CBSE Class 11 Economics Liberalisation Privatisation and Globalisation An Appraisal Worksheet

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

Question. __________ refers to the transfer of assets or service functions form public to private ownership.
a) Globalisation
b) Privatisation
c) Liberalisation
d) All of the above
Answer : B

Question. Industry reserved for public sector:
a) Defense equipment
b) Atomic energy generation
c) Railway transport
d) All of these
Answer : D

Question. WTO was established in the year
a) 1995
b) 1948
c) 1996
d) 1994
Answer : A

Question. The opening up of the Indian Economy has led to
a) Fall in foreign exchange and rise in FDI
b) Rise in foreign exchange and fall in FDI
c) Rise in foreign exchange and rise in FDI
d) Fall in foreign exchange and Fall i in FDI
Answer : C

Question. Rate of which tax was reduced as per the tax reform:
a) Gift tax
b) Corporation tax
c) Income tax
d) Both (b) and (c)
Answer : D

Question. The government has made efforts to improve the efficiency of PSU’s by giving them______ in taking managerial decisions.
a) Money
b) Financial assistance
c) Autonomy
d) none of the above
Answer : C

Question. Fiscal policy of the government refers to:
(a) Taxation policy
(b) Government expenditure policy
(c) Both (a) and (b)
(d) Neither (a) nor (b)
Answer : C

Question. Though the GDP growth rate has increased in the reform period,
a) Employment rate has rise
b) Employment rate has fallen
c) Employment rate remains same
d) Reemployment rate has fluctuates
Answer : B

Question. Which of the policy is not initiated under the new economic policy?
a) Liberalization
b) Privatisation
c) Globalisation
d) Urbanization
Answer : D

Question. BPO means ___________.
a) Business policy outsource
b) Business process organisation
c) Business process outsourcing
d) None of the above
Answer : C

Question. During the reform period
a) Agriculture has declined, industrial sector reported fluctuation, and service sector has gone up.
b) Agriculture has gone up., industrial sector reported fluctuation, and service sector has declined
c) Agriculture has declined, industrial sector reported gone up, and service sector reported fluctuation
d) Agriculture sector reported fluctuation, industrial sector gone down, and service sector has gone up.
Answer : A

Question. Financial sector reforms mainly relate to:
a) Banking sector
b) Foreign exchange market
c) Both (a) and (b)
d) Insurance sector
Answer : C

Question. India has become one of the favorable destinations for outsourcing because of this reason:
a) High wage rates
b) Availability of skilled manpower and accuracy
c) Low taxes
d) All of these
Answer : B

Question. Foreign exchange reforms was done by
a) Devaluating the Rupee against foreign currency
b) Introducing the fixed exchange rate system
c) Determination of the exchange rate by the market forces
d) Both (a) and (c)
Answer : D

Question. India approached which international monetary institution during crisis?
a) IBRD
b) IMF
c) World Bank
d) all of the above
Answer : D

Question. India is seen as a successful exporter of:
a) Auto parts
b) Engineering goods
c) IT software and textiles
d) All of these
Answer : D

Question. Cheaper imported goods was one of the reasons behind:
a) Growing unemployment
b) Unbalanced Growth
c) Low level of industrial growth
d) Spread of consumerism
Answer : C

Question. What was the one major proposal of new industrial policy (1991)?
a) NRI’s will not be allowed for capital investment in India
b) Facility of FDI upto 51 percent in high priority industries
c) Import restrictions on technical knowhow for one year
d) Abolition licensing export for six industries
Answer : D

Question. Which is the latest tax introduced by the government of India?(Choose the correct alternative)
a) Goods and services tax
b) Value added tax
c) Service tax
d) Corporation tax
Answer : A

Question. Under GST, which is not a tax slab
a) 5%
b) 12%
c) 20%
d) 28%
Answer : C

Question. Aim of demonetization not included was
a) Form a less-cash or cash-lite economy
b) Check on tax evasion
c) Reduce the money supply
d) Adding savings into the formal financial system
Answer : C

Question. In 1991, India met with an economic crisis due to
a) Rise in foreign exchange reserves
b) Low inflation
c) Huge debts burden
d) Political instability
Answer : C

Question. Factors that adversely affected Indian farmers are:
a) Removal of MSP and subsidy
b) Lifting of quantitative restrictions
c) Reduction in import duties
d) All of these
Answer : D

Question. What is the other name of the World Bank? ( Choose the correct alternative)
a) Federal Bank
b) ICICI Bank
c) IBRD
d) Bank of America
Answer: International Bank for Reconstruction and Development

Question. WTO stands for __________________. ( Fill in the blank with correct answer)
Answer: World Trade Organisation.

