Question

1. The success of any unit in a competitive environment depends on prudent management sources.
A. In this context it would have been more appropriate if the concept of accelerated depreciation, together with additional incentives towards capital allowances for recouping a portion of the cost of replacements out of the current generations, had been accepted.
B. Added to this are negligible retention of profits because of inadequate capital allowances and artificial disallowance’s of genuine outflows.
C. One significant cause for poor generation of surpluses is the high cost of capital and its servicing cost.
D. The lack of a mechanism in India tax laws for quick recovery of capital costs has not received its due attention.
6. While this may apparently look costly from the point of view of the exchequer, the ultimate cost of the Government and the community in the form of losses suffered through poor viability will be prohibitive.

• A. ADBC
• B. BCDA
• C. CBDA
• D. DBAC

Hint:

When the question is financial or policy-based, trace the issue from cause → impact → systemic flaw → suggested remedy.

Answer 1

The Correct Option is C

Sentence 1 speaks about prudent management as key to success. This sets the stage for identifying financial obstacles.
(C) introduces one such issue — high cost of capital and its servicing.
(B) adds another factor — low profit retention due to poor capital allowance structure.
(D) follows by pointing out the flaw in Indian tax laws — lack of quick capital cost recovery.
(A) concludes the chain with a potential policy solution (accelerated depreciation and capital allowances).
Sentence 6 justifies why these structural reforms are important by discussing the wider economic consequences.
So the correct order is:
1 — C — B — D — A — 6
CBDA