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    Question

    Which of the following statements about recent RBI's state of the economy report is/are correct?

    1. The report suggests the Indian corporate sector should capitalize on lower borrowing costs for capital expenditure (capex).

    2. Deputy Governor Michael Debabrata Patra authored the report.

    3. The power sector's capex plans are ambitious, but distribution companies have low leverage.

    A Only Statement 1 Correct Answer Incorrect Answer
    B Statements 1 and 2 Correct Answer Incorrect Answer
    C Statements 2 and 3 Correct Answer Incorrect Answer
    D Only Statement 3 Correct Answer Incorrect Answer
    E All Statements 1, 2 and 3 Correct Answer Incorrect Answer

    Solution

    •     According to the Reserve Bank of India’s (RBI’s) state of the economy report, The Indian corporate sector must get its act together to take advantage of the lower borrowing cost to make capital expenditure (capex) and relieve the government of heavy lifting. •     The report, authored by RBI staff, including Deputy Governor Michael Debabrata Patra, expects the current liquidity conditions to ease with government spending, and inflation expectations to edge down, while observing that unsecured loans continued to grow despite an increase in risk weighting.  •     The report pointed out fixed asset growth was evident in the oil and gas sector and in chemicals. •     In sectors such as steel and automobiles, for which stock returns have exceeded index returns, fixed asset additions have, however, been underwhelming. •     According to the report, the power sector’s capex plans are the most ambitious, but leverage is high among distribution companies. Learn Along About RBI Founded: 1 April 1935                         Headquarters: Mumbai                           Governor: Shaktikanta Das

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