RBSE Solutions Class 11 Economics Chapter 18 Industrial Development

Question 1. New industrial policy was announced on
(a) 21st July, 1991
(b) 24th July, 1991
(c) 24th July, 1990
(d) 21st July, 1990
Answer: (b) 24th July, 1991
In simple words: India's new plan for industries was officially announced on July 24, 1991. This policy brought many changes to how industries operated.

🎯 Exam Tip: Remember specific dates for important policies, as they are common direct recall questions in exams.

Question 2. Which industrial policy is called "India's Economic Constitution"?
(a) Industrial Policy, 1948
(b) Industrial Policy, 1956
(c) Industrial Policy, 1970
(d) Industrial Policy, 1991
Answer: (b) Industrial Policy, 1956
In simple words: The Industrial Policy of 1956 is known as India's "Economic Constitution" because it laid down the basic rules and framework for how industries would be managed in the country for a long time.

🎯 Exam Tip: Understand why certain policies receive specific titles, like "Economic Constitution," as it highlights their significant impact and foundational role.

Question 3. At present, obtaining license is mandatory for how many types of industries?
(a) 4
(b) 5
(c) 6
(d) 3
Answer: (b) 5
In simple words: Right now, only 5 kinds of industries still need a special government license to start or run their business. Most other industries no longer need one.

🎯 Exam Tip: Keep up-to-date with current government policies, especially regarding industrial licensing, as the numbers can change over time.

Question 4. "Make in India" campaign was launched by the Prime Minister in
(a) July 2014
(b) October 2014
(c) August 2014
(d) September 2014
Answer: (d) September 2014
In simple words: The "Make in India" program was started by the Prime Minister in September 2014. Its goal was to encourage companies to manufacture their products in India.

🎯 Exam Tip: For government initiatives, remember the launch date and the main purpose of the program.

Question 5. The contribution of small-scale and cottage industries in Gross Domestic Product for 2012-13 was
(a) 37.54 per cent
(b) 37.84 per cent
(c) 36.54 per cent
(d) 36.84 per cent
Answer: (a) 37.54 per cent
In simple words: In the years 2012-13, small businesses and home-based industries added about 37.54% to India's total economic output (GDP). This shows their big role in the economy.

🎯 Exam Tip: Pay attention to specific statistics related to the contribution of different sectors to GDP, including the year of data, as these are often tested.

Question 7. Micro, Small and Medium Industries Development Regulation was passed in
(a) 2006
(b) 2007
(c) 2008
(d) 2005
Answer: (a) 2006
In simple words: The law to help micro, small, and medium industries grow and be regulated was put into effect in 2006. This act helps these businesses get support.

🎯 Exam Tip: Note the year when key acts or policies related to industry development were passed, as it marks a significant legal change.

Question 8. "MUDRA" plan was launched in
(a) March 2015
(b) April 2015
(c) May 2015
(d) June 2015
Answer: (b) April 2015
In simple words: The MUDRA scheme, which helps small businesses get loans, was launched in April 2015 by the government.

🎯 Exam Tip: Differentiate between the launch dates of various government schemes, especially those related to financial support for small enterprises.

Question 1. Into how many categories were industries divided in the first Industrial Policy of Independent India?
Answer: 4.
In simple words: When India first made its industrial policy after becoming independent, it sorted industries into 4 main groups.

🎯 Exam Tip: Remember the initial structure and key classifications made in important historical policies, such as the first Industrial Policy.

Question 2. Mention the main characteristics of Industrial Licensing Policy, 1970.
Answer: Initiation of reservation for small scale industries.
In simple words: A key feature of the 1970 Industrial Licensing Policy was that it started setting aside certain products specifically for small-scale industries to produce. This helped protect and grow smaller businesses.

🎯 Exam Tip: Focus on the main differentiating features of each industrial policy, like the introduction of reservations for small-scale industries.

Question 3. What are the main components of India's economic reforms?
Answer: Liberalization, Privatization and Globalization.
In simple words: India's major economic changes involved three main ideas: making rules simpler (liberalization), letting private companies do more (privatization), and opening up the economy to the world (globalization).

🎯 Exam Tip: These three terms (LPG) are fundamental concepts in modern Indian economic history and their definitions should be clearly understood.

Question 5. When was the list of reserved products for small scale industries abolished?
Answer: In 2015.
In simple words: The government removed the list of products that were only allowed to be made by small-scale industries in the year 2015.

🎯 Exam Tip: Be aware of the timeline and key reforms related to small-scale industries, as policies evolve over time.

Question 6. What is dumping?
Answer: Dumping happens when a country or company sells its products in another country for a price that is lower than what they charge in their own country. This often makes it hard for local businesses to compete.
In simple words: Dumping means selling goods in a foreign country at a very low price, even less than their own cost, to push out local sellers.

🎯 Exam Tip: When defining economic terms like dumping, clearly state both the action and its direct economic impact.

Question 7. What does the emblem of "Make in India” campaign depict?
Answer: The emblem of the "Make in India" campaign shows courage, intelligence, and power. It features a lion made of gear wheels, symbolizing India's strength in manufacturing and innovation.
In simple words: The "Make in India" symbol, a lion made of gears, stands for bravery, smartness, and strength, showing India's manufacturing power.

🎯 Exam Tip: Connect national campaign emblems to the core values and objectives they represent.

Question 8. What is the full form of MUDRA?
Answer: MUDRA stands for Micro Units Development and Refinance Agency. It is an agency that helps small businesses get loans.
In simple words: MUDRA means Micro Units Development and Refinance Agency. It's an organization that helps very small businesses with money.

🎯 Exam Tip: Learn the full forms of important acronyms related to government schemes and financial institutions.

Question 1. Mention any four obstacles of industrial development.
Answer: Four common problems in industrial development include:
1. A gap between planned targets and what is actually achieved.
2. Not using industrial factories to their full capacity.
3. A lack of enough money or capital for businesses to invest and grow.
4. Industrial sickness, which means many industries become weak or shut down.
In simple words: Some big problems for industries are not meeting goals, not using factories enough, not having enough money, and many businesses becoming sick or closing down.

🎯 Exam Tip: When listing obstacles, provide clear and concise points that directly address hindrances to growth.

Question 3. What were the reasons of adopting the new Industrial Policy?
Answer: India adopted the new Industrial Policy for several important reasons:
1. The government's money problems (fiscal deficit) kept growing because it spent too much on non-developmental things, reaching 8.4% of the Gross Domestic Product by 1990-91.
2. The amount of money spent on paying interest on loans increased a lot, making up 36.4% of all government spending in 1990-91.
3. The fiscal deficit also increased in India's balance of payments, meaning the country was spending more foreign money than it was earning.
4. The rate at which prices were increasing (inflation) became very high, reaching 17%.
5. By 1991, India's foreign exchange reserves were so low that they could only pay for imports for about two weeks.
In simple words: India adopted the new policy because the government was running out of money, owed a lot, prices were rising fast, and there wasn't enough foreign currency left to buy things from abroad.

🎯 Exam Tip: For policy adoption questions, focus on the economic crises or challenges that necessitated such changes. Numerical facts strengthen your points.