Question.  _______________involves the procedure of de-reservation and disinvestment. ( Fill up the blank with correct answer)
Answer: Privatisation

Question. Economic Crisis in 1990 states_______________. ( Fill up the blank with correct option)
a) High BOP deficit
b) High poverty and backwardness
c) Burden Of external borrowings
d) Low foreign exchange reserves
Answer: B

Question. Choose the correct pair from Column I and Column II
            Column I                                                                             Column II
a) Reducing government controls from all fields of economy          i) Globalisation
b) Integration of the economy of a country with rest of the world    ii) Liberalisation
c) Selling public sector shares to Individual household                  iii) Disinvestment
d) Export- Import duty, Exim Licensing, Tariff, Quota                     iv) New economic Policy
Answer: C,iii

Question. Which of the following is not a Mini Ratna Company?
a) Indian Oil Corporation (IOC)
b) Airport Authority of India (AAI)
c) Indian Catering and Tourism Corporation ltd.
d) None
Answer: A

Question. Whether the following statements are true or false? ‘Dr. Reddy Laboratories, HCL Technologies, ONGC, TISCO etc. Are the Indian companies that have expanded their production in various countries‘. Answer: True Question 9: Which of the following is not the benefit that the domestic industries get by reducing the tariff?
a)Imports become cheaper
b)increase in profit margin
c) get cheap technology
d) Exports become expensive
Answer: D

Question. Role of RBI has been changed from controller to facilitator when Foreign Exchange Regulation Act has been changed to _______________Act. ( Fill up the blank with correct answer)
Answer: Foreign Exchange Management Act( FEMA)

Question. The government identifies PSEs and declare them as maharatnas, navratnas and miniratnas. Which of the following are the main objective of the policy.
a) improve efficiency,
b) infuse professionalism
c) enable them to compete more effectively
d) All the above
Answer: D

Question. Name the predecessor organization of WTO.
Answer: General Agreement on Trade and Tariff

Question. GATT was established in ____________with 23 countries as the global trade organization to administer all multilateral trade agreements by providing equal opportunities to all countries in the international market for trading purposes. ( Fill in the blank with correct answer)
Answer: 1948

Question. Why were reforms introduced in India?
Answer:
1. Huge Fiscal Deficit: A fiscal deficit occurs when the total expenditure of the government exceeds its total revenue. Factors that led to huge fiscal deficit were:
(a) Expenditure on development programmes : Development policies required that even though the revenues were very low, the government had to overshoot its revenue to meet challenges like unemployment, poverty and population explosion. The continued spending on development programmes of the government did not generate additional revenue.
(b) Insufficient revenue : The government was not able to generate sufficiently from internal sources such as taxation.Expenditure was incurred on those programmes like social sector and defence which did not provide sufficient returns.
(c) Poor performance of PSUs: Despite the heavy investments made in the PSUs they failed to generate sufficient returns to ensure financial viability. Their poor performance made them a liability.

2. Adverse Balance of Payments (BOP): When the imports of a country are more than its exports, the BOP become adverse as forex is needed to pay for the imports. Reasons for adverse balance payments:
(a) Slow growth of exports: Though our exports were increasing, this increase was less than the increase in imports.
(b) Gulf crisis: Price of petroleum products became very high due to gulf crisis in 1991. Moreover the Iraq war in 1990-91, resulted in a decline in the remittances (by NRIs) from the gulf countries which further worsened the BOP.
(c) Wasteful Spending of foreign exchange: Foreign exchange borrowed earlier from other countries and financial institution was spent on meeting consumption needs.

