Question 1

Q1: Why were reforms introduced in India?

Accepted Answer

Economic reforms were introduced in India in 1991 primarily due to a severe economic crisis. The key factors that necessitated these reforms were:    Balance of Payments Crisis: The government was unable to make repayments on its borrowings from abroad. Foreign exchange reserves dropped to a level t...

Question 2

Q10: Do you think outsourcing is good for India? Why are developed countries opposing it?

Accepted Answer

Why Outsourcing is Good for India: Yes, outsourcing is good for India. As described in the text, it is one of the important outcomes of the globalisation process and has provided significant benefits:    Employment Generation: It has created vast employment opportunities, especially in services such...

Question 3

Q11: India has certain advantages which makes it a favourite outsourcing destination. What are these advantages?

Accepted Answer

According to the chapter, India has become a favourite destination for global outsourcing due to the following key advantages:    Low Wage Rates: India can provide services at a much cheaper cost compared to developed countries. This cost-effectiveness is a major driver for companies to outsource th...

Question 4

Q12: Do you think the navaratna policy of the government helps in improving the performance of public sector undertakings in India? How?

Accepted Answer

Yes, the Navratna policy of the government helps in improving the performance of Public Sector Undertakings (PSUs) in India. The text explicitly states that "The granting of status resulted in better performance of these companies." How the Policy Helps: The policy works by identifying PSEs that hav...

Question 5

Q13: What are the major factors responsible for the high growth of the service sector?

Accepted Answer

The high growth of the service sector in the post-reform period can be attributed to several major factors that are highlighted or implied in the text: 1.  Economic Reforms: The liberalisation policies introduced in 1991 opened up various sectors. Financial sector reforms led to the growth of bankin...

Question 6

Q14: Agriculture sector appears to be adversely affected by the reform process. Why?

Accepted Answer

The agriculture sector has been adversely affected by the reform process for several reasons, as detailed in the chapter:    Decline in Public Investment: Since 1991, public investment in the agriculture sector, especially in crucial infrastructure like irrigation, power, roads, market linkages, and...

Question 7

Q15: Why has the industrial sector performed poorly in the reform period?

Accepted Answer

The industrial sector has recorded a slowdown and performed poorly in the reform period due to a combination of factors:    Competition from Cheaper Imports: With the liberalisation of trade and reduction of tariffs, cheaper imported goods became more readily available. This replaced the demand for...

Question 8

Q16: Discuss economic reforms in India in the light of social justice and welfare.

Accepted Answer

The economic reforms in India, while successful in accelerating GDP growth and stabilising the economy, have faced significant criticism when viewed in the light of social justice and welfare. Negative Impacts on Social Justice and Welfare:    Jobless Growth: A major criticism is that the reform-led...

Question 9

Q2: Why is it necessary to became a member of WTO?

Accepted Answer

It is necessary for a country to become a member of the World Trade Organisation (WTO) for several reasons, as it plays a crucial role in the global economy:    Rule-Based Trading Regime: The WTO establishes a rule-based trading system where nations cannot place arbitrary restrictions on trade. This...

Question 10

Q3: Why did RBI have to change its role from controller to facilitator of financial sector in India?

Accepted Answer

The Reserve Bank of India (RBI) had to change its role from a controller to a facilitator of the financial sector as a key component of the economic reforms initiated in 1991. Before the reforms, the RBI exercised tight control over the financial sector, deciding interest rates, lending norms, and t...

Question 11

Q4: How is RBI controlling the commercial banks?

Accepted Answer

Although the economic reforms of 1991 shifted the RBI's role from a strict controller to a facilitator, it still retains significant regulatory control over commercial banks to safeguard the interests of account-holders and the nation. According to the source text, the RBI controls commercial banks...

Question 12

Q5: What do you understand by devaluation of rupee?

Accepted Answer

Devaluation of the rupee refers to a deliberate reduction in the value of the Indian rupee in relation to foreign currencies, undertaken by the government. As mentioned in the text, in 1991, the rupee was devalued against foreign currencies as an immediate measure to resolve the balance of payments...

Question 13

Q6: Distinguish between the following (i) Strategic and Minority sale (ii) Bilateral and Multi-lateral trade (iii) Tariff and Non-tariff barriers.

Accepted Answer

(i) Strategic and Minority Sale    Minority Sale: This occurs when the government sells a part of the equity (a minority stake, i.e., less than 51%) of a Public Sector Enterprise (PSE) to the public or private sector. In this case, the government retains ownership and management control of the enter...

Question 14

Q7: Why are tariffs imposed?

Accepted Answer

Based on the provided text, tariffs are imposed for two primary reasons: 1.  To Protect Domestic Industries: The main purpose of imposing tariffs is to protect a country's domestic industries from foreign competition. By placing a tax on imported goods, tariffs make them more expensive for consumers...

Question 15

Q8: What is the meaning of quantitative restrictions?

Accepted Answer

Quantitative restrictions are non-tariff barriers to trade that limit the maximum quantity or value of a commodity that can be imported or exported during a specific period. These restrictions are a direct form of control over the volume of international trade, as opposed to tariffs which influence...

Question 16

Q9: Those public sector undertakings which are making profits should be privatised. Do you agree with this view? Why?

Accepted Answer

The view that profitable Public Sector Undertakings (PSUs) should be privatised is a debatable issue, and the text provides arguments for both sides. Arguments for Privatising Profitable PSUs: One could agree with this view based on the government's perspective mentioned in the chapter. The purpose...

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