Question 4. Define industrial sickness.
Answer: Industrial sickness is when an industrial company, at the end of any financial year, has lost so much money that its total losses are equal to or more than its entire net worth. Also, it must have lost money (cash losses) in that financial year and the year before it. This means the company is in serious financial trouble.
In simple words: Industrial sickness means a company has lost all its value and is making cash losses for two years in a row, showing it is in big financial trouble.

🎯 Exam Tip: Provide a precise definition that includes the key financial indicators used to identify industrial sickness, such as accumulated and cash losses.

Question 5. Write any four contributions of small-scale sector in the development of Indian economy.
Answer: The small-scale sector helps the Indian economy in these four ways:
1. It adds to industrial production: Small businesses make many different kinds of goods, increasing the country's total output.
2. It helps the small-scale sector grow: These industries expand and provide a variety of products and services.
3. It creates jobs: Small businesses employ a large number of people, which helps reduce unemployment.
4. It improves efficiency: Many small-scale industries operate efficiently and use resources effectively, contributing to overall economic health.
In simple words: Small businesses help India by making more products, growing their sector, creating many jobs, and working efficiently.

🎯 Exam Tip: When discussing contributions, use action-oriented phrases that clearly explain the positive impact of the sector on the economy.

Question 7. Write a short note on the Industrial policy of 1956.
Answer: The Industrial Policy of 1956 is very important and is often called the 'Economic Constitution of India' or 'Magna Carta' for industries. This policy divided all industries into three main groups:
1. Industries that were fully controlled by the government of India, listed under Schedule A.
2. Industries where both government (public) and private companies could work together, listed under Schedule B. This included 12 types of industries like fertilizers and chemicals.
3. All other remaining industries were left for the private sector to manage.
In simple words: The 1956 Industrial Policy, known as India's Economic Constitution, sorted industries into three types: fully government-run, mixed (government and private), and fully private.

🎯 Exam Tip: Highlight the categorization of industries as it was a defining feature of the 1956 policy and explains the roles of public and private sectors.

Question 8. Define small scale and cottage industries.
Answer:
Small scale industries: These are also known as MSMEs (Micro, Small and Medium Enterprises). They are defined based on how much money is invested in their machinery for manufacturing, or in their equipment for service industries. These industries are important for creating jobs and boosting local economies.
Cottage Industry: This is a business or manufacturing activity that is carried out by family members, usually in their own homes. An example is weaving clothes by hand. These industries often use traditional methods.
In simple words: Small-scale industries are businesses based on investment size, while cottage industries are family-run businesses often from home, like making clothes by hand.

🎯 Exam Tip: Clearly distinguish between small-scale and cottage industries by focusing on their key characteristics, such as investment criteria and location of operations.

Question 10. Why was Indian economy compared to the elephant?
Answer: The Indian economy was compared to an elephant because, like an elephant, it is very big and powerful but moves slowly. This comparison suggests that India's economy has huge potential but develops at a slow pace and takes a long time to change direction. It is a developing economy that has been gradually building its strength.
In simple words: The Indian economy was called an elephant because it is big and strong, but grows and changes very slowly.

🎯 Exam Tip: Explain the metaphor fully by linking the characteristics of an elephant (size, power, slowness) to the traits of the Indian economy.

Question 1. Explain in detail the role of industrial sector in the development of Indian economy.
Answer: The industrial sector plays a very important role in helping the Indian economy grow:

• Rapid growth in income: When industries develop, the income of each person (per capita income) goes up. Industrial work often brings in more money than farming. As more industries are set up in the country, their share in the national income has increased a lot, from 16.6% in 1950-51 to 26.2% in 2013-14.


• Contribution in employment: Industries create many job opportunities. As more factories and businesses are established, more people get work. The industrial sector is a big source of jobs, especially in organized sectors.


• Development of infrastructure: After independence, India did not have good infrastructure like roads and power. The government quickly developed these, which greatly helped industries to grow. Fast industrialization needed quick development of infrastructure.


• Utilization of resources: Industries are better at using resources than agriculture. They also train unskilled workers to make them more productive. Industrial units often organize training camps to make sure resources are fully used.


• Reduced dependence on agriculture: India's growth was too dependent on agriculture, which was a big problem. By developing industries, the country can rely less on farming alone for its overall growth.


• Self-sustained growth: Fast growth in industries helps an economy become self-reliant. Industries also support agriculture, transport, and communication. They are vital for making consumer goods and sending them across the country.


• Increase in Nation's Security: Thanks to industrial development, India can now produce its own defense equipment and machinery. This saves valuable foreign money that would otherwise be spent on importing these items.

🎯 Exam Tip: When explaining a sector's role, break down the answer into distinct points like income, employment, and infrastructure, providing specific examples or statistics where possible.

Question 2. Write a detailed note on "Make in India" programme.
Answer: The "Make in India" initiative was launched by Prime Minister Narendra Modi on September 25, 2014. Its main aim was to turn India into a global center for manufacturing. It encourages both international and local companies to make their products in India. The symbol for this program is a lion made of gear wheels, which is also part of India's national emblem, Ashoka Chakra. This lion symbolizes courage, intelligence, and power. Economists used to call the Indian economy an 'elephant' because it was huge but moved slowly. The 'Make in India' lion was adopted to change this view and show the economy's limitless energy. Industrialists believed this program could greatly speed up the country's development. If its policies are carried out well, it is expected to create 9 crore (90 million) jobs in the next ten years. The program focuses on sectors like manufacturing and services, which can bring major changes to the economy by improving skills and increasing population. It aims for growth that considers future evaluations.
In simple words: "Make in India" started in 2014 to make India a big manufacturing hub, using a lion symbol for courage and power. It aims to speed up the economy, create millions of jobs, and boost manufacturing and services.

🎯 Exam Tip: For detailed notes on programs, include the launch date, main objective, symbolic representation, and expected impacts on the economy and employment.

Question 3. State the importance of small scale and cottage industries in Indian economy.
Answer: Small-scale and cottage industries are very important for the Indian economy for several reasons:

• Share in Industrial Output: These industries contribute significantly to India's total industrial production. For instance, in 2006-07, the total value produced by Micro, Small, and Medium Enterprises (MSME) was Rs. 1,198,818 crore, making up 35.13% of the GDP. This contribution grew to 37.54% by 2012-13.


• Expansion of small scale sector: The number of MSMEs has grown rapidly. From 361.8 lakh (36.18 million) in 2006-07, it increased to 467.54 lakh (46.75 million) by 2012-13, showing continuous growth.


• Role in employment: These industries create a large number of jobs. In 2006-07, the MSME sector employed 805.23 lakh (80.5 million) people, which increased to 1114.29 lakh (111.4 million) by 2012-13.


• Efficiency of small scale industries: Experts have different opinions, but some believe that small-scale industries are often more efficient than large ones.


• Decentralization of national income: Compared to big industries, small and cottage industries have many owners spread across different areas. They are better at creating jobs and contribute more widely to the country's production.

🎯 Exam Tip: When discussing importance, provide both qualitative points (e.g., job creation) and relevant quantitative data (e.g., GDP contribution, employment figures) to support your answer.

