CBSE Class 11 Economics Economic Reforms Since 1991 Notes Set B

Liberalisation, Privatisation and Globalisation :

Question: What are the major factors responsible for the high growth of the service sector?
Answer: The major factors responsible for the high growth of the service sector are as follows:
- Rise in income – Rise in income of the people increase the demand of the services which can make their lives more comfortable.
- Outsourcing- India is looked upon as a great destination to outsource various business processes such as call centers, accounting services etc.
- Globalization- It has increased the demand for courier, shipping ,travel and information services.
- Cheap labor and reasonable degree of skill in India- Due to the availability of cheap labor and reasonable degree of skilled manpower in India, developed countries found outsourcing to India feasible and profitable.

Question: “Agriculture sector appears to be adversely affected by the economic reform process” Explain the given statement.
Answer: The agriculture sector was adversely affected by the reform process in the following manner-
- Public investment in agriculture sector especially in infrastructure like irrigation ,power etc. , has been reduced in the reform period.
- Removal of fertilizer subsidy has incre4ased the cost of production affecting thereby the small and marginal farmers.
- Increased international competitiveness due to liberalization and reduction of import duties.
- Shift from food crops to cash crops due to export-oriented policy in agriculture.

Question: India is often called the OUTSOURCING DESTINATION of the World. Discuss the prime reasons for this name given to India.
Answer: Reasons for India as outsourcing destination-
- Availability of skilled manpower- India has vast skilled manpower which enhances the faith of MNCs.
- Favorable Government Policies – MNCs get various types of lucrative offers from the Indian government such as tax holidays , tax concessions etc.
- Low wages- The wage rate in India is low comparative to European and other countries.

Question: Why has the industrial sector performed poorly in the reform period?
Answer: The causes of the poor performance of the industrial sector are as follows:
- More dependence of foreign loan.
- Competition with foreign developed countries.
- Comparison of the products of Indian industries with foreign industries.
- Exploitation of consumers due to privatization.
- Challenge of prices from industrial sector of China.

Question: Do you think the navaratna policy of the government helps in improving the performance of public sector undertakings in India? How?
Answer: The government identifies PSUs and declare them as maharatnas, navratnas and miniratnas. They are given greater managerial and operational autonomy, in taking various decisions to run the company efficiently and thus increase their profits’
- Maharatnas – a) Indian OIL corporation Ltd(IOC),b) Coal India Ltd(CIL) , c) National Thermal Power Corporation(NTPC) , d) Steel Authority of India Ltd(SAIL).
- Navratna – a) Hindustan Aeronautics Ltd., b) Mahanagar Telephone Nigam Ltd(MTNL)
- Miniratnas- a) Bharat Sanchar Nigam Ltd (BSNL) ,b) Air Authority of India and ,c) Indian Railway Catering and Tourism Corporation Ltd.
The granting of status resulted in better performance of these companies

Question: Is it necessary to become a member of WTO ? Why?
Answer: Yes it is important for any country to become a member of WTO for the following reasons:
- WTO provides equal opportunities to all its member countries to trade in the international market.
- The countries of similar economic conditions being members of WTO can raise their voice to safeguard their common interests.
- It provides its member countries with larger scope to produces at large scale to cater for the needs of people across the international boundaries.
- It advocates for the removal of tariff and non tariff barriers ,thereby promoting healthier and fairer competition among different countries.

Question: Why has the industrial sector performed poorly in the reform period?
Answer: Just like the agriculture sector ,industrial sector’s performance was also poor. The poor performance of industrial sector may be attributable to the following reasons:
- Cheaper Imports – The demand for industrial output reduced due to the cheaper imports. the imports from developed countries were cheaper due to the removal of import tariffs. These cheaper and quality foreign imports led to the fall in the demand of domestic goods.
- Lack of investment- Due to the lack of investment in infrastructure facilities, the domestic firms could not compete with their developed foreign counterparts in terms of cost of production and quality of goods.
- High non tariffs barriers by the developed countries: It was very difficult to gain access to the developed countries market due to high non-tariff barriers maintained by the developed countries..
- Competition from MNCs – During the pre-liberalized period, the domestic industries were provided a protective environment to grow and expand. But at the time of liberalization, the domestic industries were still not developed up to the extent it was thought and consequently they could not compete with the multinational companies.

Question: Which of the organization replaced General Agreement on Trade and Tariff
a) International Monetary Fund
b) United Nations Organization
c) World Trade Organization
d) World Health Organization
Answer: c

Question: When was the New Economic Policy announced?
a) June 1991
b) July 1991
c) May 1991
d) None of the options
Answer: b

Question: —– refers to disposal of equity of public sector units in the market
a) Globalization
b) Privatization
c) Liberalization
d) Disinvestment
Answer: d

Question: Which of the following is not a policy initiated under New Economic Policy?
a) Liberalization
b) Privatization
c) Globalization
d) Licensing
Answer: d

Question: Quantitative restrictions on imports of manufactured consumer goods and agricultural products were also fully removed from
a) 1980
b) 1991
c) 2001
d) 1995
Answer: c

Question: On which date did PM Narendra Modi address the Indian people announcing the demonetization of RS 5OO AND RS 1000
a) 8 Oct 2017
b) 8 Nov 2016
c) 8 Nov 2017
d) 8 Oct 2016
Answer: b

Question: The highest GST rate applicable now is
a) 28%
b) 12%
c) 18%
d) None of the options
Answer: a

Question: GST was introduced in India with effect from
a) 1/7/2017
b) 1/7/2016
c) 1/7/2018
d) 1/7/2019
Answer: a

Question: What is the other name of World Bank?
a) World Health Organization
b) World Trade Organization
c) International Monetary Fund
d) International Bank for Reconstruction and Development
Answer: d

Question: At present how many industries are exclusively reserved for the public sector in India?
a) 2
b) 3
c) 4
d) 5
Answer: b

Question: When was WTO founded?
a) 1948
b) 1951
c) 1991
d) 1995
Answer: d

Question: Which Act has been enacted in place of MRTP Act ?
a) Competition Act
b) Monopoly Act
c) Licensing Act
d) Foreign Exchange Act
Answer: a

Question: At present how many member countries WTO has?
a) 150
b) 164
c) 159
d) 190
Answer: b

Question: —refers to the transfer of assets or services function from public to private ownership?
a) Globalization
b) Privatization
c) Disinvestment
d) Liberalization
Answer: b

Question: Outsourcing is good for India because
a) It provides employment to large number of unemployed
b) It provides excellence in a particular field
c) Both a and b
d) Neither a nor b
Answer: c

Question: It refers to contracting out some of its activities to a third party which were earlier performed by the organization
a) Globalization
b) Outsourcing
c) Privatization
d) Liberalization
Answer: b

Question: Trade between two countries is known as
a) Bilateral Trade
b) Multi lateral Trade
c) Both a and b
d) Neither a nor b
Answer: a

Question: GATT was established in the year:
a) 1958
b) 1948
c) 1968
d) 1995
Answer: b

Question: Financial sector reforms mainly relate to :
a) Banking sector
b) Foreign Exchange Market
c) Both a and b
d) Insurance sector
Answer: c

Question: Reforms have not been able to benefit agriculture because of
a) Public investment in agriculture sector especially in infrastructure has fallen
b) Rise in subsidy
c) Rise in import duties on agriculture products
d) Shift from production of cash crops to food crops
Answer: a