CBSE Class 11 Economics Liberalisation Privatisation And Globalisation

Question. The economic system adopted by India is
(a) Capitalistic
(b) Socialistic
(c) Mixed Economy
(d) None of these
Answer. C

Question. When was Planning Commission setup?
(a) 1949
(b) 1950
(c) 1956
(d) 1850
Answer. B

Question. In which year was India’s First Five Year Plan launched?
(a) 1951–56
(b) 1952–57
(c) 1947–52
(d) 1950–55
Answer. A

Question. Which Five Year Plan was implemented during the year 2012–17?
(a) Eighteenth
(b) Ninth
(c) Eleventh
(d) Twelfth
Answer. D

Question. Which of the following is not a goal of perspective plans in India?
(a) GDP Growth
(b) Equity
(c) Land reforms
(d) Self-reliance
Answer. C

Question. In which economy means of production are owned, controlled and operated by the Government?
(a) Mixed Economy
(b) Socialist Economy
(c) Capitalist Economy
(d) None of these
Answer. B

Question. In a Capitalist Economy means of production are owned, controlled and operated by:
(a) Private sector
(b) Public sector
(c) External sector
(d) Both (a) and (b)
Answer. A

Question. Name the body/institution which was engaged in the formulation of Five Year Plans in India.
(a) Planning Commission
(b) Election Commission
(c) National Development Commission
(d) None of these
Answer. A

Question. When was NITI Aayog formed?
(a) 1950
(b) 1991
(c) 2015
(d) 2012
Answer. C

Question. Who is the ex-officio chairman of the NITI Aayog?
(a) Prime Minister
(b) Home Minister
(c) Finance Minister
(d) President
Answer. A

Question. Mahalanobis Model was started in ___________ Five Year Plan.
(a) First
(b) Second
(c) Tenth
(d) Eleventh
Answer. B

Question. Which of the following facts are associated with P.C. Mahalanobis?
(a) He is known as the architect of Indian planning.
(b) He started the journal Sankhya.
(c) He established the Indian Statistical Institute.
(d) All of the above.
Answer. D

Question. Who is known as the architect of Indian Planning?
(a) Jawaharlal Nehru
(b) Dr. B.R. Ambedkar
(c) P.C. Mahalanobis
(d) Dadabhai Naoroji
Answer. C

Question. The production decision under which economic system is based upon the market forces of demand and supply?
(a) Capitalism
(b) Socialism
(c) Mixed
(d) Monarchy
Answer. A

Question. Which amongst the following are the central problems of an economy?
(a) What to produce
(b) How to produce
(c) For whom to produce
(d) All of the above
Answer. D

Question. Which sector made the maximum contribution in the national income of India from the period 1950–91?
(a) Agriculture sector
(b) Service sector
(c) Industrial sector
(d) None of these
Answer. A

Question. The term ‘natural rate of unemployment’ is consistent with the situation of:
(a) Full employment
(b) Under employment
(c) Disguised unemployment
(d) Structural unemployment
Answer. A

Question. ‘Modernisation’ as a goal of planning in context of Indian economy aimed at:
(a) Use of new technology
(b) Change in social outlook
(c) Adopting western lifestyle
(d) Both (a) and (b) above
Answer. D

Question. The share of agricultural sector in India’s GDP has tended to:
(a) Decline
(b) Rise
(c) Remain constant
(d) First decline then increase
Answer. A

Question. Equity as a goal of planning aims to achieve the following objectives:
(a) Reduction in economic inequalities
(b) Curbing concentration of economic power
(c) Uplifting the weaker sections of the society
(d) All of the above
Answer. D

CBSE Class 11 Economics Chapter 3 Liberalisation Privatisation And Globalisation Match the following