Question 4. Critically discuss the new Industrial Policy.
Answer: The new Industrial Policy, adopted in 1991, brought big changes to India's industrial structure. Here are some of its achievements and failures:

Its achievements include:
1. The rate of industrial development increased after this policy. It grew from 7.8% in 1980-90 to 13.0% in 1995-96, and was 11.5% in 2006-2007.
2. Foreign investment, both Direct (FDI) and Institutional (FII), increased a lot because of the new policy.
3. According to a 2010 UNCTAD report, foreign investment reached 34.6 billion dollars in 2009.
4. Foreign technology was encouraged, making India known globally and improving productivity.

Failures of the New Industrial Policy:
1. Unemployment did not significantly decrease after this policy was adopted; it actually kept increasing.
2. Many industries became weak or closed because they couldn't get enough money to use expensive foreign technology.
3. Indian industries struggled to compete with foreign industries, which threatened their existence and forced many out of business.
4. Indian industries became more dependent on foreign technology, which some experts called "Economic Colonialism."
5. Foreign investments did not reach all sectors of the economy.
6. Small-scale and cottage industries found it hard to compete with foreign industries.

Conclusion: The new Industrial Policy brought many changes and stability, helping Indian industries show their strength globally. However, it also led to problems like the decline of small industries, increased reliance on foreign money, and unemployment.
In simple words: The new Industrial Policy of 1991 helped India's industries grow faster and attracted foreign money and technology. But it also led to more unemployment, made local industries sick, increased foreign dependence, and hurt small businesses that couldn't compete.

🎯 Exam Tip: When critically discussing a policy, always present both its positive outcomes (achievements) and negative consequences (failures) for a balanced answer, along with a concise conclusion.

Question 5. Clarify the obstructions present in the path of development of small scale and cottage industries.
Answer: Small-scale and cottage industries face several problems that hinder their growth:

• Problem of raw material: Indian weavers and other artisans struggle with raw materials. Traders often sell them raw materials at high prices, but then buy their finished goods (like cloth) at low prices. Also, they sometimes have to import raw materials, which costs India valuable foreign money.


• Lack of capital: These industries need money for both long-term investments (like buying machines) and short-term needs (like raw materials). They often borrow from moneylenders, who charge very high interest rates, making it difficult to earn profits.


• Lack of modern technology: Many small and cottage industries still use old and traditional machines. This means their product quality often doesn't improve, making them less competitive.


• Problem of marketing and standardization: It's hard for these industries to sell their goods. The government tried to help by reserving goods for them (increasing from 77 to 836 items) and setting up the National Small Industries Corporation in 1955 to find markets for their products.


• Problem of sickness: Many small and cottage industries are becoming sick. A 2013 report showed that over 2.49 lakh (249,903) small units were sick, with a large amount of bank money stuck, and most of these were hard to revive.


• Lack of infrastructure: Poor roads and transport make it difficult to quickly move goods from small-scale units to markets. Also, new units face complex paperwork and processes.


• Lack of availability of Data: Institutions like the Small Industries Development Organization and Central Statistical Organization often don't have enough data specifically for small-scale industries.


• Delay in Payments: A big problem is not getting paid on time for goods sold. Government departments and large companies, who often buy from these units, frequently delay payments.


• Other problems: These industries also face issues like needing more management and technical skills, not knowing enough about market conditions, and operating in an unorganized way.


• Effect of economic reform: The economic reforms of 1991 negatively affected these industries. The influx of cheap Chinese products created a crisis, leading to the closure of many Indian toy and electronics units.

🎯 Exam Tip: When detailing obstructions, categorize them (e.g., raw material, capital, technology, market) and explain each point clearly to show a comprehensive understanding.

Question 2. The contribution of coal in supply of energy is-
(a) 50%
(b) 52%
(c) 55%
(d) 60%
Answer: (c) 55%
In simple words: Coal provides 55% of the total energy supply, making it a major source of power.

🎯 Exam Tip: Remember key statistics related to energy sources, as they highlight their importance in the overall energy mix.

Question 3. At present, dumping is being done by which country?
(a) China
(b) India
(c) Pakistan
(d) America
Answer: (a) China
In simple words: Currently, China is known for practicing dumping, where it sells products cheaply in other countries.

🎯 Exam Tip: For current affairs or contemporary economic issues, know which countries are frequently associated with specific trade practices like dumping.

Question 4. According to the Industrial Policy of 1948, which sector was not kept under Government control?
(a) Security
(b) Rail transport
(c) Coal
(d) Atomic power
Answer: (c) Coal
In simple words: The Industrial Policy of 1948 did not put the coal sector entirely under government control. It allowed private players as well.

🎯 Exam Tip: Understand the classifications of industries under different historical policies, especially which sectors were left open to private control.

Question 1. When was the new industrial policy adopted?
Answer: In 1991, the new industrial policy was adopted.
In simple words: The new plan for industries was put into action in 1991.

🎯 Exam Tip: Knowing the year of adoption for major policies is crucial for understanding economic timelines.

Question 2. What is fiscal deficit?
Answer: A fiscal deficit happens when a government spends more money than it earns from taxes and other sources, not counting money borrowed. It means the government's total spending is higher than its total income.
In simple words: Fiscal deficit is when the government spends more money than it collects, not counting what it borrows.

🎯 Exam Tip: Clearly define economic terms. For fiscal deficit, highlight that it excludes borrowings when comparing expenditure to revenue.

Question 3. State the names of two international financial institutions.
Answer: Two important international financial institutions are:
1. World Bank.
2. International Monetary Fund.
In simple words: Two global financial organizations are the World Bank and the International Monetary Fund.

🎯 Exam Tip: Memorize the names and basic functions of major international economic organizations, as they are frequently asked.

Question 4. State two problems of industrial development.
Answer: Two problems faced in industrial development are:
1. Under-utilization of industrial capacity: This means factories are not producing as much as they can, leaving machines idle or operating below their full potential.
2. Poor performance of public sector: Government-owned industries sometimes don't work efficiently or make enough profit, slowing down overall industrial growth.
In simple words: Two issues are factories not running at full power, and government-owned companies not performing well.

🎯 Exam Tip: When listing problems, provide concise descriptions for each point to show understanding.

Question 6. The reservation of small scale industries was initiated under which policy?
Answer: The reservation of small scale industries was started as part of the Industrial License Policy of 1970.
In simple words: The policy from 1970 was the one that first set aside certain types of industries just for small businesses.

🎯 Exam Tip: Remember specific years and policies when discussing industrial development, as these are key details for scoring well.

Question 7. State the full form of MRTP.
Answer: MRTP stands for Monopolistic and Restrictive Trade Practices.
In simple words: MRTP is a longer name for laws that deal with monopolies and unfair business practices.

🎯 Exam Tip: Know the full forms of important economic terms; they are often asked in short answer questions.

Question 8. When was MRTP Act abolished and the Competition Act was formed?
Answer: The MRTP Act was abolished in 2002. In its place, the Competition Act was formed.
In simple words: The old MRTP law was removed in 2002 and a new law called the Competition Act took its place.

🎯 Exam Tip: Understanding the transition from MRTP to the Competition Act shows knowledge of changes in India's economic policy.

