Plus One Economics Chapter Wise Questions and Answers Chapter 3 Liberalisation, Privatisation and Globalisation: An Appraisal

Kerala Plus One Economics Chapter Wise Questions and Answers Chapter 3 Liberalisation, Privatisation and Globalisation: An Appraisal

Plus One Economics Liberalisation, Privatisation and Globalisation -An Appraisal One Mark Questions and Answers

Question 1.
India started economic reforms in:
(i) 1990
(ii) 1991
(iii) 1992
(iv) 1995
Answer:
(ii) 1991

Question 2.
In which year WTO was formed?
(i) 1990
(ii) 1992
(iii) 1995
(iv) 2000
Answer:
(iii) 1995

Question 3.
Which among the following is NOT a pillar of economic reforms
(i) Liberalisation
(ii) Privatisation
(iii) Nationalisation
(iv) Globalisation
Answer:
(iii) Nationalisation

Question 4.
Odd one out and justify.
(Privatisation, Nationalisation, Liberalisation, Globalisation)
Answer:
Nationalization. Others are parts of economic reforms.

Question 5.
How many countries are members of WTO?
Answer:
133 countries are members of WTO (subject to change)

Question 6.
Find the odd one out.
SBI, Punjab National Bank, Andhra Bank, Union Bank of India.
Answer:
Andhra Bank. Others are national banks.

Question 7.
What is BPO?
Answer:
BPO stands for Business Process Outsourcing.

Plus One Economics Liberalisation, Privatisation and Globalisation -An Appraisal Two Mark Questions and Answers

Question 1.
Point out major factor responsible for the high growth of service sector?
Answer:
The growth rate of service sector was very high in India compared to other sectors. After adopting new economic policy, the growth rate was 8.2%. The liberalisation and privatisation policy are responsible for the fast growth rate in service sector.

Question 2.
What does foreign direct investment mean?
Answer:
if refers to investment directly undertaken by the foreign companies and nationals in various sectors of the economy.

Question 3.
What is the meaning of disinvestment of public sector unit?
Answer:
The sale of part of government shareholding in public sector undertakings to financial institutions, mutual funds, and public is known as disinvestment of PSUs.

Question 4.
State true or false

1. WTO was found in 1995 as successor organisation of G#TT.
2. India signed NEP in 1991.

Answer:

1. True
2. True

Question 5.
Write full form of the following,

1. IBRD
2. Fll
3. IMF
4. GATT

Answer:

1. IBRD – International Bank for Reconstruction and Development.
2. Fll – Foreign Institutional Investment
3. IMF – International Monetary Fund.
4. GATT – General Agreement on Tariff and Trade

Plus One Economics Liberalisation, Privatisation and Globalisation -An Appraisal Three Mark Questions and Answers

Question 1.
Match the following columns

Answer:

Question 2.
Give examples for Nationalized bank, Private bank and Private Foreign Bank.
Answer:
Nationalized banks

• BankofBaroda
• Union bank of India
• Punjab National bank

Private banks

• Andhra Bank
• Oriental Bank of Commerce
• Punjab and Sindh Bank

Private Foreign Banks

• Deutsche Bank
• HSBC

Question 3.
The industrial sector has performed poorly during reform period’. Justify.
Answer:
The industrial sector has performed poorly in the re-form period due to the following reasons :

1. The shortage of electricity and raw materials affect the quality of goods produced.
2. NEP has seriously affected local industrial production.

Question 4.
Classify the following as direct tax and indirect tax. (Sales tax, Property tax, VAT, Customs duty, Income tax, Corporate tax)
Answer:

Question 5.
‘NEP has impact on poverty’. Do you agree? Substantiate.
Answer:
Yes, NEP has impact on poverty. NEP cannot solve the problem of poverty. It seems that it will increase the problem of poverty. The reason is that there will be reduction of public expenditure on projects benefiting the poor. It will also reduce subsidy on food and agricultural product. At the same time, the government will raise the prices of essential products used by the poor. Ail will lead to increase in poverty.

Question 6.
At present how many industries are reserved for public sector in India? Which are they?
Answer:
3 industries. They are:

1. Atomic energy
2. Minerals enlisted under schedule of atomic energy.
3. Rail transport.

Question 7.
Mention the monetory reforms under new economic policy?
Answer:

1. Re-constitution of banking system
2. Free determination of interest rate
3. Reduction of liquidity ratio
4. Improvement in banking system.
5. More freedom to banks
6. Abolition of direct credit program.

Question 8.
Do you think that “navaratna policy” of the government helps in improving the performance of Public Sector undertakings in India? Substantiate.
Answer:
In 1996, in order to improve efficiency, infuse professionalism and enable them to compete more effectively in the liberalized global environment, the government chose nine PSUs and declared them as navaratnas.

