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.

Sales_i , Imports_i, and Exports_i respectively denote the sales, imports and exports in year i.

Deficit in year i, Deficit_i = Imports_i – Exports_i.

Deficit Intensity in year i, DI_i = Deficit_i / Sales_i.

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

Correct answer: 1994-95

1994-95
B
1995-96
C
1996-97
D
1997-98

Solution

Deficit intensity = $\frac{D e f i c i t}{S a l e s} = \frac{I m p o r t}{S a l e s} - \frac{E x p o r t}{S a l e s} =$ Import Intensity - Export Intensity

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Growth rate in 1994-95 = $\frac{6.3 - 5.1}{5.1}$ ×100 = 23.5%

Growth rate in 1995-96 = $\frac{7.6 - 6.3}{6.3}$ × 100 = 20.63%

Growth rate in 1996-97 = $\frac{8 - 7.6}{7.6}$ × 100 = 5.26%

Growth rate in 1997-98 = $\frac{5 - 8}{8}$ × 100 = -37.5%

Hence, option (a).

CAT 2000 — DILR Question 20

Answer & solution

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