Question 9. In which sectors, FDI is restricted at present?
Answer: At present, Foreign Direct Investment (FDI) is restricted in sectors like retail business (except for monopolistic brand retail business), atomic energy, trade of lottery, and gambling.
In simple words: Foreign investments are not allowed in some areas like lottery, gambling, atomic energy, and most retail shops.

🎯 Exam Tip: Be aware of the specific sectors where foreign investment is restricted, as this reflects current government policy.

Question 10. When was an independent small scale industrial policy announced?
Answer: An independent small scale industrial policy was announced on August 6, 1991.
In simple words: A special policy just for small industries was announced in India on August 6, 1991.

🎯 Exam Tip: Note the dates of key policy announcements, as they mark important shifts in economic strategy.

Question 11. The decentralization of industries was emphasized in which year?
Answer: The decentralization of industries was emphasized in the Industrial Policy Resolution of 1977.
In simple words: The idea of spreading industries out to different places was highlighted in the 1977 Industrial Policy.

🎯 Exam Tip: Decentralization is a strategy to promote balanced regional growth, a key concept in industrial policy.

Question 13. According to census of India 2011, how much per cent of India's total population lives in rural areas?
Answer: According to the Census of India 2011, 68.8% of India's total population lives in rural areas.
In simple words: In 2011, almost 69 out of every 100 people in India lived in villages.

🎯 Exam Tip: Census data provides vital demographic information that helps understand economic structures.

Question 14. Who firstly performed the study related to the efficiency of industries?
Answer: Dhar and Laidal were the first to study the efficiency of industries.
In simple words: Dhar and Laidal were the first people to research how efficient industries were.

🎯 Exam Tip: Knowing key economists and their contributions is important for understanding economic thought.

Question 15. Which major things are exported by MSME?
Answer: Micro, Small, and Medium Enterprises (MSME) primarily export items such as leather products, woollen clothes, games, sports goods, and ready-made clothes.
In simple words: Small and medium businesses mainly send out leather goods, wool clothes, sports items, and ready-made garments to other countries.

🎯 Exam Tip: Identifying the major export categories from MSMEs highlights their role in the economy and foreign exchange earnings.

Question 16. Which scheme was launched by the government for providing loans to provide the facility of finance and refinance to the traders of the unorganised sector?
Answer: The MUDRA scheme was launched by the government to provide loans, finance, and refinance facilities to traders in the unorganised sector.
In simple words: The government started the MUDRA scheme to give loans and financial help to small traders who are not part of big organized businesses.

🎯 Exam Tip: MUDRA scheme is a significant government initiative for financial inclusion in the unorganised sector.

Question 17. Under the new small scale industrial policy of 1991, the limit for Tiny sector has been raised to what amount?
Answer: Under the new small scale industrial policy of 1991, the investment limit for the Tiny sector was raised from 2 lakh rupees to 5 lakh rupees.
In simple words: In 1991, the maximum money a 'Tiny sector' industry could invest was increased from 2 lakh to 5 lakh rupees.

🎯 Exam Tip: Specific investment limits for different industrial classifications are important for understanding policy scope.

Question 18. Which scheme was launched for technical enhancement?
Answer: The Credit Linked Capital Subsidy Scheme was launched for technical enhancement.
In simple words: The Credit Linked Capital Subsidy Scheme was created to help businesses improve their technology.

🎯 Exam Tip: Schemes like Credit Linked Capital Subsidy help small businesses upgrade their technology, which is crucial for competitiveness.

Question 20. Write the full form of WTO.
Answer: WTO stands for World Trade Organization.
In simple words: WTO is the full name for the global group that deals with trade rules between countries.

🎯 Exam Tip: The WTO plays a crucial role in global trade policies, so its full form and function are fundamental knowledge.

Question 21. Government to Business portal is established under which scheme?
Answer: The Government to Business (G2B) portal is established under the E-business project.
In simple words: The online portal for government dealings with businesses is part of the E-business project.

🎯 Exam Tip: E-business projects aim to simplify interactions between government and businesses, improving ease of doing business.

Question 22. What is economic reform? Also state the major reasons of the need of economic reform.
Answer: Economic reform is a process where a country makes changes to its economic, political, and social systems to improve the well-being of its people. The major reasons for needing economic reform are:
1. To create more jobs.
2. To diversify industries.
3. To retain and expand businesses.
4. To strengthen the economy.
5. To increase tax revenue.
6. To improve the quality of life.
In simple words: Economic reform means changing a country's systems to make life better for everyone. This is needed to create jobs, grow businesses, make more money for the government, and improve living standards.

🎯 Exam Tip: When defining economic reform, remember to mention its purpose and list a few key reasons for its implementation.

Question 23. What is liberalization? State its measures.
Answer: Liberalization is a broad term for any process where the government removes or reduces restrictions on private activities. It means things that were once banned are now allowed, or government rules are relaxed. Measures of liberalization include:
7. Independent fixation of interest rates.
In simple words: Liberalization is when the government loosens up its rules on businesses and personal activities. One way this happens is by letting interest rates be set freely.

🎯 Exam Tip: Focus on the core idea of reduced government control and provide a concrete example like interest rate deregulation when explaining liberalization.

Question 24. What is privatization? State its measures.
Answer: Privatization is when a government-owned company's shares are bought by private investors, or a state-owned business is sold to private investors. The measures of privatization include:
1. Reducing the size of the public sector.
2. Selling off public sector enterprises.
3. Selling shares of public sector companies.
In simple words: Privatization is when the government sells its businesses or shares to private companies. This includes making the government's role smaller and selling parts of its businesses.

🎯 Exam Tip: For privatization, emphasize the shift of ownership and control from the public to the private sector and list the ways this is done.

Question 25. What is Globalization? State its measures.
Answer: Globalization is the process where businesses and organizations from one country start operating or become influential internationally, due to advancements in transport and communication. It's about countries becoming more connected. Its measures include:
1. Partial transformation.
2. Reducing tariffs.
3. Growth in foreign investment.
4. Long-term trade policy.
In simple words: Globalization is when countries and businesses become more connected worldwide, helped by better travel and communication. This happens through things like lower trade taxes and more foreign investments.

🎯 Exam Tip: When explaining globalization, highlight the increasing interconnectedness and provide specific measures like reduced tariffs and increased foreign investment.

Question 27. In your opinion, should, only those governmental ventures be privatized which are suffering from loss? Why?
Answer: In my opinion, government businesses that are losing money should be privatized first. However, selling profitable government businesses is also good. This is because selling them can bring in a lot of money for the government and help provide better services to people. India is a developing country and needs funds for public welfare, so spending government money on loss-making entities might not be ideal. Privatization can help generate capital and improve efficiency.
In simple words: Loss-making government businesses should be privatized first, but selling profitable ones also helps the government get money and offer better services. This is important for a developing country like India that needs funds for its people.

🎯 Exam Tip: When answering opinion-based questions, provide a clear stance and support it with economic reasoning, such as capital generation and improved services.