They were given greater managerial and operational autonomy, in taking various decisions to run the company efficiently and thus increase their profits. Greater operational, financial and managerial autonomy had also been granted to 97 other profit-making enterprises referred to as miniratnas.

The granting of navaratna status resulted in better performance of these companies. Gradually the government has decided to help these Navaratnas in becoming independent so that they can expand themselves in the global markets and raise resources by themselves from financial markets.

Plus One Economics Liberalisation, Privatisation and Globalisation -An Appraisal Four Mark Questions and Answers

Question 1.
State whether true or false

1. ICICI is a public sector bank
2. ONGC is a Navaratna company
3. Quota is a non-tariff barrier
4. India faced balance of payment crisis in 1991

Answer:

1. False. ICICI is a private sector bank
2. True
3. True
4. True

Question 2.
What are the causes of globalisation?
Answer:
The major causes of globalisation are given below:

1. rapid growth of research and development.
2. Improvement in communication facilities.
3. deregulation of money market.
4. removal of artificial barriers.

Question 3.
“Agricultural sector appears to be adversely affected by the reform process” do you agree? Give reasons.
Answer:
Yes, Agricultural sector appears to be adversely affected by the reform process. The agricultural sector has not been able to be benefited by the reform process, rather the growth rate has decelerated. Public investment in agriculture sector has been reduced during the reform period. Further, the removal of fertilizer subsidy severely affected the mall and marginal farmers

Due to commencement of WTO a lot of policies have changed which have adversely affected the Indian farmers. Moreover, because of export oriented policy in agriculture, there has been a shift from production for the domestic market towards production for export market focusing on cash crops instead of food grains. This has resulted in the price rise of food grains. In short India’s agricultural sector is badly affected by the reform process.

Question 4.
“New Economic Policy of 1991 was an inevitable phenomenon”. Do you agree? Justify.
Answer:
Yes, I agree.
India at the time of independence, adopted a mixed economy framework and accordingly rules and laws were framed which aimed at controlling and regulating the economy. However, in the long run, theses ended up hampering the process of growth and development.

In 1991 India faced an acute economic crisis relating to external debt. The government was not able to make repayments on its borrowings from abroad. Foreign exchange reserves dropped at such a level that it was not sufficient for even a fortnight. Prices of essential goods were rising high. All these factors led to the need for reforms to be introduced in India.

Question 5.
Prepare a note on WTO.
Answer:
The WTO was founded in 1995 as the successor organization to the General Agreement on Trade and Tariff (GATT). GATT was established in 1948 with 23 countries as the global trade organization to administer all multilateral trade agreements by providing equal opportunities to all countries in the international market for trading purposes.

WTO is expected to establish a rule based trading regime in which nations cannot place arbitrary restrictions on trade. In addition, its purpose is also to enlarge production and trade of services, to ensure optimum utilization of world resources and to protect the environment.

The WTO agreements covertrade in goods as well as services to facilitate international trade (bilateral and multilateral) through removal of tariff as well as non-tariff barriers and providing greater market access to all member countries.

Plus One Economics Liberalisation, Privatisation and Globalisation -An Appraisal Five Mark Questions and Answers

Question 1.
Do you think outsourcing is good for India?
Answer:
Outsourcing is one of the important outcomes of the globalization process. In outsourcing, a company hires regular services from external sources, mostly from other countries, which was previously provided internally or from within the country (like legal advice, computer service, advertisement, security each provided by respective departments of the company).

As a form of economic activity, outsourcing has intensified, in recent times, because of the growth of fast modes of communication, particularly the growth of Information Technology (IT). Most multinational corporations, and even small companies, are outsourcing their services to India where they can be availed at a cheaper cost with reasonable degree of skill and accuracy.

The low wage rates and availability of skilled manpower in India have made it a destination for global outsourcing in the post-reform period. Thus I think in this reform period outsourcing is good for India.

Question 2.
Prepare a note on privatisation of Indian economy?
Answer:
Privatisation means removing strict control over private sector and making them free to take necessary decisions. Since independence, we accorded top priority to the public sector but the desired results could not be achieved with the encouragement of the public sector. Now the new economic policy tries to expand private sector. In order to encourage private sector following measures have been adopted.
Measures to encourage Private Sector in the economy are the following

1. Reduction in the number of reserved public sector industries. The number of Public Sector industries from 17 to 4.
2. Increasing the share of private sector investment.
3. Selling the share of public enterprises.
4. No insistance on conversion. Now the financial corporation can not insist the industries for conversion of their loans into equity shares.

The government has also made attempts to improve the efficiency of PSUs by giving them autonomy in taking managerial decisions.