3. Rise in Prices: There was a sharp rise in the prices of essential goods leading to an increase in the cost of living as well as the cost of production so that the domestic and foreign demand for our products was adversely affected. The increasing pressure of inflation further worsened the country‘s economic position (around 16%)

Question. How many countries are members of the WTO?
Answer: At present there are 164 countries which are members of WTO.

Question. How was RBI controlling the commercial banks?
Answer: Prior to 1991, banking institutions were subject to too much control by the RBI through high bank rate, high cash reserve ratio and statutory liquidity ratio. In India, financial sector is regulated and controlled by the RBI (Reserve Bank of India). There was a substantial shift in role of the RBI from ‗a regulator‘ to ‗a facilitator‘ of the financial sector. Earlier as a regulator, the RBI would itself fix interest rate structure for the commercial banks. After liberalisation in 1991, RBI as a facilitator would only facilitate free play of the market forces and leave it to the commercial banks to decide their interest rate structure.
i) RBI checks that banks deposit CRR timely
ii) Checks all the records of banks
iii) Reviews the lending activities of banks, that if it is as per the guidelines.
iv) Follow the guidelines of RBI

Question. What do you understand by devaluation of rupee?
Answer: Devaluation refers to lowering in the official value of a currency with respect to gold or foreign currency by the government and monetory authority. It results in costlier imports and cheaper exports.

Question. Distinguish between the following: (i) Strategic and Minority sale (ii) Bilateral and Multi-lateral trade (iii) Tariff and Non-tariff barriers
Answer: (i)
(a) Strategic Sale
(b) Minority Sale
1. It involves the sale of minimum 51% stake of a PSU to the private sector.
It involves the sale of maximum 49% stake of a PSU to the private sector.
2. Control and management of PSU is transferred to the private sector.
The control and management of PSU remains with government as it holds the majority stake.
3. PSU‘s are pr ivat ized by auctioning to the highest bidder.
Share of PSU‘s are sold through public offer.
(ii) Bilateral : Trade agreements involving more than two countries are referred to as multilateral trade agreements. Multi-lateral trade :Trade agreements involving two countries are referred to as bilateral trade agreements.
(iii) Tariff Barriers. Tariff barriers are imposed on imports to make them relatively costly as a measure to protect domestic production. Non-Tariff Barriers. They are imposed on the amount of imports and exports.

Question. Those public sector undertakings which are making profits should be privatised. Do you agree with this view? Why?
Answer: No, if profit making PSUs are privatised then there will be only loss making PSUs left. Government needs the profit of the profit making PSUs to modernise them, to make them more competitive and more efficient.

Question. Do you think outsourcing is good for India? Why are developed countries opposing it?
Answer: Outsourcing is good for India because it provides employment to large number of unemployed IndiAnswer: Developed countries oppose it because:
(a) it causes unemployment in their countries.
(b) It would narrow down the income disparity between the two countries.

Question. India has certain advantages which makes it a favourite outsourcing destination. What are these advantages?
Answer: (a) Growth of Information Technology: Due to growth of fast modes of communication many of the services such as voice-based business processes (popularly known as BPO or call centres), record keeping, accountancy, banking services, music recording, film editing, book transcription, clinical advice or even teaching are being outsourced by companies in developed countries to India.
(b) Digitisation: With the help of modern telecommunication links including the Internet, the text, voice and visual data in respect of these services is digitised and transmitted in real time over continents and national boundaries.
(c) Low Wage Rate: Wage rates in India are relatively much lower as compared to the developed world. Most multinational corporations, and even small companies, are outsourcing their services to India where they can be availed at a cheaper cost with reasonable degree of skill and accuracy.
(d) Skilled Manpower: Large number of young and educated people fluent in English is gradually transforming India as an important ‗back office‘ destination for the global outsourcing of customer services and technical support.

Question. Do you think the navratna policy of the government helps in improving the performance of public sector undertakings in India? How?
Answer: The government has decided to give special treatment to some of the important profit making PSUs and they were given the status of navratnas. These navratnas were granted financial and operational autonomy in the working of the companies. The granting of navratna status resulted in better performance of these companies. The government partly privatised these companies through disinvestment.