Question 29. State 5 companies that provide business services in India.
Answer: Five companies that provide business services in India are:
1. TCS
2. Reliance Insurance Company
3. Infosys
4. WIPRO
5. Bajaj Allianz.
In simple words: Five Indian companies that offer business services are TCS, Reliance Insurance, Infosys, Wipro, and Bajaj Allianz.

🎯 Exam Tip: Listing specific company names demonstrates practical knowledge of the business services sector in India.

Question 30. India has gained from integration of liberalization and world markets. Do you agree?
Answer: Yes, I agree that India has gained from integrating liberalization and world markets. While the service sector has improved a lot, there have been some negative effects on the agriculture and industrial sectors, and the gap between rich and poor has grown. However, in the short term, liberalization has been beneficial for India.
In simple words: Yes, India has benefited from opening up its economy to the world. Although some areas like farming and factories faced issues, and the rich-poor gap increased, overall, it was good for India for a while.

🎯 Exam Tip: When discussing the impacts of liberalization, present a balanced view, acknowledging both positive and negative consequences, and specify the timeframe if applicable.

Question 31. Can call centre guarantee a static job? What qualities should be there to work in a call centre on a permanent basis?
Answer: Yes, a call centre can guarantee a stable job. To work in a call centre on a permanent basis, you should have the following qualities:
1. Good command of English.
2. Good communication skills.
3. Good listening skills.
4. Good command of the internet and computer.
In simple words: Yes, call centre jobs can be stable. To keep such a job, you need to be good at English, communication, listening, and using computers.

🎯 Exam Tip: When asked about job requirements, list both language proficiency and technical skills relevant to the role.

Question 33. State the recent 6 schemes initiated by the government for encouraging industrial development?
Answer: The recent six schemes started by the government to help industrial development are:
1. Ease in doing business.
2. Make In India.
3. E-business scheme.
4. Skill development.
5. Making environment and forest-related approval effective and quick.
6. Reforms in the labour sector.
In simple words: The government has started six programs to boost industries: making it easier to do business, the Make in India initiative, e-business, skill training, faster environmental approvals, and changes in labor laws.

🎯 Exam Tip: List the specific schemes accurately. These initiatives reflect the government's approach to industrial growth.

Question 34. Explain the objectives of Make in India campaign.
Answer: The main goals of the "Make in India" campaign are to create jobs and improve skills in 25 different economic sectors. The initiative also aims to ensure high quality standards and reduce environmental impact. It hopes to attract foreign capital and technological investments into India. The lion emblem represents courage, intelligence, and power, and was adopted to counter the view that the Indian economy is huge but slow.
In simple words: The "Make in India" campaign aims to create jobs, improve skills, ensure good quality, protect the environment, and attract foreign investments. Its lion logo shows India's strength and speed.

🎯 Exam Tip: When describing a campaign's objectives, include its multiple facets like job creation, skill development, quality, and foreign investment attraction.

Question 35. Under the Industrial Policy of 1948, which basic industries were included in the mixed sector?
Answer: Under the Industrial Policy of 1948, basic industries included in the mixed sector were coal, iron, aircraft manufacturing, telephone, telegraph, and mineral oil.
In simple words: In 1948, industries like coal, iron, making airplanes, phones, and getting oil were partly owned by the government and partly private.

🎯 Exam Tip: Categorizing industries under different policies (like 1948) shows an understanding of historical economic frameworks.

Question 36. According to the Industrial policy of 1948, which industries were kept in the third category?
Answer: According to the Industrial Policy of 1948, important industries like electronic products related to aerospace and defense, gunpowder explosives, detonator fuses, hazardous chemicals, tobacco and cigarettes, and alcoholic beverages were kept in the third category.
In simple words: In the 1948 policy, specific industries like defense electronics, explosives, dangerous chemicals, tobacco, and alcohol were placed in the third group.

🎯 Exam Tip: Be precise about which industries fall into specific categories under different industrial policies.

Question 38. State the characteristics of the Industrial Policy of 1980.
Answer: The Industrial Policy of 1980 focused on setting up industries in rural areas to help them grow faster. The government also aimed to improve the efficiency of public sector businesses to reduce differences between public and private sectors.
In simple words: The 1980 Industrial Policy wanted to build more factories in villages for faster rural growth and make government companies work better.

🎯 Exam Tip: Key features of the 1980 Industrial Policy include rural development and public sector efficiency, which are important points to remember.

Question 39. Which provisions were made under the Industrial Policy of 1991?
Answer: Under the Industrial Policy of 1991, the following provisions were made:
1. Industrial licensing was abolished.
2. Industries previously reserved for the public sector were opened up.
3. Reservation for the public sector was reduced.
4. The upper limit for foreign investment was relaxed.
5. Changes were made to the MRTP Act.
6. This policy aimed to free India's industrial economy from unnecessary government rules.
In simple words: The 1991 Industrial Policy removed most industry licenses, opened up reserved sectors, allowed more foreign investment, changed the MRTP Act, and aimed to reduce government control.

🎯 Exam Tip: The 1991 Industrial Policy marked a major shift towards liberalization; list its key reforms accurately.

Question 40. When was MRTP act amended and why?
Answer: The MRTP Act was amended in 1969, then abolished and replaced by the Competition Act in 2002. It was changed to regulate the establishment and expansion of industries, and to control mergers and acquisitions.
In simple words: The MRTP Act was changed in 1969 and then completely replaced by the Competition Act in 2002 to better manage industry growth and company mergers.

🎯 Exam Tip: Understand the progression from MRTP Act to Competition Act and the reasons for these regulatory changes.

Question 41. What was the impact of the Industrial Policy of 1991 on foreign exchange reserve?
Answer: The Industrial Policy of 1991 had a positive impact on foreign exchange reserves. It led to an increase in these reserves, which helped India become recognized as a creditor nation by the International Monetary Fund (IMF). This also encouraged foreign technology and helped Indian industrialists establish their presence in the global market.
In simple words: The 1991 policy helped India gain more foreign money, making it a stronger country in global finance and attracting new technology.

🎯 Exam Tip: Connecting the 1991 policy to its impact on foreign exchange reserves highlights a critical aspect of economic stability and international standing.

Question 42. What was the impact of the new Industrial Policy on Indian industries?
Answer: The new Industrial Policy had a mixed impact on Indian industries. Many industries became sick or had to close down because they couldn't afford expensive foreign technology or compete with foreign companies. This competition posed a threat to their survival, forcing many out of business.
In simple words: The new Industrial Policy caused problems for many Indian businesses, making them sick or close down, because they couldn't compete with foreign companies or afford new technology.

🎯 Exam Tip: When discussing the impact of a policy, remember to consider both its intended benefits and unintended negative consequences, especially for local industries.

Question 43. Explain the effect of new Industrial Policy on small scale and cottage industries.
Answer: The new Industrial Policy negatively affected small scale and cottage industries, as they struggled to compete with foreign companies. As a result, many reserved items for private sectors were opened up. Currently, the list of reserved items has increased to 20, leading to the closure of many small and cottage industries.
In simple words: The new industrial policy made it hard for small local businesses to compete with foreign companies, causing many to close down as their reserved products were opened to bigger private players.

🎯 Exam Tip: Understand how policies can affect different sectors differently; small-scale industries often face unique challenges in a liberalized economy.

