| Directions for Questions 35-39
Answer the Questions after reading the following passage. Base your answer on information that is either stated or implied in the passage. Choose the best answer and darken the corresponding oval in the answer sheet.
Passage:
A good monsoon has improved the economic outlook. With the industrial growth rising from last year’s 4.5 percent to 5.7 percent in June, there is cause for cheer. The manufacturing factor in particular has been performing well, especially in the passenger car segment, along with non - cotton textiles, steel and transport equipment. Electricity generation is also up. The farm sector is expected to grow to 7.5 percent generating higher incomes in rural households and adding momentum to the demand for industrial goods. The other positive sign are the huge stocks of food grains and foreign exchange reserves. Exports, too, are growing at a double digit rate and on the balance of payments side, a trade surplus has accrued for the second time. Inflation has remained low.
The only problem is the widening fiscal deficit and government’s borrowing pattern. A higher deficit will effect the scope of public investment. In the first Quarter of 2003-2004, the Central and State governments together borrowed Rs 73,218 Crores from the domestic market as compared to Rs 66,702 Crores during same period last year. The Center alone has already borrowed more in the first quarter (April-June), this fiscal than it did over the first half of the last year. Such heavy borrowing could be attributed to the rather low revenue collection so far as the large loan repayments scheduled for July – August this year. When Government borrows so heavily, it has less money to spend on crucial growth promoting areas and the social sector.
The private sector, too, has been reluctant to invest in the expansion of productive capacity and has parked its cash kitty in government bonds and mutual funds. Better demand prospect on account of a favourable monsoon are likely to persuade them to invest more. An increase in both public and private investment will be necessary to bring about GDP growth of 8 percent, as a higher industrial growth alone will not be sufficient.
(Source: A lead article from a national daily, August 2003)
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