Lesson- 3 (Liberalisation, Privatisation, Globalisation)

Question 1

5 reasons for economic reforms

Answer 1

BOP deficit
Huge debt burden
Inflationary pressure
Fall in forex reserves
Poor performance of the public sector

Question 2

2 types of New Economic Policies

Answer 2

Stabilisation measures
Structural reforms

Question 3

3 main policies of NEP

Answer 3

Liberalisation
Privatisation
Globalisation

Question 4

5 liberalisation reforms

Answer 4

Industrial
Financial
Tax
Trade and investment
Forex reserves

Question 5

4 industrial reforms

Answer 5

Reduction in licensing
De- reservation
Decrease in role of public sector
MRTP was replaced by Competition Act, 2002

Question 6

4 financial sector reforms

Answer 6

Change in RBI’s role
Origin of private banks
Increase in limit of foreign investment
Ease in expansion process

Question 7

3 tax reforms

Answer 7

Rationalisation of direct taxes
Reforms in indirect taxes
Simplification of process

Question 8

2 foreign exchange reforms

Answer 8

Devaluation of rupee
Market determination of Indian rupee

Question 9

4 trade and investment policy reforms

Answer 9

Removal of quantitative restrictions
Relaxation of import duties
Removal of export duties
Relaxation of licensing system

Question 10

2 ways in which privatisation can be achieved

Answer 10

Transfer of ownership to private sector
Disinvestment

Question 11

5 arguments in favour of economic reforms

Answer 11

Increase in forex reserves
High rate of economic growth
Rise in exports
Foreign investment
Control on inflation

Question 12

5 arguments against economic reforms

Answer 12

Unbalanced growth
Ineffective tax reforms
Spread of consumerism
Neglect of agriculture
Growth of unemployment