Question 44. Under the Industrial Policy of 1977, which industries have kept under ancillary units?
Answer: Under the Industrial Policy of 1977, ancillary units were considered small-scale industries where the investment in plant and machinery was less than 10 lakh rupees. For Ancillary industrial units, the maximum investment limit was 15 lakh rupees, and for Tiny units, it was 1 lakh rupees.
In simple words: The 1977 policy defined ancillary units as small industries that invested less than 10 lakh in machines. The maximum investment for these support units was 15 lakh, and for very tiny ones, it was 1 lakh.

🎯 Exam Tip: Differentiate between investment limits for various types of small industries (small scale, ancillary, tiny) as specified in different policies.

Question 45. What is the contribution of MSME in exports?
Answer: The contribution of Micro, Small, and Medium Enterprises (MSME) to total exports has been increasing steadily. For example, in 1971-72, MSME exports were 155 crore rupees, which surged to 6,77,318 crore rupees in 2012-13. Similarly, their share in total exports rose from 9.6% in 1971-72 to almost 41.4% in 2012-13.
In simple words: Small and medium businesses (MSME) have steadily increased their share in India's total exports, growing significantly from a small percentage in the 1970s to over 40% by 2012.

🎯 Exam Tip: Use specific data and percentages when available to support claims about economic contributions, demonstrating a precise understanding.

Question 46. What is the maximum investment limit for industries under the MSME Development Act?
Answer: The maximum investment limits for industries under the MSME Development Act are:
Small Scale: More than 25 lakh and less than 5 crore
Medium Scale: More than 5 crore and less than 10 crore
For earlier policies (e.g. 1991 policy for Tiny sector): More than 10 lakh and less than 2 crore
For earlier policies (e.g. 1991 policy for Tiny sector): More than 2 crore and less than 5 crore
In simple words: The MSME Act sets different maximum investment limits for small and medium businesses: Small scale can invest up to 5 crore, and Medium scale up to 10 crore. Older policies had different limits, like up to 2 crore or 5 crore for certain types.

🎯 Exam Tip: It is crucial to specify the different investment limits for Micro, Small, and Medium enterprises as they are often updated and depend on the specific policy or act.

RBSE Class 11 Economics Chapter 18 Long Answer Type Questions

Question 1. Why were economic reforms initiated in India?
Answer: Economic reforms were started in India in 1991 because the country was heavily burdened with foreign loans and couldn't pay them back. The foreign exchange reserves were so low that they could only cover imports for about 15 days. It was urgent to overcome these financial difficulties, which is why economic reforms were introduced. The industrial sector plays a crucial role in economic development.
2. Developing nature of Indian economy.
In simple words: India started economic reforms in 1991 because it had huge foreign debts and very little foreign money left. The country desperately needed to fix its financial problems.

🎯 Exam Tip: The 1991 reforms were a response to a severe economic crisis; focusing on foreign debt and low reserves provides a strong answer.

Question 2. "The public enterprises that are earning profits should be privatized". Do you agree with this statement? Why?
Answer: Privatization is often seen as a way to solve problems in public enterprises. When these businesses are transferred from government to private hands, they become less affected by politics, which helps reduce administrative corruption. This also helps increase tax revenue from profits and strengthens the government's financial position. Privatization can have positive effects on both individual businesses and the overall economy. Therefore, privatizing profitable ventures can also be beneficial, not just loss-making ones.
In simple words: Yes, privatizing profitable government businesses can be good. It reduces political influence, cuts corruption, increases tax money for the government, and helps the economy grow.

🎯 Exam Tip: When discussing privatization, consider both its financial benefits (tax revenue, efficiency) and administrative advantages (reduced political interference).

Question 3. Since 1991, what measures have been taken by the Indian government to upheave the country from economic instability?
Answer: Since 1991, the Indian government has taken several measures to address economic instability, including implementing liberalization and privatization policies. These policies aimed to open up the economy domestically and internationally, boost development in poorer regions, and improve the living standards of people. These changes allowed for reduced restrictions on private activities and more market-driven decisions.
In simple words: Since 1991, the Indian government used policies like liberalization and privatization to make the economy stable. These steps reduced restrictions, opened markets, and helped develop the country.

🎯 Exam Tip: The 1991 reforms are a cornerstone of India's economic history; focus on the core policies of liberalization and privatization and their broad goals.

Question 4. Explain the advantages and disadvantages of privatization.
Answer: Advantages of Privatization:
1. Private companies are driven by profit, which motivates them to cut costs and become more efficient. Unlike government managers, private firms directly benefit from profits, leading to better cost control.
2. Privatization reduces government interference. Governments often find it hard to make tough decisions, like layoffs or pay cuts, due to public opposition. Private firms can make these decisions more easily.
3. Private sector industries are usually more profitable than public sector ones. Multinational companies are good examples of this.
4. Privatization encourages companies to improve through competition.
Disadvantages of Privatization:
1. Private firms, driven by short-term profits for shareholders, might avoid investing in long-term projects.
2. Privatizing essential services like water and electricity could create private monopolies. These monopolies might then increase prices, harming consumers without any control.
In simple words: Privatization makes companies more efficient and reduces government interference, leading to more profit. But it can also make companies focus only on short-term gains and create monopolies that can charge high prices.

🎯 Exam Tip: Provide a balanced view by listing both the economic benefits (efficiency, less political interference) and potential drawbacks (short-term focus, monopolies) of privatization.

Question 5. Define globalization. Also state that what is an external source?
Answer: Globalization is the growing interaction between people and companies worldwide, driven by advancements in transport and communication. It's about opening economies domestically and internationally through policies like liberalization and privatization to boost development and improve living standards. An "external source" in this context refers to something outside the country, like foreign investments or international markets that influence the domestic economy.
In simple words: Globalization means countries and businesses are becoming more connected globally because of better travel and communication. An external source is something from outside the country that affects it.

🎯 Exam Tip: Define globalization clearly by focusing on increased interaction and interconnectedness, and link it to policies like liberalization and privatization.

Question 6. Industrial development has resulted in the growth of income. Explain.
Answer: Industrial development leads to income growth for everyone. The industrial sector earns more than the agriculture sector, and these benefits are shared across society. This growth in individual income eventually increases national income. The industrial sector's contribution to the Gross Domestic Product (GDP) increased from 16.6% in 1950-51 to 26.2% in 2013-14.
In simple words: When industries grow, everyone earns more money, which boosts the country's total income. Industries now contribute a much larger part to the national economy than before.

🎯 Exam Tip: Explain the link between industrial development and income growth, using statistics to show its increasing contribution to GDP.

Question 7. What is the role of industrial development in employment?
Answer: The industrial sector plays a significant role in creating jobs. As industries expand, more employment opportunities become available. The Indian industrial sector is a major employer in the organized sector, and the establishment of new industries has led to an increase in overall employment.
In simple words: When industries develop, they create many jobs. The industrial sector is a big source of employment in India, especially in organized businesses.

🎯 Exam Tip: Emphasize how industrial growth directly translates into job creation, particularly in organized sectors, which is a key economic benefit.

