Passage

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. Many of them are the outcomes of economic reforms. India’s vulnerability to prices has increased with trade liberalization. The effort to reduce subsidies has resulted in a continuous increase in administered commodity prices.

QUESTION

CSAT

Easy

Comprehension

Prelims 2015

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

Select an option to attempt

Explanation

Statement A is incorrect. Because the passage does not suggest that India should completely avoid trade liberalization or subsidies. It only mentions that India’s vulnerability to prices has increased with trade liberalization, but it does not call for abandoning the policies altogether.

Statement B is incorrect. The passage highlights the negative outcomes of economic reforms, like increased inflation and vulnerability, but it does not argue that India is not ready for trade liberalization.

Statement C is incorrect. The passage does not directly suggest that no solution is available for poverty and inflation. It discusses the causes of inflation but does not imply an absence of solutions.

Statement D is correct. The passage states that many of the inflationary problems are outcomes of economic reforms, and that increased administered prices and other factors like trade liberalization have contributed to high inflation. This indicates that economic reforms can sometimes lead to a high-inflation economy.

Trusted by 2L aspirants