RBI Grade B 18 Dec 2011

Read the following passage carefully and answer the questions given below it. Certain words/phrases are printed in bold to help you to locate them while answering some of the questions.

Food in ation is a signi cant negative feature of today's economic environment and more so, in respect of our country. It has a tremendous impact on quality of life, as people struggle to maintain nutritional standards that they had previously achieved, or give up some other forms of consumption so as to keep themselves well-fed. For a country that legitimately believed that it had effectively dealt with its vulnerability to food shortages in the form of the Green Revolution of the late 1960s and early 1970s, the current situation comes as a rude reminder that solutions are rarely permanent.

To place the current developments in context, it must be pointed out that the world economy is itself facing problems with food prices. Food as a category has been following global trends in commodity prices over the past couple of years. There is a view that this is the outcome of the larger trend towards financialisation of commodities wherein large increases in global liquidity as a response to the 2008 crisis feed directly into higher asset prices,
including commodities. Be that as it may, the price dynamics of individual food items suggest that there are also some commodity-speci c factors at work, which may either reinforce or counteract the broader trend. Sugar, for example, shows fluctuations in response to current supply conditions, while wheat re ects the effect of persistent
drought in some major cultivating areas.

India's food in ation is certainly linked to global trends, particularly in relatively heavily traded commodities like sugar and oilseeds, but, given the high degree of self-reliance in many other commodities, domestic factors play a
big role, although the drivers of in ation in recent months have been energy prices and demand pressures, as re ected in the non-food manufactured products index, food prices contributed signi cantly in the first half of 2010 and remain uncomfortably high. Apart from the direct impact on the index, it is also likely to feed through into the wider in ationary process through higher wage demands, of which there is some evidence.
It is generally believed that food prices are highly sensitive to monsoon performance, but this belief has been tested over the past few years. There is suf cient evidence to suggest that food prices are being driven not by transitory factors, such as rainfall, but by more fundamental forces. Essentially, a long period of relatively rapid growth has taken large numbers of households across a threshold at which they begin to look for nutritional diversi cation. The predominance of cereals in the typical household diet gives way to greater balance and a consequent increase in the demand for proteins - pulses, milk, meat, sh and eggs, vegetables and fruit. It is no surprise that these items have been the primary causes of food in ation in the recent period.

Rearrange the following seven sentences (A), (B), (C), (D), (E), (F) and (G) in the proper
sequence to form a meaningful paragraph; then answer the questions given below them.
(A) They have to, therefore, necessarily devise strategies for product differentiation and pricing, market segmentation and ef cient portfolio management.
(B) There is a great need for the banks to fully exploit these sectors to achieve a win-win situation for both - the farm and non-farm sector units and the banks.
(C) The time has now come to consolidate on the gains of the past decades of nationalized banking.
(D) This means banks will no longer be operating in a "seller's market".
(E) Undoubtedly, an untapped and vibrant market for commercial banking exists in the farm and non-farm sectors of rural economy.
(F) Then, and only then, could it be claimed that the nationalization has, at least to some extent, achieved the purpose of nationalization.
(G) The present era of financial liberalization and globalized banking would entail that banks equip themselves to face the rigours of a highly competitive financial market.