PARAGRAPH COMPREHENSION

This content is on reading and understanding paragraph comprehension

 PASSAGE 

Direction on paragraph comprehension: Read the following passage carefully and answer the questions that follow. Certain words are given in bold to help you locate them while answering some of the questions. 

PARAGRAPH 1 OF PARAGRAPH COMPREHENSION

The sweeping wave of loan waivers has generated serious debates across the country on their economics and likely outcomes. Till date 12 States have announced loan waiver amounting to more than Rs. 2 lakh crore. Loan waiver cannot be a solution to address the agrarian crisis; instead the government must look for long-term solutions. There is also the danger of intense competition among the political parties to win by promising the farm loan waiver and projecting themselves as the protectors of farmers becoming the norm of the day before each election.

PARAGRAPH 2 OF PARAGRAPH COMPREHENSION

India has a long history of loan waivers. In 1900, the then Prime Minister announced an agricultural debt relief scheme totaling to Rs. 10,000 crore for agricultural borrowers. In the same year, a similar scheme was announced by the then Chief Minister of Haryana, waiving Rs. 227.5 crore of farm loans by banks and cooperatives. Over the next decade, despite the RBI’s warning of the adverse consequences of such measures, several States restored to them. In 2008, the UPA government announced one of the largest debts waiver schemes in history. The Agricultural Debt Waiver and Debt Relief Scheme waived Rs. 60,000 crore spread across 237 districts and reaching 30 million farmers. Over the next few years the programme received widespread criticism from economists.

PARAGRAPH 3 OF PARAGRAPH COMPREHENSION

However, this did not stop governments at the State level from making further loan waiver announcements and now more than 10 States have joined the club. If loan waiver was solution to agrarian distress, why hasn’t it prevented farm incomes from decelerating and farmers from agricultural productivity and in fact resulted in an increase in moral hazard among the eligible households. The CAG report following the 2008 loan waiver clearly brought out rampant corruption and exclusion and inclusion errors in identification of beneficiaries. We try to dwell upon this expensive scheme and its desirability from the economic, social and farmers’ welfare perspectives.

PARAGRAPH 4 OF PARAGRAPH COMPREHENSION

As per the latest data available Nabard All-India Rural Financial Inclusion Survey 2016-17, only 26 percent of rural households in Chhattisgarh, 35 percent in Madhya Pradesh, and 31 percent in Rajasthan availed themselves of loans from any source during 2015-16. The percentage of institutional borrowers was close to 16, 21, and 19 percent respectively in Chhattisgarh, Madhya Pradesh, and Rajasthan. One can see that waiving loans benefits only about one-fifth of agricultural households and creates disincentives for those who use their own resources or are unable to avail themselves of institutional loans.

PARAGRAPH 5 OF PARAGRAPH COMPREHENSION

Apart from benefitting only institutional borrowers, loan waivers would be a heavy drain on the financial resources of both the States and the Center which may adversely affect public investments in agriculture and irrigation and dissuade private investments. This has been the case at the Central level with agricultural investments declining in real terms in the last few years. Several studies have shown that facilitating access to institutional credit can increase farmers’ income by 15-20 percent, which will be instrumental in improving their living standards. The amount foregone on waiving loans could give better returns if invested in agricultural research and development, markets, irrigation, or even in enhancing the penetration of institutional credit.

QUESTION1

1)What is/are the downside of the farm loan waiver? Answer on the basis of the given passage.

(A)Farm loan waiver cannot be a solution to address the agrarian crisis.

(B)Loan waiver will give rise to intense competition among the political parties to win elections by promising the farm loan waiver.

(C)The burden of loan waiver is ultimately shifted to common taxpayers.

1. Only (A) and (B)

2. Only (B) and (C)

3. Only (A) and (C)

4. All (A), (B), and (C)

5.Only (C)

QUESTION 2 OF PARAGRAPH COMPREHENSION

2)Which of the following statements is not true in the context of the given passage is not true?

(A)It was the UPA government that announced one of the largest debt waiver schemes in history.

(B)The economists never appreciated the farm loan waivers.

(C)The RBI did not favor the loan waivers by state governments.

1.Only (A)

2.Only (B)

3.Only (C)

4.Only (B) and (C)

5.None of these

QUESTION3 OF PARAGRAPH COMPREHENSION

3)What have been the impacts of farm loan waivers?

(A)Owing to farm loan waivers, the income of farmers has registered positive growth.

(B)This scheme has helped reduce the number of suicides committed by farmers.

(C)This scheme has helped increase agricultural productivity.

1.Only (A) and (B)

2.Only (B) and (C)

3.Only (A) and (C)

4.None of these

5.All (A), (B) and (C)

QUESTION 4

4)What was/were the observation(s) of the CAG following the 2008 loan waiver?

(A)The loan waiver brought out rampant corruption and exclusion and inclusion errors in identification of beneficiaries.

(B)That only  26 per cent of rural households in Chhattisgarh, 35 per cent in Madhya Pradesh and 31 per cent in Rajasthan availed themselves in loans from any source during 2015-16.

(C)That the waiving of loans benefits only about one-fifth of agricultural households and creates disincentives for those who use their own resources or are unable to avail themselves of institutional loans.

1.Only (A) and (B)

2.Only (B) and (C)

3.Only (A) and (C)

4.None of these

5.All (A), (B) and (C)

QUESTION 5 OF PARAGRAPH COMPREHENSION

5)What is/are the effect(s) of allowing farm loan waivers? Answer on the basis of the last paragraph.

(A)Allowing farm loan waivers results into a heavy drain on the financial resources of both the States and the Centre.

(B)Doing so adversely affects public investments in agriculture and irrigation and dissuades private investments.

(C)Doing so can increase farmers’ income by 15-20 per cent, which may improve their living standards.

1.Only (A) and (B)

2.Only (B) and (C)

3.Only (A) and (C)

4.None of these

5.All (A), (B) and (C)

ANSWERS OF PARAGRAPH COMPREHENSION :

1)Only (A) and (B)

2)None of these

3)None of these

4)Only (A)

5)Only (A) and (B)