undertaken. He reckons investors will return to the table once the fog over retrospective taxes is lifted.

Consider the following statements:
1. The Income Tax Act was enacted in 1963.
2. Mr. Parthasarathi Shome was an economist. According to the above passage, which of the statements is/are valid?

India’s balance of payments is back in surplus. Important as this development has been in the management of the external economy, it is unwise to exaggerate its significance. The level of deficit is still way above what is considered prudent and manageable. Besides, the fall in the Current Account Deficit (CAD) is due to all the wrong reasons — falling imports that corroborate the slowdown, and decelerating exports. The outlook for software export earnings is not bright amidst the global slowdown. Expressed as a percentage of GDP, the CAD has fallen from 4.5 per cent to 3.9 per cent. Most experts have projected the CAD for 2012-13 at 3.5 per cent or lower, on the basis of certain key assumptions: that the economy will grow at a reasonably fast clip of around 6.5 per cent; oil prices will not go very much higher than current levels of around $100 a barrel; and most important of all, the actions of the European Central Bank and the Federal Reserve will help in bringing economic growth in Europe and the U.S. back on track. The last point will have an all-round bearing on India’s external economy. It could help India’s faltering exports regain traction. Second, there would be far less uncertainty on the movement of capital flows to India.
There is of course a flip side to all of this. India’s growth has already slipped by most accounts to below five per cent. The cheap money policy of the Federal Reserve will boost inflation worldwide. Although it is customary to view the CAD on a par with the fiscal deficit — the menace of twin deficits as they are usually referred to — it is the latter that has received greater attention. Besides, the government seems determined to adopt questionable means to finance the deficit rather than be proactive in reining it in. For instance, recent announcements to ease external commercial borrowings and encourage capital market flows from abroad might have had the intended effect of boosting stock prices. But these are not sound policies from the point of view of the macroeconomy. Encouraging foreign currency borrowing to take advantage of the surfeit of funds circulating abroad is hardly the right strategy for an economy whose level of short-term debt has been rising and exchange reserves falling.

Why does the author feel that it is too early to place a positive significance on the surplus balance of payments?

India’s balance of payments is back in surplus. Important as this development has been in the management of the external economy, it is unwise to exaggerate its significance. The level of deficit is still way above what is considered prudent and manageable. Besides, the fall in the Current Account Deficit (CAD) is due to all the wrong reasons — falling imports that corroborate the slowdown, and decelerating exports. The outlook for software export earnings is not bright amidst the global slowdown. Expressed as a percentage of GDP, the CAD has fallen from 4.5 per cent to 3.9 per cent. Most experts have projected the CAD for 2012-13 at 3.5 per cent or lower, on the basis of certain key assumptions: that the economy will grow at a reasonably fast clip of around 6.5 per cent; oil prices will not go very much higher than current levels of around $100 a barrel; and most important of all, the actions of the European Central Bank and the Federal Reserve will help in bringing economic growth in Europe and the U.S. back on track. The last point will have an all-round bearing on India’s external economy. It could help India’s faltering exports regain traction. Second, there would be far less uncertainty on the movement of capital flows to India.
There is of course a flip side to all of this. India’s growth has already slipped by most accounts to below five per cent. The cheap money policy of the Federal Reserve will boost inflation worldwide. Although it is customary to view the CAD on a par with the fiscal deficit — the menace of twin deficits as they are usually referred to — it is the latter that has received greater attention. Besides, the government seems determined to adopt questionable means to finance the deficit rather than be proactive in reining it in. For instance, recent announcements to ease external commercial borrowings and encourage capital market flows from abroad might have had the intended effect of boosting stock prices. But these are not sound policies from the point of view of the macroeconomy. Encouraging foreign currency borrowing to take advantage of the surfeit of funds circulating abroad is hardly the right strategy for an economy whose level of short-term debt has been rising and exchange reserves falling.

Which of the following has not been mentioned as an incorrect strategy in the current economy?

India’s balance of payments is back in surplus. Important as this development has been in the management of the external economy, it is unwise to exaggerate its significance. The level of deficit is still way above what is considered prudent and manageable. Besides, the fall in the Current Account Deficit (CAD) is due to all the wrong reasons — falling imports that corroborate the slowdown, and decelerating exports. The outlook for software export earnings is not bright amidst the global slowdown. Expressed as a percentage of GDP, the CAD has fallen from 4.5 per cent to 3.9 per cent. Most experts have projected the CAD for 2012-13 at 3.5 per cent or lower, on the basis of certain key assumptions: that the economy will grow at a reasonably fast clip of around 6.5 per cent; oil prices will not go very much higher than current levels of around $100 a barrel; and most important of all, the actions of the European Central Bank and the Federal Reserve will help in bringing economic growth in Europe and the U.S. back on track. The last point will have an all-round bearing on India’s external economy. It could help India’s faltering exports regain traction. Second, there would be far less uncertainty on the movement of capital flows to India.
There is of course a flip side to all of this. India’s growth has already slipped by most accounts to below five per cent. The cheap money policy of the Federal Reserve will boost inflation worldwide. Although it is customary to view the CAD on a par with the fiscal deficit — the menace of twin deficits as they are usually referred to — it is the latter that has received greater attention. Besides, the government seems determined to adopt questionable means to finance the deficit rather than be proactive in reining it in. For instance, recent announcements to ease external commercial borrowings and encourage capital market flows from abroad might have had the intended effect of boosting stock prices. But these are not sound policies from the point of view of the macroeconomy. Encouraging foreign currency borrowing to take advantage of the surfeit of funds circulating abroad is hardly the right strategy for an economy whose level of short-term debt has been rising and exchange reserves falling.

Which of the following options has/have not been taken into account while projecting the current account deficit for 2012-2013?
1. The rate of growth of the economy will occur at much more than 6.5 per cent.
2. The European Central Bank’s measures will bring in positive economic change in Europe.
3. Oil prices will finally settle at a higher rate than the current $100 per barrel.
With reference to the above passage which of the given statements is/are valid?