Q. 1. Complete the following statements by choosing the correct alternative :
1) After Independence, India had adopted ___________.
options:
a) Socialism
b) Capitalism
c) Mixed Economy
d) Communism
2) The new economic policy approved foreign technology in __________.
options:
a) Cottage industries
b) Small scale industries
c) Micro enterprises
d) High priority industries
3) At present, the number of industries reserved for public sector has been reduced to ___________.
options:
a) 3
b) 5
c) 7
d) 2
Q.2. Assertion and Reasoning questions :
1) Assertion (A) Delicensing of industries was an important step taken under liberalization.
Reasoning (R) Unwanted controls and restrictions led to economic stagnation prior to 1991.
options:
a) (A) is TRUE but (R) is FALSE
b) (A) is FALSE but (R) is TRUE
c) (A) and (R) both are TRUE and (R) is the correct explanation of (A)
d) (A) and (R) both are TRUE but (R) is not the correct explanation of (A)
2) Assertion (A) In 1990-91, India faced an acute shortage of foreign exchange reserves.
Reasoning (R) Import quotas and tariffs led to an increase in the imports.
options:
a) (A) is TRUE but (R) is FALSE
b) (A) is FALSE but (R) is TRUE
c) (A) and (R) both are TRUE and (R) is the correct explanation of (A)
d) (A) and (R) both are TRUE but (R) is not the correct explanation of (A)
3) Assertion (A) Post liberalization, the sale of domestic goods has increased.
Reasoning (R) The demand for imported goods had increased due to liberal policy.
options:
a) (A) is TRUE but (R) is FALSE
b) (A) is FALSE but (R) is TRUE
c) (A) and (R) both are TRUE and (R) is the correct explanation of (A)
d) (A) and (R) both are TRUE but (R) is not the correct explanation of (A)
4) Assertion (A) Due to Globalisation, a country cannot achieve self- sufficiency in food production.
Reasoning (R) Globalisation has created a revolution in IT sector.
options:
a) (A) is TRUE but (R) is FALSE
b) (A) is FALSE but (R) is TRUE
c) (A) and (R) both are TRUE and (R) is the correct explanation of (A)
d) (A) and (R) both are TRUE but (R) is not the correct explanation of (A)
Q. 3. Find the odd word out :
1) New Economic Policy –
options:
(1) Liberalization,
(2) Privatization,
(3) Demonetization,
(4) Globalisation
2) Industries requiring compulsory licensing –
options:
(1) defence equipment,
(2) agro-based industries,
(3) cigarettes,
(4) industrial explosives
3) Navratna status companies –
options:
(1) SPCL,
(2) IOC,
(3) ONGC,
(4) HPCL
4) Liberalization dealt with the following –
options:
(1) MRTP,
(2) FERA,
(3) SEBI,
(4) NTPC
Q. 4. Identify and explain the concepts from the given illustrations :
1) Vehicles manufactured by various automobile companies are now available in India.
Ans.
A. Identified concept: Trade liberalisation.
B. Explanation of concept: Trade liberalisation is a practice in which import licensing controls are abolished and import of various goods is made easy.
2) Government equity in some public sector enterprises is sold to the private sector.
Ans.
A. Identified concept: Privatisation.
B. Explanation of concept: Privatisation means the transfer of ownership from the public sector to the private sector. In the above illustration, by selling government equity in some public sector enterprises to the private sector, the transfer of ownership is followed.
3) Foreign investments are encouraged on a large scale in the industrial sector of India.
Ans.
A. Identified concept: Liberalisation.
B. Explanation of concept: Liberalisation refers to economic freedom or freedom for economic decisions.
Q. 5. State with reasons whether you agree or disagree with the following statements :
1) Liberalisation has permitted the use of foreign technology.
Ans.
Yes, I agree with this statement.
Reasons:
Liberalisation has allowed the use of foreign technology in high priority industries. The use of foreign technology reduces the cost of production. The use of foreign technology also makes the industries competitive. Thus, liberalisation has permitted the use of foreign technology.
2) Government has given private enterprises free access to public sector.
Ans.
Yes, I agree with this statement.
Reasons:
By disinvestment, the government sells shares of sick public sector units to the private sector. For example, disinvestment of Maruti, VSNL, etc.By dereservation policy, private enterprises have given free access to the public sector except for railway transport and atomic energy.During 1997-98, nine public sector units were selected and were given the status of Navratna and were given Financial and managerial autonomy, for example, Oil and Natural Gas Limited (ONGC), Bharat Heavy Electrical Limited (BHEL). Thus, the government has given private enterprises free access to the public sector.
3) Government has monopoly in insurance sector.
Ans.
No, I disagree with this statement.
Reasons:
The new economic policy passed the Insurance, Regulatory, and Development Authority Act (IRDA) in 1999 With the aim of introducing reforms in the insurance sector. The IRDA has given licences to many private companies to start an insurance business. IRDA has ended the monopoly of the government in the insurance sector. Thus, the government has no monopoly in insurance
4) The creation of National Renewal Board was done to remove poverty.
Ans.
Yes, I agree with this statement.
Reasons:
Due to the closing down of loss-making public sector units, the workers have to face a problem of unemployment and poverty. The National Renewal Board (NRB) was established to solve the problem of these unemployed workers. NRB takes the responsibility for providing compensation to the retrenched workers or the workers taking voluntary retirement. Thus, the creation of the National Renewal Board was done to remove poverty.