1. (i) Gross Domestic Product         (a) A system under which a set of target is
                                                            defined by the central authority
(ii) Long term planning                     (b) Architect of Indian planning
(iii) Economic planning                    (c) Market value of all final goods
(iv) P. C. Mahalanobis                     (d) Perspective plans
Answer. (i) (c) (ii) (d) (iii) (a) (iv) (b)

CBSE Class 11 Economics Chapter 3 Liberalisation Privatisation And Globalisation Fill in the blanks

1. A _________ economy may be defined as an economic system in which the means of production are privately owned and economic activities are guided by self-interest and profit motive.
2. ___________ economy is a system in which means of production are owned by the whole community and all economic decisions are taken by a central authority.
3. A ______________ economy is a system in which both private and public sector co-exist and both work under the general guidance of an economic planning.
4. The post-independent India chose the path of ___________ economy through economic planning for her development.
5. __________ is a system under which a set for targets is defined by the central authority of the country.
6. In India, __________ formulated the plans for the country.
7. The Planning Commission in India was constituted in the year __________ under the chairmanship of Pt. Jawaharlal Nehru.
8. Long term plan is also termed as __________ plan.
9. Short period objectives of planning are for the term of __________ years.
10. __________ is regarded as the architect of Indian planning.
11. __________ refers to an increase in country’s productive capacity and is measured by increase in real per capita GDP
12. With the process of development, the share of __________ sector in GDP declines whereas the share of industry and service sector increases.
13. __________ implies avoiding dependence on imports of those goods which could be produced in the country itself.
14. __________ refers to adoption of new technology in the field of production and change in social outlook.
15. __________ institution replaced Planning Commission in India.
16. __________ is a policy think-tank of Government of India and aims to involve the states in economic policy-making in India.
17. An economy in which means of production are used in a manner such that social welfare is maximised is called __________ economy.
18. Objective of planning necessary to reduce our dependence on foreign goods is called__________ .
Answer. 
1. Capitalist                     2. Socialist
3. Mixed economy          4. Mixed
5. Economic Planning    6. Planning Commission
7. 1950                           8. Perspective
9. Five                           10. Prof. P.C. Mahalanobis
11. Economic growth    12. Agriculture
13. Self-reliance           14. Modernisation
15. NITI Aayog             16. NITI Aayog
17. Socialist                 18. Self-reliance

CBSE Class 11 Economics Chapter 3 Liberalisation Privatisation And Globalisation Very Short Answer Questions

Question. What are the three questions that every economic system has to answer?
Answer. The three questions are: (i) What to produce? (ii) How to produce? (iii) For whom to produce?

Question. Define a capitalist economy.
Answer. A capitalist economy may be defined as an economic system in which the means of production are privately owned and economic activities are guided by self-interest and profit motive.

Question. Define a socialist economy.
Answer. Socialist economy is a system in which means of production are owned by the whole community and all economic decisions are taken by a central authority.

Question. What do you mean by mixed economy?
Answer. A mixed economy is an economy in which both private and public sector co-exist and both work under the general guidance of economic planning.

Question. What type of economic system was accepted in post-independent India?
Answer. The post-independent India chose the path of mixed economy for her development.

Question. What is economic planning?
Answer. Economic planning is essentially a way of organising and utilising resources to the maximum advantage in terms of defined social ends.

Question. When was India’s Planning Commission constituted and who was its first chairman?
Answer. The planning commission in India was constituted in March 1950 under the chairmanship of Pt. Jawaharlal Nehru.

Question. Who is regarded as the architect of Indian planning?
Answer. Prof. P.C. Mahalanobis is regarded as the architect of Indian planning.

Question. List the long-term objectives of Indian planning.
Answer. Rapid economic growth, Equity; Self- reliance; Modernisation; Full employment.

Question. What is economic growth?
Answer. Economic growth refers to increase in country’s productive capacity and it is measured by increase in real per capita GDP.

Question. What is meant by sectoral (or structural) composition of an economy?
Answer. The contribution of various sectors to the GDP is termed as sectoral composition of the economy.

