SEBI Grade A 2026 Comprehension Questions with Expected Answers

(Phase II Descriptive English – 21 February 2026)

The SEBI Grade A 2026 Mains Comprehension passage tested more than reading ability. It tested:

  • Conceptual clarity
  • Environmental policy awareness
  • Analytical articulation
  • Structured answer writing within word discipline

The passage was based on water consumption crisis in data centres and the AI-driven digital economy.

Below are the exact questions asked along with expected answer direction (exam-standard approach).

📖 Passage Theme Snapshot

The passage highlighted:

  • Data centres as backbone of digital infrastructure
  • Heavy freshwater consumption
  • Evaporative cooling systems
  • AI model training water footprint
  • Sustainability vs digital growth tension
  • Need for regulatory and corporate accountability

This was a conceptual + policy-based RC, not a factual memory test.

📝 Question 1

Q1. Why do data centers require such large quantities of water, and what role does evaporative cooling play in their operations?

✅ Expected Answer Direction:

Data centres generate enormous heat due to continuous server operations. To prevent overheating and system failure, they use cooling mechanisms. Evaporative cooling systems circulate large volumes of water through cooling towers where water absorbs heat and evaporates. This method is efficient but highly water-intensive, making data centres major freshwater consumers.

🔎 Key Points Examiner Looks For:

  • Heat generation from servers
  • Need to prevent hardware failure
  • Evaporative cooling explanation
  • Water-intensive nature

📝 Question 2

Q2. How has the rise of artificial intelligence intensified the water consumption crisis associated with data centers?

✅ Expected Answer Direction:

The expansion of artificial intelligence has significantly increased computational workloads, leading to greater demand for data processing and storage. Training large AI models consumes substantial water indirectly through cooling systems and energy production. As AI adoption expands globally, the freshwater footprint of digital infrastructure continues to grow.

🔎 Key Focus:

  • AI workload escalation
  • Large model training
  • Increased cooling demand
  • Projected exponential growth

📝 Question 3

Q3. In what ways does the geographical placement of data centers worsen water stress in vulnerable regions?

✅ Expected Answer Direction:

Many data centres are located in areas already experiencing water scarcity. Their large daily water consumption strains local freshwater supplies, affecting communities and ecosystems. When built in drought-prone or water-stressed regions, they intensify existing environmental vulnerabilities.

🔎 Key Elements:

  • Location sensitivity
  • Water-stressed regions
  • Community and ecological impact

📝 Question 4

Q4. Explain the dual water dependency of data centers in relation to energy consumption.

✅ Expected Answer Direction:

Data centres depend on water not only for cooling but also indirectly through electricity generation. Thermal power plants used to generate energy require large quantities of water for cooling purposes. Thus, data centres consume water both directly (cooling systems) and indirectly (energy production), creating a dual dependency.

🔎 Key Insight:

  • Direct cooling usage
  • Indirect power-generation usage
  • Water-energy nexus

📝 Question 5

Q5. What measures are being taken by governments and technology companies to reduce the water footprint of data centers, and are they sufficient?

✅ Expected Answer Direction:

Governments and technology firms are exploring water-efficient cooling systems, renewable energy adoption, and sustainability commitments. However, despite these initiatives, the growing demand for digital services continues to offset efficiency gains. Therefore, stronger policy intervention and technological innovation are necessary.

🔎 Examiner Looks For:

  • Sustainability initiatives
  • Corporate commitments
  • Renewable energy shift
  • Insufficiency of current efforts

🎯 How to Write RC Answers in SEBI

SEBI does NOT reward:

❌ Lengthy repetition
❌ Decorative vocabulary
❌ Opinion-based answers

SEBI rewards:

✔ Contextual clarity
✔ Conceptual linkage
✔ Policy relevance
✔ Structured 3–5 line answers
✔ Word discipline

⏱ Time Management Insight (60-Minute Paper)

Recommended Order Strategy:

  1. Precis (15–18 min)
  2. Essay (22–25 min)
  3. RC (15–18 min)

RC answers must be sharp and structured — not bulky.

🚀 Bank Whizz Strategic Takeaway

SEBI is moving toward:

  • Sustainability governance
  • Technology-regulation balance
  • Environmental-economic trade-offs
  • Policy depth in comprehension

Your preparation must include:

✔ Editorial-based comprehension practice
✔ Structured answer writing
✔ Word precision drills
✔ Analytical reasoning improvement