5) Indian Oil Corporation is one of the public sector units among ‘Navratnas’
Ans.
Yes, I agree with this statement.
Reasons:
During 1997-98, nine public sector units were selected and given the status of Navratnas on the basis of their performance. These nine Navratnas were given full financial and managerial autonomy. Indian oil corporation is one of these nine Navratnas. Thus, Indian Oil Corporation is one of the public sector units among Navratnas.
Q. 6. Answer in detail ::
1) Explain the features of economic policy of 1991.
Ans.
Features of the Economic Policy of 1991 :
1) Delicensing : It means abolition of government licence required to carry on any business or industrial activity. All industries except 18 specified industries of strategic importance required licence. As per the Dept. of Industrial Policy and Promotion, Government of India, only the following four industries require compulsory licensing :
1) Electronic Aerospace and defence equipment
2) Industrial Explosives
3) Hazardous chemicals, drugs and pharmaceuticals.
4) Cigarettes
2) Abolition of Monopolies and Restrictive Trade Practices (MRTP) Act : According to MRTP Act, it was compulsory for large industrial houses to take the approval of Central government for establishment,
expansion, merger etc. This resulted in slow industrial growth. Abolition of MRTP Act has encouraged industrial growth.
3) Encouragement to small sector : The government encouraged small sector units to attain a higher growth rate in output, employment and export sector. Its investment limit was increased from 1
crore to 5 crores.
4) Encouraging foreign investment : Industrial policy of 1991 approved Foreign Direct Investment (FDI) to encourage investment in high priority industries requiring high investment and technology.
Initially FDI was permitted upto 51% of total invesment in selected industries. Later this limit was raised to 74% and then 100% for specific industries.
5) Reducing role of Public Sector : Many changes were made in the public sector policy to include following objectives : a) Ending state monopoly b) Improving efficiency of public sector c) Releasing capital blocked in sick public sector enterprises To encourage private sector, NEP reduced the number of industries in public sector from 17 to 8. From 2014, there are only two industries reserved for public
sector which include railways and atomic energy.
6) Trade Liberalisation : Import licensing controls have been abolished. Almost all capital goods, raw materials, intermediate goods and other components were made freely importable. Established exporters
are allowed to raise external credit to finance their trade. Special Economic Zones (SEZ) are set up to promote exports. The Government has also introduced the concept of Agro Export Zones (AEZ) to
encourage agricultural exports.
7) Reforms in Insurance Sector : Insurance sector was a monopoly of the government. The new policy passed Insurance Regulatory and Development Authority Act (IRDA) in 1999 to introduce reforms in this sector. The IRDA has given licence to many private companies to enter insurance business. This has ended the monopoly of Government in this sector.
8) Reforms in financial sector : Earlier only co-operative banks and public sector banks were permitted to do banking business in the financial sector. The new economic policy has also permitted the entry of new private banks and foreign banks.
Q. 7. Read the following passage carefully and answer the questions.
Indian ice-cream industry is one of the fastest growing segments of the dairy and food processing sector. India has a low per capita consumption of ice-cream of 400 ml whereas in USA it is 22,000 ml and in China it is 3000 ml.
The per capita consumption of ice-cream is low in India because it is a country filled with traditional sweets of more than 100 varieties. In developed countries, people have either pastries or ice-creams for dessert. In the era of Globalisation, the mindset of the people is fast changing. This is because multi-national companies have set up a number of ice-cream parlours, with a lot more varieties and flavours that attract the younger lot. Besides this, there are better delivery systems.
The ice-cream sector has great potential for growth in the country due to improvement in the cold chain infrastructure, increasing disposable income and changing lifestyle of the people. However, it is taxed higher with 18 percent GST while other dairy products in the same basket such as butter and cheese are taxed at 12 percent.
The ice-cream industry has generated revenue of more than $1.5 billion in 2016-17. With an employment of15 lakh people directly or indirectly, it is also considered one of the largest employers of the dairy and food
processing industry.
1) Identify the reason for low per capita consumption of ice-cream in India.
2) Explain the impact of Globalisation on the Indian ice-cream industry.
3) Find out the factors that could lead to the growth of ice-cream industry in India.
4) Express your views about the implications of higher GST on ice-cream industry in India.
Ans.
(1) The reason for low per capita consumption of ice-cream in India is availability of traditional sweets of more than 100 varieties.
(2) 18 per cent GST on ice-cream discourages entrepreneurs from investing in the ice-cream industry. To boost the ice-cream industry, like other dairy products viz. butter, cheese, etc. Ice-cream too should be taxed at 12 per cent GST. Also because multi-national companies have set up a number of ice-cream parlours, with a lot more varieties and flavours that attract the younger lot.
(3) The factors that could lead to the growth of ice-cream industry in India are: (i) Changing mindset and consumption patterns of people (ii) Improvement in the cold chain infrastructure (iii) Increasing disposable income (iv) Changing lifestyle of the people.
(4) The first implication of higher GST on ice-cream industry is an increase in the prices of ice-cream. An increase in price of ice-cream will affect the sales of ice-cream. Bigger brands may manage the higher GST by some way but it will affect local manufacturers in a negative manner. They will not be able to compete with big companies.