Question. What changes take place in the sectoral composition of an economy during the process of development?
Answer. With the process of development the share of agriculture in GDP declines whereas the share of industry and service sectors increase.

Question. What changes have been observed in the contribution of agricultural sector to GDP from the period 1950-51 to 1990-91?
Answer. The contribution of agricultural sector to GDP declined from 59 per cent in 1950-51 to nearly 35 per cent in 1990-91.

Question. What are the three main dimensions of the objective of social and economic justice?
Answer. (i) Reduction in economic inequalities
(ii) Curbing concentration of economic power
(iii) Uplifting the weaker sections of the society

Question. What is meant by self-reliance?
Answer. Self-reliance implies avoiding dependence on imports of those goods which could be produced in the country itself.

Question. What is meant by modernisation?
Answer. Modernisation refers to adoption of new technology in the field of production and change in social outlook.

Question. What is the name of the institution which is formed in place of planning commission?
Answer. The name of the new institution is NITI Aayog (or National Institution for Transforming India).

Question. When was NITI Aayog formed?
Answer. NITI Aayog was formed on January 1, 2015.

Question. What is the main function of NITI Aayog?
Answer. NITI Aayog is a policy think-tank of government of India that aims to involve the states in economic policy-making in India.

Question. What is the basic difference between Planning Commission and NITI Aayog?
Answer. NITI Aayog will be providing strategic and technical advice to the Central and the state governments i.e. by adopting bottom-up approach rather than traditional top-down appraoch as adopted by the Planning Commission

Very Short Answer Questions - 1 Mark Each

1. What are tariffs? [1 Mark]

Answer:
Tariffs refer to taxes imposed on imported goods to make them more expensive and protect domestic industries from foreign competition.

Teacher's Note:
a) Tariffs act as a trade barrier.
b) They discourage excessive imports and encourage domestic consumption.

2. Name the central bank in India. [1 Mark]

Answer:
The Reserve Bank of India (RBI) is the central bank in India.

Teacher's Note:
a) RBI regulates the entire banking system in the country.
b) It controls money supply and interest rates.

3. What are taxes? [1 Mark]

Answer:
Taxes are compulsory financial charges imposed by the government on individuals or businesses to fund public expenditure and developmental activities.

Teacher's Note:
a) They are a primary source of government revenue.
b) Taxes can be direct or indirect.

4. Define outsourcing. [1 Mark]

Answer:
Outsourcing is the business process of hiring external agencies, often in foreign countries, to perform routine or specialized business tasks that were previously done internally.

Teacher's Note:
a) It helps companies reduce operational costs.
b) India is a major global hub for IT and business process outsourcing.

5. What is the other name of the policy of Liberalisation, Privatisation and Globalisation? [1 Mark]

Answer:
The policy of Liberalisation, Privatisation and Globalisation is also known as the New Economic Policy (NEP) introduced in 1991.

Teacher's Note:
a) These reforms marked a shift from a closed to an open economy.
b) They aimed at overcoming the severe balance of payments crisis.

6. What are ‘navratnas’? [1 Mark]

Answer:
Navratnas are select public sector undertakings (PSUs) that have been granted greater managerial and operational autonomy by the government to compete globally.

Teacher's Note:
a) This status is given based on financial performance.
b) It allows these enterprises to make quick decisions without government interference.

Short Answer Questions - 3 Marks Each

1. Describe the economic condition prevailing in the economy that lead to the introduction of reforms in India? [3 Marks]

Answer:
1. India faced a severe balance of payments crisis where foreign exchange reserves dropped to levels barely enough to pay for two weeks of imports.
2. The inflation rate soared due to a sharp increase in prices of essential goods.
3. Public sector undertakings incurred massive losses, adding to the growing fiscal deficit of the government.

Teacher's Note:
a) The crisis forced India to approach the World Bank and IMF for financial assistance.
b) Avoid writing general statements without mentioning foreign exchange reserves and fiscal deficit.
c) These conditions paved the way for structural adjustment policies in 1991.