Question 8. How does industrial development help in the development of basic infrastructure and use of resources?
Answer: At the time of independence, India had poor infrastructure. The government quickly developed infrastructure, which benefited industries and helped them grow. Rapid infrastructure development was crucial for fast industrialization. Also, industrial units train unskilled workers to improve their productivity, ensuring that resources are fully utilized.
In simple words: Industrial growth helps build roads and other basic facilities faster. It also makes sure that all available resources, including workers, are used well by training them.

🎯 Exam Tip: Connect industrial development to both infrastructure growth and efficient resource utilization, highlighting the benefits of skill training.

Question 9. What can be said about industrial morbidity of the sixth five year plan?
Answer: The document for the Sixth Five-Year Plan states that the structure of industrial development in India was not benefiting from international competition. This means that Indian industries faced challenges and were not robust enough to compete effectively with global players. The lack of competitiveness likely contributed to industrial sickness and underperformance.
In simple words: The Sixth Five-Year Plan noted that Indian industries were not strong enough to compete globally, showing a weakness in their structure.

🎯 Exam Tip: For plan-specific questions, refer to the document's findings directly, focusing on key challenges identified, such as competitiveness.

Question 11. State the future problems of industrial development.
Answer: Since 1991, India has faced intense competition from international businesses. If this situation continues, many domestic industries could be forced to close down. The widespread availability of Chinese products in Indian markets has created a crisis for small-scale industries. The Indian toy and electronics industries are particularly affected, with 40% of their units already closed, which could severely harm these industries in the future.
In simple words: In the future, Indian industries face big problems from global competition, especially from Chinese products. Many small businesses, like toy and electronics makers, might close if things don't change.

🎯 Exam Tip: When discussing future problems, focus on external competition and its specific impact on vulnerable domestic sectors.

Question 12. Explain E-biz scheme in detail.
Answer: The e-Biz portal was launched on January 28, 2013, by the Department of Industrial Policy & Promotion (DIPP) to improve the business environment and ease of doing business in India. This portal, part of the Government's initiative, provides information on licenses, permits, and regulations needed to comply with rules across all government levels. E-Biz acts as a 24x7 online single-window system, offering efficient Government-to-Business (G2B) services. This helps business users save time, effort, and money, benefiting sectors like manufacturing, IT, and construction.
In simple words: The e-Biz portal is an online system launched in 2013 to make it easier for businesses to deal with the government. It helps companies get licenses and permits quickly from one place, saving time and money across many industries.

🎯 Exam Tip: Highlight the "single-window" and "24x7" aspects of e-Biz, as these are key features promoting ease of doing business.

Question 13. What do you understand by skill development scheme?
Answer: A skill development scheme aims to train a large number of Indian youth, preparing them for jobs that are not covered by existing qualification standards. This scheme is connected to the "Make in India" initiative and spans 25 sectors, focusing on enhancing the workforce's abilities to meet industrial needs.
In simple words: A skill development scheme trains many young Indians for jobs, especially in sectors linked to "Make in India," to improve their work abilities.

🎯 Exam Tip: Emphasize the core purpose of skill development: making youth employable and aligning with national initiatives like "Make in India."

Question 14. What measures have been taken to make the forest and environment effective for clearances industrial development?
Answer: To streamline environmental clearances for industrial development, the government has made approvals for environment, coastal regulatory zone (CRZ), and forest-related projects online. The decision-making process has been decentralized to strengthen federalism. Additionally, requirements for obtaining environmental clearance for industrial sheds have been removed where plants, machinery, educational institutes, and hostels already exist, simplifying the process.
In simple words: The government has made environmental and forest approvals for factories faster and online. It also made rules simpler for existing sites, making it easier for industries to get necessary clearances.

🎯 Exam Tip: Focus on the "online," "decentralized," and "simplified" aspects of environmental clearances, as these are key administrative reforms.

Question 15. In context to industrial development, how are reforms being made in the labour sector?
Answer: In the labor sector, reforms include setting up a labor facilitation portal for online unit registration and simplified self-certified returns. A transparent labor inspection plan is being implemented, based on risk parameters, with inspection reports uploaded within 72 hours. The Apprentice Regulation Act of 1961 has been made more flexible, and amendments have been introduced, along with an "Appreciate Incentive Plan," to make apprenticeships more attractive for youth and industries, helping MSMEs employ apprentices.
In simple words: Reforms in the labor sector include online registration, easier inspections, and more flexible apprenticeship rules to attract young people and help small businesses hire them.

🎯 Exam Tip: When detailing labor reforms, mention key elements like online portals, transparent inspections, and modernized apprenticeship programs.

Question 16. How was foreign investment encouraged by the new Industrial Policy?
Answer: The new Industrial Policy categorized industries based on investment levels. Industries requiring high investments were listed, and 51% foreign investment was allowed in them without government approval. For service sector industries, the foreign investment limit was raised from 51% to 74%, and later to 100%. However, foreign investment is currently restricted in specific sectors like retail business, atomic energy, lottery, and gambling.
In simple words: The new Industrial Policy allowed more foreign money into many industries without needing government permission. It raised the foreign investment limit for service sectors but still restricts it in sensitive areas like atomic energy or gambling.

🎯 Exam Tip: Explain the mechanisms used to encourage foreign investment, such as increased percentage limits and reduced approval requirements, while also noting restrictions.

Question 18. State four failures of the new Industrial Policy.
Answer: Four failures of the new Industrial Policy are:
1. Unemployment did not decrease significantly; both the rate and scale of unemployment continued to rise.
2. Many industries became sick or closed down because they couldn't afford expensive foreign technology.
3. Indian industries struggled to compete with foreign industries, leading to many going out of business.
4. The increased dependence of Indian industries on foreign technology was criticized as "Economic Colonialism" by experts.
In simple words: The new Industrial Policy failed to reduce unemployment, caused many local businesses to close due to high technology costs and foreign competition, and led to a problematic reliance on foreign technology.

🎯 Exam Tip: When listing policy failures, ensure each point describes a clear negative outcome or unmet objective.

Question 19. State the contribution of small and cottage industries in industrial production.
Answer: Small and cottage industries continuously increase their contribution to industrial production. They produce about 6000 types of goods, ranging from traditional items to those with higher technology and quality.

🎯 Exam Tip: Quantify the contribution of small and cottage industries by citing the number of goods produced and their share in GDP or total production, using tables where data is presented.

Question 20. State the contribution of small and cottage industries in increasing in employment.
Answer: The MSME sector provided jobs to 805.23 lakh people in 2012-13. This number grew to 1114.29 lakh people in 2013-14. This shows that the rate of employment in this sector was higher than the overall employment rate.

🎯 Exam Tip: When discussing employment figures, focus on the growth trend and the impact on the overall job market.

Question 21. What did Ram Singh K. Ashar study in context to the efficiency of small scale industries?
Answer: Ram Singh K. Ashar's study showed that for every 1 rupee of fixed capital invested, small scale industries created more employment. This highlights their efficiency in job creation compared to larger industries.
In simple words: Ram Singh K. Ashar found that small industries create more jobs for the same amount of money invested than big industries.

