English Reading Comprehension for SBI Clerk / IDBI Executive 2018 (Day-82)

Dear Readers, Here we have given Practice English Reading Comprehension quiz and questions for SBI Clerk and IDBI Executive 2018 Exams with detailed explanation. Candidates those who are preparing for Upcoming Bank Exams can make use of it.

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Directions (Q1-10): Read the following passage carefully and answer the questions given below it.

Public sector undertakings (PSU) were established in India as a part of mixed economy with the objective of providing necessary infrastructure for the fast growth of economy & to safeguard against monopoly of industrialist community. However, the entire mechanism did not turn out as efficient as it ought to be,

The new economic policy initiated in July 1991 clearly indicated that PSUs had shown a very negative rate of return on capital employed. Inefficient PSUs had become and were continuing to be a drag on the Government’s resources turning to be more of liabilities to the Government than being assets. Many undertakings traditionally established as pillars of growth had become a burden on the economy. The national gross domestic product and gross national savings were also getting adversely affected by low returns from PSUs. About 10 to 15 % of the total gross domestic savings were getting reduced on account of low savings from PSUs. In relation to the capital employed, the levels of profits were too low. Lack of autonomy, political interference, nepotism & corruption has further deteriorated the condition of public sector undertakings.

Hence, the need for the Government to get rid of these units and to concentrate on core activities was identified. The Government also took a view that it should move out of non-core businesses, especially the ones where the private sector had now entered in a significant way. In this direction, the Government adopted the ‘Disinvestment Policy’.

Disinvestment means selling of assets. Here, in the case of PUSs, disinvestment means Government selling/ diluting its stake (share) in Public Sector Undertakings in which it has a majority holding. Disinvestment is carried out as a budgetary exercise, under which the government announces yearly targets for disinvestment for selected PSUs.

The Government of India is hardly left with any surplus for capital expenditure on social and physical infrastructure because of the huge revenue expenditure on items such as wages and salaries of Government employees, interest payments etc. Sectors such as trading companies, consultancy companies, hotels, textile companies, pharmaceuticals and chemical companies, consumer goods companies etc. blocked huge amounts of resources which the Government would have otherwise used on primary health and family welfare, basic education etc.

Thus, the basic objectives for disinvesting the PSEs are unlocking huge reserves of public resources locked up in non-strategic PSUs, for redeployment in areas of much higher social priority.

In an era of globalization, liberalization and dissolution of boundaries between nations, industrial competitiveness has especially assumed an important role, necessitating privatization or disinvestment of PSUs. Though it is claimed by many that ownership isn’t all that an important indicator of an organization’s functioning as is its management, it has been proven by an ample number of examples that private controls of an organization bring about drastic changes in its effectiveness. This is especially true today when competitiveness is essential not only for leading the industry but for mere survival.

As per recent reports, the government is expected to sharply increase its asset-sale target for the next financial year with about 36 companies are lined up for strategic disinvestment. In Strategic disinvestment, significant proportion of a Public Sector Unit’s (PSU) share and the management control goes to a private sector which is considered as strategic partner. It is different from the ordinary disinvestment in which management of PSU is retained with Government.

A minority disinvestment is one such that, at the end of it, the government retains a majority stake in the company, typically greater than 51%, thus ensuring management control.

A majority disinvestment is one in which the government retains a minority stake in the company i.e. it sells off a majority stake.

Disinvestment and Privatization are two different terms in technical sense, though both involve the sale of Government’s share of the Public Sector Undertakings. However there is, , a vital difference between the two. Disinvestment may or may not result in Privatization. When the Government retains 26% of the shares carrying voting powers while selling the remaining to a strategic buyer, it will be considered as disinvested, not as privatized’, because with 26%, it can still stall vital decisions for which generally a special resolution (three-fourths majority) is required.

Finance minister Arun Jaitley has unveiled the government’s disinvestment target for FY19 .Stepping up asset sales is part of the government’s reform agenda and higher receipts will help it meet fiscal deficit targets. At a recent meeting with Prime Minister and other top cabinet ministers, leading economists have favored aggressive disinvestment to help maintain fiscal discipline.

The disinvestment process needs to be taken up more seriously by the government. The Government should try to come out with a time bound programme to conduct the process with transparency in all the activities need to reach. Some consensus is very essential. Only then the real benefits can be reaped.

1) According to the passage, in an era of globalization, why are the privatization or disinvestment of PSUs needed?

1. for creating jobs
2. for reallocation of resources
3. for foreign investment
4. for domestic investment
5. for increasing industrial competitiveness

2) According to the passage, huge amount of fund is locked in hotels, textile and chemical companies otherwise government would have used these fund in which of the following sectors?

1. for defense sector
2. for agricultural sector
3. primary education
4. for insurance sector
5. for technological advancement

3) According to the passage, in which of the followings, will the higher receipts from disinvestment help in Financial Year 2019?

1. in balance of payment
2. in monetary policy
3. in public revenues
4. in fiscal deficit
5. in foreign reserves

4) According to the passage, in which of the following types of disinvestment does the management control of PSU goes to the private sector?

1. majority disinvestment
2. minority disinvestment
3. public offer disinvestment
4. strategic disinvestment
5. sale of equity

5) According to the passage what is the meaning of disinvestment?

1. purchasing of shares of private company
2. payment of government loan
3. reducing tax rate
4. foreign investment
5. reducing government share in PSU

6) According to the passage, why did the public sector undertakings not do well for the country?

1. due to the lack of technological advancement
2. due to improper infrastructure facilities
3. due to improper decision making
4. due to lack of autonomy
5. lack of public support

7) Choose the word which as same meaning as the word “drag on”

1. complete
2. conclude
3. finalize
4. continue
5. end

8) Choose the word which as same meaning as the word “stall”

1. allow
2. assist
3. aid
4. help
5. halt

9) Choose the word which as opposite meaning as the word “unveiled”

1. displayed
2. revealed
3. uncovered
4. concealed
5. unbolt

10) Choose the word which as opposite meaning as the word “diluting”

1. weakening
2. dwindling
3. mounting
4. diminishing
5. declining

Answers:

1) Correct Answer is: e)

It is mentioned in the passage that in an era of globalization and liberalization, industrial competitiveness is needed and for this industrial competitiveness, economy need’s privatization and disinvestment.

2) Correct Answer is: c)

It is clearly mentioned in the passage that the government would have used unnecessary locked fund for primary education, public health and essential infrastructure.

3) Correct Answer is: d)

It is mentioned in the passage that higher receipts from disinvestment of PSU will help in fiscal deficit in the financial year’19.

4) Correct Answer is: d)

It is mentioned in the passage, that in strategic disinvestment the management control of the PSU go to the private sector.

5) Correct Answer is: e)

It is mentioned in the passage that disinvestment means diluting or reducing government’s stake (share) in Public Sector undertakings.

6) Correct Answer is: d)

It is clearly mentioned in the passage that ‘lack of independence’ was one of the reasons due to which public sector undertaking could not do well.

7) Correct Answer is: d)

The meaning of the “drag on” is “extend/keep going / go on slowly”.

8) Correct Answer is: e)

The meaning of the “stall” is “stop/ halt /delay”.

9) Correct Answer is: d)

The meaning of “unveil” is “tell/open/ disclose” and its opposite is “hide/ conceal”.

10) Correct Answer is: c)

The meaning of “dilute” is “decrease / lessen” and its opposite is “rise / mount”.

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