2. What were the major policy changes introduced in the New Economic Policy? [3 Marks]

Answer:
1. Liberalisation measures were introduced to remove unnecessary government controls and restrictions on private businesses.
2. Privatisation policies facilitated the transfer of ownership and management of public sector enterprises to the private sector.
3. Globalisation measures integrated the domestic economy with the world economy through trade, capital, and technology flows.

Teacher's Note:
a) The three pillars form the acronym LPG.
b) Students must categorize measures correctly under each head.
c) This policy shifted India towards a market-driven economic model.

3. Define Liberalisation. What were the main reasons to introduce reforms in India? [3 Marks]

Answer:
1. Liberalisation refers to the removal of government restrictions, licensing requirements, and controls on private sector enterprises.
2. Reforms were introduced to tackle mounting fiscal deficits and severe foreign exchange shortages.
3. They aimed to improve the efficiency and competitiveness of domestic industries by exposing them to market forces.

Teacher's Note:
a) Definition must clearly mention deregulation and easing of controls.
b) A common mistake is confusing liberalisation with globalisation.
c) Increased competition was a key expected outcome.

4. State the reforms introduced in the financial sector [3 Marks]

Answer:
1. The role of the Reserve Bank of India was shifted from a regulator to a facilitator of the financial sector.
2. Private sector banks, both Indian and foreign, were permitted to operate and compete freely.
3. Foreign Institutional Investors (FIIs) were allowed to invest in Indian financial markets.

Teacher's Note:
a) Financial sector includes commercial banks, investment banks, and stock exchange operations.
b) Mentioning the shift in RBI's role fetches full credit.
c) Reforms increased customer choice and banking efficiency.

5. What reform measures were introduced in the industrial sector? [3 Marks]

Answer:
1. Industrial licensing was abolished for almost all product categories except a few hazardous and strategic ones.
2. The scope of the public sector was drastically reduced, and many reserved industries were opened to private players.
3. Small-scale industries were deregulated, and goods earlier reserved exclusively for them were dereserved.

Teacher's Note:
a) Focus on delicensing and dereservation.
b) Students often miss mentioning the reduction in public sector monopoly.
c) These measures stimulated private investment and industrial growth.

6. What do you understand by devaluation of rupee? [3 Marks]

Answer:
1. Devaluation is the official reduction of the value of the domestic currency against foreign currencies by the government or central bank.
2. It makes domestic goods cheaper for foreign buyers, thereby encouraging exports.
3. Conversely, it makes imports expensive, which helps curb excessive import demand and protects domestic producers.

Teacher's Note:
a) Distinguish clearly between official devaluation and market-driven depreciation.
b) Explain both export promotion and import restriction impacts.
c) It was a core tool used to correct balance of payments deficits.

7. Define Privatisation and explain the different ways of privatisation. [3 Marks]

Answer:
1. Privatisation is the process of transferring ownership, management, or control of public sector enterprises to private hands.
2. One way is through the outright sale of government-owned companies to private entities.
3. Another way is through disinvestment, which involves selling a part of the equity of public sector undertakings to the public or private investors.

Teacher's Note:
a) Define privatisation clearly before listing methods.
b) Differentiate between total privatization and strategic sale/disinvestment.
c) It aimed to improve managerial efficiency and reduce government burden.

8. Those public sector undertakings which are not making profits should be privatised. Do you agree with this view? Why? [3 Marks]

Answer:
1. Yes, loss-making public sector enterprises drain scarce government resources that could otherwise be used for public welfare.
2. Privatisation often brings professional management, modern technology, and improved efficiency to loss-making units.
3. However, privatization should be weighed against social objectives and the protection of workers' interests.

Teacher's Note:
a) A balanced view mentioning both economic efficiency and social welfare is expected.
b) Avoid one-sided answers without justification.
c) The drain on the public exchequer is a primary justification.