🎯 Exam Tip: Remember specific studies or reports when answering questions about economic efficiency, as they add credibility to your points.

Question 23. State four problems of small scale and cottage industries.
Answer: Four problems faced by small scale and cottage industries are:

• Problem of raw material: Traders often sell raw materials to weavers at high prices and buy their finished cloth at low prices. Also, importing raw materials from other countries reduces India's foreign exchange savings.
• Lack of capital: These industries need money for both long-term (like buying machines) and short-term (like buying raw materials) needs. They often borrow from moneylenders, who charge high interest rates.
• Lack of modern technology: Small and cottage industries still use old and traditional methods. This means their product quality has not improved because they don't use new machines.
• Problem of marketing and standardization: These industries find it hard to sell their products. The number of reserved goods for them has increased, but marketing is still a challenge. The government set up the National Small Industries Corporation in 1955 to help find markets for their products.

🎯 Exam Tip: When listing problems, provide a brief explanation for each point to demonstrate your understanding.

Question 24. State four provisions of the new Industrial Policy, 1991.
Answer: Four key provisions of the new Industrial Policy, 1991 are:
1. Industrial licensing was mostly ended.
2. Industries previously reserved for the public sector were opened up to private companies.
3. Rules for foreign investment were relaxed, making it easier for foreign companies to invest.
4. More importance was given to making credit available instead of just cheap credit.
In simple words: The 1991 policy removed many old rules, let private companies enter more sectors, allowed more foreign investment, and focused on making loans accessible.

🎯 Exam Tip: For policy questions, focus on the main changes or reforms introduced and their direct objectives.

Question 25. State four steps taken for the development of small scale Industries.
Answer: Four steps taken to help small scale industries grow are:
1. The investment limit for small scale industries was raised to Rs 1 crore in 2006.
2. The Credit Linked Capital Subsidy Scheme was launched to help these industries upgrade their technology.
3. The production tax exemption limit for the small scale sector was increased from Rs 3 crore to Rs 4 crore.
4. A Credit Guarantee Fund was started to support the small scale sector financially.
In simple words: The government increased investment limits, offered technology subsidies, raised tax exemption limits, and created a credit guarantee fund to boost small industries.

🎯 Exam Tip: When discussing government initiatives, mention the specific schemes or policy changes and their intended benefits.

Question 26. What was the effect of economic reforms on small and cottage industries?
Answer: The economic reforms of 1991 had a negative impact on India's small scale and cottage industries. They faced a crisis due to the large number of Chinese products in Indian markets. Many Indian toy and electronics units closed down, with 40% shutting entirely. China sold its products below production cost (dumping), threatening the entire MSME sector. To help, the government started the MUDRA plan to provide financing to small businesses in the unorganized sector.
In simple words: The 1991 economic reforms hurt small industries because they couldn't compete with cheap Chinese goods. Many closed down, and the government had to start the MUDRA plan to help.

🎯 Exam Tip: Explain both the positive and negative impacts when analyzing economic reforms, and cite specific examples or schemes if possible.

Question 27. What is said about Limited Partnership in small and cottage industries in the new Industrial Policy?
Answer: The new industrial policy introduced a new legal structure for businesses called Limited Partnership. In this setup, at least one partner has unlimited responsibility, while the other partners have limited responsibilities. This provides flexibility for small and cottage industries.
In simple words: The new policy introduced a "Limited Partnership" where some owners are fully responsible, but others have limits to their responsibility.

🎯 Exam Tip: Define specific terms like "Limited Partnership" clearly and explain its implications in the context of the policy.

Question 29. In order to make "Make In India” successful, what means have been provided according to the Economic Survey?
Answer: To make the "Make In India" campaign successful, the Economic Survey suggested several measures, categorized as follows:
i. To increase private investment in Indian domestic and foreign sectors, the following steps were taken:
1. Simplifying rules.
2. Reducing quantity and rate of taxes.
3. Preparing infrastructure.
4. Reforming labor laws.
ii. These methods are also known as 'Industrial Policy'. To increase production, the following actions were taken:
1. Reducing capital costs.
2. Increasing subsidies and availability.
3. Establishing Special Economic Zones in all manufacturing activities.
iii. The last group of methods are generally called “protective” measures:
1. Providing export-related benefits to local producers.
2. Protecting local products from foreign competition by increasing customs duty.
In simple words: To make "Make In India" work, the government is simplifying rules, lowering taxes, building better infrastructure, supporting local producers, and protecting them from foreign goods.

🎯 Exam Tip: Organize your answer into clear categories (e.g., investment, policy, protective measures) to make it easy to understand.

Question 2. What do you understand by liberalization? Under this, what measures have been taken to develop the Indian economy?
Answer: Liberalization means a government reducing or removing rules that limit private business activities. It happens when things previously banned are allowed, or government regulations become less strict. To develop the Indian economy through liberalization, measures included:
7. Allowing independent setting of interest rates.
In simple words: Liberalization means the government makes rules less strict for private businesses. This helps the economy by letting interest rates be set freely.

🎯 Exam Tip: Clearly define economic terms like "liberalization" first, then list the specific measures taken under it.

Question 3. State the effect of new economic reforms on the Indian economy.
Answer: The new economic reforms had several effects on the Indian economy:

• Growth in Employment: Although the Gross Domestic Product (GDP) grew, employment did not increase as much as it should have, indicating a failure in this area.
• Growth in agriculture: Indian agriculture saw less development, which is another sign of the reforms not fully succeeding in this sector.
• Growth in Industrialism: Industrial development faced challenges due to increased imports. Even the industrial sector is struggling to make enough profits today.
• Disinvestment: The government is selling shares in public enterprises to cover budget shortfalls.

🎯 Exam Tip: Discuss the effects of reforms sector-wise (employment, agriculture, industry) and mention key policy outcomes like disinvestment.

Question 4. Explain New Small Enterprise Policy, 1991 for small scale industries.
Answer: The New Small Enterprise Policy of 1991 was introduced for small, medium, and large scale industries with the following provisions:
1. The investment limit for the tiny sector was raised from Rs 2 lakh to Rs 5 lakh. Earlier, these units could only be set up in towns with fewer than 50,000 people. This policy also included service sector activities.
2. A support package was announced for tiny units, promising continuous help, while small scale units would get priority assistance.
3. Other industrial units were allowed to invest up to 24% equity in small scale units, bringing different industry sizes closer and helping larger units support smaller ones.
4. A new legal structure called Limited Partnership was created. In this, at least one partner had unlimited responsibility, while others had limited responsibility.
5. The policy focused on ensuring "sufficiency of credit" instead of just "cheap credit."
6. Small scale sector was given priority in government purchases.
7. Cooperative institutions, public institutions, and commercial organizations were formed to find new markets for small and tiny sectors.
8. Great emphasis was placed on setting up small and tiny industrial units in rural and backward areas.
In simple words: The 1991 policy boosted small industries by increasing investment limits, offering support packages, allowing other companies to invest, creating new business structures, focusing on credit availability, and promoting rural industrialization.

🎯 Exam Tip: When explaining a policy, break down its provisions into clear, numbered points to cover all aspects effectively.

RBSE Solutions for Class 11 Economics