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CAT 2000 — DILR Question 20

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Passage / Data

Answer the following question based on the information given below.

The table shows trends in external transactions of Indian corporate sector during the period 1993-94 to 1997-98. In addition, following definitions hold good.

Salesi , Importsi, and Exportsi respectively denote the sales, imports and exports in year i.

Deficit in year i, Deficiti = Importsi – Exportsi.

Deficit Intensity in year i, DIi = Deficiti / Salesi.

Growth rate of deficit intensity in year i, GDIi = (DIi – DIi-1)/DIi-1

Further, note that all imports are classified as either raw material or capital goods.

Trends in External Transactions of Indian Corporate Sector (All figures in %)

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The highest growth rate in deficit intensity was recorded in

Answer & solution

  • 1994-95

  • B

    1995-96

  • C

    1996-97

  • D

    1997-98

Solution

Deficit intensity = DeficitSales=ImportSales-ExportSales= Import Intensity - Export Intensity

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Growth rate in 1994-95 = 6.3-5.15.1×100 = 23.5%

Growth rate in  1995-96 = 7.6-6.36.3 × 100 = 20.63%

Growth rate in  1996-97 = 8-7.67.6 × 100 = 5.26%

Growth rate in  1997-98 = 5-88 × 100 = -37.5%

Hence, option (a).

CAT 2000 DILR Q20: The highest growth rate in deficit intensity was recorded in — Solution | TheCATExam