9. Why are tariffs imposed? [3 Marks]

Answer:
1. Tariffs are imposed to protect domestic industries from cheap foreign competition.
2. They generate significant revenue for the government.
3. They help regulate the import of non-essential luxury goods and conserve foreign exchange reserves.

Teacher's Note:
a) Highlight protectionism as the primary historical objective.
b) Mention revenue generation as a secondary benefit.
c) Modern reforms generally aim at lowering tariff barriers.

10. What is the meaning of quantitative restrictions? [3 Marks]

Answer:
1. Quantitative restrictions refer to limits and quotas placed by the government on the physical quantity of goods that can be imported or exported.
2. Import quotas restrict the exact volume of foreign goods entering the domestic market.
3. They are used to protect domestic producers and manage foreign exchange reserves.

Teacher's Note:
a) Distinguish tariffs (price-based barriers) from quantitative restrictions (quantity-based limits).
b) WTO agreements require countries to phase out quantitative restrictions in favor of tariffs.
c) Precise wording on physical volume is essential.

Long Answer Questions - 6 Marks Each

1. Do you think outsourcing is good for India? Why are developed countries opposing it? [6 Marks]

Answer:
1. Outsourcing is beneficial for India as it generates large-scale employment for educated youth.
2. It brings in valuable foreign exchange and promotes technological advancement in the service sector.
3. It enhances skill development and improves the overall standard of living in urban tech hubs.
4. Developed countries oppose outsourcing because it leads to the shifting of jobs from their domestic workers to developing nations.
5. It causes political and social friction in developed economies due to rising domestic unemployment.
6. Companies in developed nations face criticism for bypassing local labor markets to reduce costs.

Teacher's Note:
a) Structure the answer into two clear parts: benefits for India and opposition reasons from developed nations.
b) Avoid missing the employment and wage loss angles in Western countries.
c) Use economic terminology like foreign exchange earnings and structural unemployment.
d) Conclude with the perspective of global interdependence.

2. What are the major factors responsible for the high growth of the service sector? [6 Marks]

Answer:
1. Availability of a vast pool of skilled, English-speaking, and technologically proficient human capital in India.
2. Favorable government policies and tax incentives promoting IT, IT-enabled services, and financial sectors.
3. Globalisation and liberalization opened up international markets for Indian professional services.
4. Low labor and operational costs compared to developed nations made India an attractive outsourcing destination.
5. Rapid advancements in telecommunication and internet infrastructure facilitated seamless global service delivery.
6. Rise in domestic demand for financial, banking, real estate, and professional business services.

Teacher's Note:
a) List at least six distinct factors for a six-mark question.
b) Highlight the role of human capital and telecom infrastructure.
c) Connect domestic capabilities with international demand.
d) Ensure proper spacing and point-wise presentation.

3. Agriculture sector appears to be adversely affected by the reform process. Why? [6 Marks]

Answer:
1. Public investment in agricultural infrastructure such as irrigation, power, and roads declined during the reform period.
2. Removal of fertilizer and agricultural subsidies increased the cost of cultivation for farmers.
3. Shift in cropping patterns toward export-oriented cash crops reduced the production of food grains.
4. International exposure and reduction of import tariffs exposed Indian farmers to unfair competition from heavily subsidized global agriculture.
5. Institutional credit availability became scarcer for small and marginal farmers.
6. Withdrawal of market support systems left farmers vulnerable to price fluctuations.

Teacher's Note:
a) Focus on declining public investment and subsidy cuts as core reasons.
b) Explain how global exposure affected domestic farmers adversely.
c) Mention the shift towards cash crops and its impact on food security.
d) Emphasize the plight of small and marginal farmers.

