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Tivr 12th Commerce Batch

Liberalisation, Privatisation and DPP-1

Globalisation
1. Which of the following refers to relaxation of
previous government restrictions? 5. _____ refers to disposal of equity of public sector
(1) Privatisation units in the market.
(2) Globalisation (1) Globalisation (2) Privatisation
(3) Disinvestment (3) Disinvestment (4) Liberalisation
(4) Liberalisation
6. How was RBI controlling the commercial banks?
2. _____means integrating the domestic economy with
the world economy. 7. Why has the industrial sector performed poorly in
(1) Globalisation (2) Privatisation the reform period?
(3) Liberalisation (4) Disinvestment
8. Discuss economic reforms in India in the light of
3. Which of the following is not a policy initiated social justice and welfare.
under New Economic Policy?
(1) Liberalisation (2) Privatisation
(3) Globalisation (4) Licensing

4. When was the New Economic Policy announced?

(1) June 1991 (2) May 1991
(3) July 1991 (4) January 1991
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Answer Key
1. (4) 5. (3)

2. (1) 6. With Discussion

3. (4) 7. With Discussion

4. (3) 8. With Discussion

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Hints & Solutions

1. (4) replaced the demand for domestic goods and domestic
Liberalisation manufacturers started facing competition from
imports.
2. (1) (ii) Lack of infrastructure facilities: The infrastructure
Globalisation facilities, including power supply, have remained
inadequate due to lack of investment.
3. (4)
Licensing 8. The economic reforms have been criticized in the
light of social justice and welfare due to following
4. (3) reasons:
July 1991 (i) Growing Unemployment: Though the GDP growth
rate has increased in the reform period, but such
5. (3) growth failed to generate sufficient employment
Disinvestment opportunities in the country.
(ii) Removal of subsidy: Removal of fertilizer subsidy
6. Prior to 1991, commercial banks were subject to too increased the cost of production, which adversely
much control by the RBI through various norms and affected the small and marginal farmers.
regulations. The banks has to take prior permission (iii) Rise in the prices of Food grains: Due to export-
from RBI oh all the financial decisions. However, oriented policy strategies in agriculture, the
after liberalization in 1991, there was a substantial production shifted from food grains to cash crops for
shift in role of the RBI from regulator to facilitator of the export market. It led to rise in the prices of food
financial sector. grains.
(iv) Cheaper Imported Goods: Due to globalisation,
7. The industrial sector performed poorly in the reform there was a greater flow of goods and capital from
period because of following reasons: developed countries and as a result, domestic
(i) Cheaper Imported Goods: Due to globalisation, industries were exposed to imported goods.
there was a greater flow of goods and capital from
developed countries. As a result, domestic industries
were exposed to imported goods. Cheaper imports