Plus One Economics Liberalisation, Privatisation and Globalisation -An Appraisal Eight Mark Questions and Answers

Question 1.
Assess the performance of Indian economy during reforms.
Answer:
The growth of GDP measured from 5.6 percent during 1980-91 to .8.2% during 2007-12. The foreign exchange reserve and foreign direct investment increased rapidly. FDI increased from about US $100 million in 1990 -91 to US$ 400 billion in 2010 -11.

Foreign exchange reserve increased from US$6 billion in 1990-91 to US $400 billion 2011 -12. During this period Indian exports of auto parts, engineering goods, IT software and textiles, increased rapidly. But the reform process have been widely criticized on the following grounds.

Even though there has been an increase in GDP, the reform led growth has not generated sufficient employment opportunities Growth rate in agriculture has been decelerating. Public investment in agriculture sector has been reduced in the reform period. Industrial growth also has been decelerated. Disinvestment of PSUs could not reach near the target.

The tax reduction in the reform period, aimed at yielding larger revenue and to cut tax evasion, have not resulted in increase in tax revenue. The process of globalization has produced positive as well as negative results for both India and other countries.

Globalization could be seen as an opportunity is term of greater access to global markets, high technology, etc. Some other economists argue that globalisation is a strategy of the developed countries to expand their markets in other countries.

Question 2.
Many scholars argue that globalization is a threat as it reduces the role of the state in many sectors.
Some counter argue that it is an opportunity as it opens up markets to compete in and capture. Prepare a Debate Report on “Globalization is a threat or blessing”.
Answer:
lips “Globalization is a threat or blessing”.
The plus one commerce batch of (Name of school) conducted a debate on the topic Globalization is a threat or blessing on 16/08/2018 at 10.0 a.m with the ample guidance of our economics teacher. Our class was divided into two groups to cover the entire area of the topic. Each group presented relevant points to support their views.

1. Arguments in favors of Globalization

• As a result of globalization, the growth rate of the economy has gone up. Production of both agricultural and industrial sectors increased
• As a result of globalization, export growth rate has increased, foreign direct investment has risen and the ratio of external debt to GDP has also fallen
• Globalization will create pressures of competition which help in improving efficiency level
• The New Economic Policy has helped to tide over the immediate balance of payments crisis

2. Arguments against Globalization

• Globalization process neglected the agricultural sector compared to other sectors
• More dependence on foreign debt will put India into debt trap
• The globalization process has given more importance to foreign technology. This will hurt indigenous know-how
• The globalization has encouraged the production of comforts and luxuries.

Question 3.
Prepare a seminar report on the topic “New Economic Policy – 1991 ”
Answer:
“New Economic Policy -1991”
Introduction:
The plus one commerce batch of (Name of school) conducted a seminar on the topic “New Economic Policy – 1991” on 16/08/2018 at 11.0 a.m with the ample guidance of our economics teacher. Our class was divided into three groups to cover the entire area of the topic. Each group presented one objective each. They focused on the area given to them and the group leader presented the seminar paper after required preparation.

Content:
LIBERALISATION:
Liberalization was introduced to put an end to these restrictions and open up various sectors of the economy. Though a few liberalization measures were introduced in 1980s in areas of industrial licensing, export-import policy, technology up-gradation, fiscal policy, and foreign investment, reform policies initiated in 1991 were more comprehensive.

Let us study some important areas such as the industrial sector, financial sector, tax reforms, foreign exchange markets and trade and investment sectors which received greater attention in and after 1991.

The features of liberalization are:

• Deregulation of Industrial Sector
• Financial Sector Reforms
• Tax Reforms
• Foreign Exchange Reforms
• Trade and Investment Policy Reforms

PRIVATISATION:
It implies shedding of the ownership or management of a government-owned enterprise. Government companies can be converted into private companies in two ways

1. by withdrawal of the government from ownership and management of public sector companies and or
2. by outright sale of public sector companies. Privatization of the public sector undertakings by selling off part of the equity of PSUs to the public is known as disinvestment.

The purpose of the sale, according to the government, was mainly to improve financial discipline and facilitate modernization. It was also envisaged that private capital and managerial capabilities could be effectively utilized to improve the performance of the PSUs.

GLOBALISATION:
Globalization is the outcome of the policies of liberalization and privatization. Although globalization is generally understood to mean integration of the economy of the country with the world economy, it is a complex phenomenon. It is an outcome of the set of various policies that are aimed at transforming the world towards greater interdependence and integration.

It involves creation of networks and activities transcending economic, social and geographical boundaries. Globalization attempts to establish links in such a way that the happenings in India can be influenced by events happening miles away. It is turning the world into one whole or creating a borderless world

Conclusion:
All the three groups presented their topics with necessary facts and figures. After the presentation, there was a question-answer session. The active participation of everyone made this session live and interesting. On the whole, the seminar was a big success.

Plus One Economics Chapter Wise Questions and Answers