4. Why has the industrial sector performed poorly in the reform period? [6 Marks]

Answer:
1. Cheaper imported manufactured goods flooded the domestic market, outcompeting local industries.
2. Inadequate infrastructure facilities like power supply and transport hampered industrial production and increased costs.
3. Non-tariff and tariff barriers were lowered, but developed nations maintained non-tariff barriers against Indian exports.
4. High domestic interest rates discouraged fresh industrial investment and expansion.
5. Global slowdowns reduced the demand for Indian manufactured goods abroad.
6. Disinvestment and privatization policies created uncertainty among industrial workers.

Teacher's Note:
a) Identify cheap imports and infrastructure bottlenecks as major culprits.
b) Explain the impact of global competition on domestic manufacturing.
c) Mention the role of credit costs and global demand.
d) Conclude with the need for supportive domestic policies for manufacturing.

5. Discuss economic reforms in India in the light of social justice and welfare. [6 Marks]

Answer:
1. Economic reforms led to rapid economic growth, but the benefits have been skewed toward urban areas and higher-income groups.
2. Agriculture and rural sectors suffered due to reduced public spending, aggravating rural-urban income disparities.
3. Employment growth did not keep pace with output growth, resulting in jobless growth in certain sectors.
4. Reduction in social sector expenditure by the government adversely affected health and education provisions for the poor.
5. Price rise in essential commodities due to the removal of subsidies hurt vulnerable sections of society.
6. Inclusive growth policies and targeted welfare schemes became necessary to correct the negative social impacts of reforms.

Teacher's Note:
a) Maintain a critical and balanced analytical approach.
b) Address the conflict between high GDP growth and social welfare equity.
c) Highlight rural distress and regional disparities.
d) Conclude on the necessity of inclusive growth policies.

NCERT text book questions - 3 Marks each

1. What is the most important function of RBI? [3 Marks]

Answer:
1. The most important function of the Reserve Bank of India is the monopoly of currency note issue and regulation of money supply.
2. It acts as a banker to the government and manages government accounts.
3. It regulates, supervises, and controls the commercial banking system to ensure financial stability.

Teacher's Note:
a) Note issue is universally recognized as the prime central banking function.
b) Mention banker to the government and supervisor of commercial banks.
c) Concise points ensure full marks in textbook questions.

2. What do you understand by devaluation of rupee? [3 Marks]

Answer:
1. Devaluation is the deliberate downward adjustment of the value of a country's currency relative to foreign currencies.
2. It makes exports cheaper and more competitive in international markets.
3. It makes imports expensive, thereby reducing import demand and correcting balance of payments deficits.

Teacher's Note:
a) Reiterate definition clearly.
b) Explain export promotion and import discouragement effects.
c) Mention its role in overcoming foreign exchange crises.

3. India has certain advantages which makes it a favourite outsourcing destination. What are these advantages? [3 Marks]

Answer:
1. Availability of a large pool of low-cost, highly skilled, and English-speaking professionals.
2. Favorable government policies, tax holidays, and supportive infrastructure for the IT sector.
3. Time zone advantages that allow round-the-clock operations and quick service delivery to Western clients.

Teacher's Note:
a) Focus on labor cost advantage and language proficiency.
b) Mention time zone benefits as a unique logistical advantage.
c) Keep points distinct and well-structured.

4. Was it necessary for India to introduce economic reforms at the behest of World Bank and International Monetary Fund? Was thereno alternative for the government to solve the balance of paymentscrisis? [3 Marks]

Answer:
1. Yes, it was necessary because India's foreign exchange reserves had fallen to dangerously low levels, insufficient to finance even two weeks of imports.
2. International lenders refused further credit without structural reforms and conditionalities.
3. In the absence of foreign aid or reforms, India faced a humiliating sovereign default on international debt obligations.

Teacher's Note:
a) Explain the gravity of the 1991 balance of payments crisis.
b) Highlight the conditional nature of World Bank and IMF assistance.
c) Emphasize that internal restructuring was unavoidable to restore global creditworthiness.