Reading Comprehension Practice 17

Reading Comprehension Practice 

Activity in the services sector shrank in September as new orders sank; a new survey shows. To add to the worries, overall economic activity is seen to be nearly stagnating, while employment levels fell for the second successive month.

The seasonally adjusted Service Sector Business Activity Index fell to 49.8 from 53.8 in August, HSBC Purchasing Managers Index, which is based on a survey of 350 private sector executives, showed. Any reading of less than 50 indicates contraction, while economic activity is seen to be growing if the index is over 50. This is the first time since April 2009 that the services sector, that accounts for more than half the Indian economy, has slipped into negative terrain.

The decline in services sector activity could be attributed to lower demand for offshoring and IT and IT-enabled services from the US and Europe, where several economies are grappling with debt problems. There is also an impact on financial services as banking activity has slowed down on account of higher interest rates and investors are wary of parking their funds in stock markets.

At the moment, manufacturing activity is continuing to grow, though at a much slower pace. As a result, the HSBC India Composite Index which covers manufacturing and services sectors stood at 50.2 in September, compared to 54.5 in August.

The overall trend is in line with expectations that the Indian

economy will grow at less than 8% during the current financial year, with agriculture providing the only silver lining. Last year the economy expanded 8.5%, prompting the government to predict 9% growth this year. But over the last few months, as the global economic situation deteriorated and higher interest rates slowed down the tempo, the government too is lowering its forecasts although not to the extent that others have done.

But it isn't just services which are shrinking. The survey shows employment fell for the second successive month, increasing worries for policymakers, who want rapid economic growth to take care of the growing population that is joining the workforce.

Typically, a near-stagnant economy will encourage the central bank to start lowering interest rates to spur economic activity. But given the inflationary pressures, RBI is in no mood to do so and the debate is whether it will resort to further rate hikes or pause after increasing key policy rates a dozen times over the last 18 months. It is due to review its monetary policy later this month. The HSBC survey showed that inflation pressures are firmly in place though the rate is moderating a little. "We are getting close to the end of RBI's tightening cycle, but we are not quite there yet," an economist observed.

 51. Which of the following sector(s) is/are covered under HSBC India Composite Index?

(a) Services only

(b) Manufacturing only

(c) Agriculture only

(d) Both Services and Agriculture

(e) Both Manufacturing and Services.

52. Which of the following will not show contraction in the services sector business?

(a) 54.5

(b) 49.8

(c) 48.3

(d) 20.5

(e) 35.5

53. According to the passage, what is the contribution of services sector to Indian economy?

(a) Less than 25%

(b) Less than 35%

(c) More than 80%

(d) More than 50%

(e) None of these

54. What was the initial prediction of percent growth of Indian economy, according to the passage?

(a) 8.5%

(b) 9%

(c) 8%

(d) Not indicated

(e) None of these

55. Which of the following is correct in the context of the passage?

(a) Banking activity has gone up with higher interest rates.

(b) There have been many successive key policy rate hikes recently.

(c) US has increased offshoring of their IT-enabled services.

(d) Asian countries are grappling with debt problems. 

(e) The global economic situation is quite good.

56. Which of the following may be the most suitable title for the passage?

(a) Global Outlook

(b) India and the World

(c) Services Sector and Economy

(d) Economics of Politics

(e) How to fight inflationary pressures

57. According to the passage, what (percentage-wise) is the share of manufacturing in Indian economy?

(a) 500%

(b) 9%

(c) 20%

(d) Not indicated

(e) None of these

58. Which of the following is one of the factors, according to the passage, for not lowering interest rates?

(a) Inflationary pressure

(b) Stagnant economy

(c) Lower rate of employment

(d) Successive fall in employment levels

 (e) The growth in agriculture is good

59. Which of the following conveys the meaning of the phrase, " ... we are not quite there yet." as used in the passage?

(a) We are far from satisfactory levels of employment rate. 

(b) There may be one or two more rounds of further rate hike.

(c) The tightening cycle has come to an end.

(d) The rapid economic growth is far away.

(e) The overall trend is not in line with expectations.

60. Which of the following is not true in the context of the passage?

(a) Services sector shrank while overall economy grew. 

(b) There is a fall in employment levels.

(c) Manufacturing activity continues to grow marginally. 

(d) Agriculture sector continues to grow.

(e) The government has now lowered the forecast of growth.

Answer: - 

1.E

2.D

3.C

4.C

5.E

6.C

7.D

8.B

9.E

10.A