Flourishing Friday with Epitome English
Read the passage and answer the questions that follow :
Seeking to move towards a cashless economy, the government has proposed income tax benefits for people making payments through credit or debit cards, besides doing away with transaction charges on the purchase of petrol, gas and rail tickets with plastic money. This is the first serious effort to tackle the predominance of cash in India’s economy. India is a hugely cash-dependent economy. The RBI and commercial banks annually spend around Rs 21,000 crore in currency operations costs while the citizens of Delhi alone spend Rs 9.1 crore and 60 lakh hours in collecting cash.
The scale of this burden is unique to India considering that it is among the most cash-intensive economies with a cash-to-GDP ratio of 12%, almost four times as much as other markets such as Brazil (3.93%), Mexico (5.3%) and South Africa (3.73%). Moreover, cash transactions and black money are directly linked, since a cash trail is nigh impossible to track. As such, electronic transactions and the ease of audit they afford should make the government’s job much easier in terms of curbing illegal transactions.
What the switchover to payments by credit and debit cards means is that the payer must have money in the bank. This can be facilitated through a greater recourse to direct cash transfer of subsidies to banks. But, those who avail of this may not belong to the section that pays income tax. Given that less than three per cent of our population pays income tax, transactions by plastic cards may not amount to much. But, the scene is changing. For instance, payments by mobiles have grown from just 860 transactions in November 2010 to 4.4 million in August 2014. With the spread of Internet and expansion of e-commerce, online payments are fast catching on among the middle class. These are mostly cashless transactions. It is also necessary to remember that a move towards a cashless economy will eliminate the cost of printing and distributing cash. If to these expenses are added the cost of storage and maintaining the currencies in the over 60,000 ATMs, the outlay becomes prohibitive. The answer is a buoyant economy that will reduce the numbers of those who still regard cash as the only reliable legal tender.
1. According to the author of the passage, what type of economy is India?
a) Dependent Economy
b) Developed Economy
c) Cash-intensive Economy
d) Labour-intensive Economy
2. According to the passage, which country after India can be considered to be a Cash-dependent economy?
a) Brazil
b) Mexico
c) South Africa
d) Brazil or South Africa
3. According to the author of the passage, which of the following is directly linked?
a) Credit transactions and black money
b) Cash transactions and black money
c) Cash and Credit Transactions
d) Black and White Money
4. How would the e-transactions help the Government of India?
a) Increasing the revenue of the government
b) Increasing the paperwork of the government
c) Curbing illegal transactions
d) Increasing the audit work at government level
5. Which of the following statements is incorrect according to the passage?
a) Payments by mobiles have grown from 860 transactions in 2010 to 4.4 million in 2014.
b) The RBI and commercial banks annually spend around Rs 21,000 crore in currency operations costs.
c) Citizens of Delhi alone spend Rs. 9.1 crore and 60 lakh hours in collecting cash.
d) Less than 4% of our population pays income tax.
1. Answer: c)
Explanation: The author clearly states in the passage that India is a hugely cash-dependent economy.
2. Answer: b)
Explanation: According to the passage India considered to be amongst the most cash-intensive economies with a cash-to-GDP ratio of 12%, almost four times as much as other markets such as Brazil (3.93%), Mexico (5.3%) and South Africa (3.73%).
3. Answer: b)
Explanation: The author clearly mentions in the second paragraph that cash transactions and black money are directly linked, since a cash trail is nigh impossible to track.
4. Answer: c)
Explanation: The last lines of the passage clearly mention that electronic transactions and the ease of audit they afford should make the government’s job much easier in terms of curbing illegal transactions.
5. Answer: d)
Explanation: The third paragraph clearly states that given that less than three per cent of our population pays income tax, transactions by plastic cards may not amount to much. Hence, option d) is incorrect.