Question. What are the major factors responsible for the high growth of the service sector?
Answer: There has been high growth of the service sector in India. There is too much demand‘ for services because:
(a) It is more profitable to contract services from developing countries.
(b) There is easy availability of skilled manpower at lower wage rate. The service sector continued to witness a high level of growth — higher than the overall GDP growth in 2014–15, this sector witnessed the highest ever growth rate of 10.3 per cent. The industrial sector witnessed a steep decline during 2012–13, it began to show a continuous positive growth.

Question. Agriculture sector appears to be adversely affected by the reform process. Why?
Answer: Agricultural crisis.
(i) More Emphasis to Industries: Due to LPG, focus shifted from agriculture to industry.
(ii) Fall in Public Investment: Public investment in agriculture sector especially in infrastructure which includes irrigation, power, roads, market linkages and research was reduced in the reform period.
(iii) Removal of Fertiliser Subsidy: Subsidies in agriculture were reduced which led to increase in cost of production. Farmers, therefore, found it difficult to compete in global markets. (iv) Policy Changes: Reduction in import duties on agricultural products, removal of minimum support price and lifting of quantitative restrictions on agricultural products have adversely affected Indian farmers as they now have to face increased international competition.
(v) Export-oriented Production: There has been a shift from production for the domestic market towards production for the export market focusing on cash crops in lieu of production of food grains. This puts pressure on prices of food grains.

Question. Why has the industrial sector performed poorly in the reform period?
Answer: The post-reform period shows that industrial growth has slowed down.
This was due to:
(i) Lack of Infrastructure: There was inadequate investment in infrastructural facilities such as power supply.
(ii) Decrease in demand of domestic products: Globalisation led to decrease in demand for domestic industrial products due to cheaper imports. In a globalised world, developing countries are compelled to open up their economies to greater flow of goods and capital from developed countries and rendering their industries vulnerable to imported goods.
(iii) Hampering growth of local industries: Globalisation is, thus, often seen as creating conditions for the free movement of goods and services from foreign countries that adversely affect the local industries and employment opportunities in developing countries.
(iv) Inaccessibility of foreign markets: A developing country like India still does not have the access to developed countries‘ markets because of high non-tariff barriers. For example, although all quota restrictions on exports of textiles and clothing have been removed in India, USA has not removed their quota restriction on import of textiles from India and China.

Question. Discuss economic reforms in India in the light of social justice and welfare.
Answer: Economic reforms have been criticised on the following grounds:
(a) Privatisation encourages growth of monopoly power in the hands of big business houses. It results in greater inequalities of income and wealth.
(b) Globalisation has devastated local producers since they are unable to compete with cheap imports.
(c) Economic reforms have led to mounting workers unrest. Workers have protested against low wages, poor working conditions, autocratic management rule, long work days and fall in social benefits.
(d) Small business class is adversely affected by fall of public subsidies, de-industrialisation and floods of cheap imports.
(e) Due to reduction in taxes, government receipts became inadequate to meet welfare expenditures.

Question. Read this excerpt of a news item from a daily newspaper describing something that is now becoming increasingly common. ―
Answer: On a morning, a few minutes before 7 A.M., Greeshma sat in front of her computer with her headset on and said in accented English ‗Hello, Daniella‘. Seconds later, she gets the reply, ‗Hello, Greeshma‘. The two chatted excitedly before Greeshma said that ‗we will work on pronouns today‘. Nothing unusual about this chat except that Greeshma, 22, was in Kochi and her student Daniella, 13, was at her home in Malibu, California. Using a simulated whiteboard on their computers, connected by the Internet, and a copy of Daniella‘s textbook in front of Greeshma, she guides the teenager through the intricacies of nouns, adjectives and verbs. Greeshma, who grew up speaking Malayalam, was teaching Daniella English grammar, comprehension and writing.‖
i) How has this become possible? Why can‘t Daniella get lessons in her own country? Why is she getting English lessons from India, where English is not the mother tongue?
ii) India is benefiting from liberalisation and integration of world markets. Do you agree?