Tag: Liberalization

TN State Board 12th Commerce Important Questions Chapter 20 Liberalization, Privatization and Globalization

Question 1.
State the branches of New Economic Policy.
Answer:

1. Liberalization
2. Privatization
3. Globalization

Question 2.
What is Privatisation?
Answer:

1. Privatization is the incidence or process of transferring ownership of a business enterprise, agency or public service from the Government to the private sector.
2. Under this policy many Public Sector Units (PSUs) were sold to private sector.

Question 3.
Mention any three disadvantages of Liberalisation.
Answer:

1. Increase in unemployment
2. Loss to domestic units
3. Increased dependence on foreign nations
4. Unbalanced development

Question 4.
Name the industries whiph are reserved for public sector.
Answer:

1. Arms and Ammunition
2. Atomic Energy
3. Coal and Lignite
4. Mineral oils
5. Mining of ores
6. Railways

Question 5.
Give any three advantages of Globalisation.
Answer:

1. Increase in foreign collaboration
2. Expansion of market
3. Technological development
4. Reduction.in brain drain

Question 6.
What do you mean by Liberalisation?
Answer:

1. Leralization means relaxation of various Government restriction in the areas of social and economic policies in order to make economies free to enter in the market and establish their venture in the country.
2. Liberalizing trade policy by the Government includes removal of tariff, subsidies and other restrictions on the flow of goods and services between countries.

Question 7.
Explain the concept of Privatisation.
Answer:

1. Privatization is the incidence or process of transferring ownership of a business enterprise, agency or public service from the Government to the private sector.
2. Privatization means permitting the private sector to setup industries which were previously reserved for the public sector.
3. Under this policy many Public Sector Units (PSUs) were sold to private sector.
4. The main reason for privatizations was that (PSUs) were running in losses due to management and political interference.
5. To increase competition and efficiency privatization of (PSUs) was inevitable.

Question 8.
What are advantages of disinvestment?
Answer:

1. To achieve greater inflow of private capital.
2. Bring the low productivity (PSUs) back on track thereby improving the quality of goods.
3. To force the companies to become more efficient and survive.
4. Small investor and employees would benefit from disinvestment.
5. It result in increase in overall economic activity by providing employment and tax revenues in the medium into longterm.

Question 9.
State any three impacts on Globalisation.
Answer:

1. Corporations got a competitive advantage from lower operating costs, and access to new raw materials and additional markets.
2. Multinational corporations (MNCs) can manufacture, buy and sell goods worldwide.
3. Globalization has led to a boom in consumer products market.
4. The advent of foreign companies and growth in economy has led to job creation.
5. Globalization has touched every aspect of agriculture like technological advancement, improved production techniques and quality based enhancement.

Question 10.
Write a short note on New Economic Policy.
Answer:

1. During 1991, India approached International Bank for Reconstruction and Development (IBRD) popularly known as World Band and IMF and receive $ 7 Million as loan to repay the external borrowings.
2. These International agencies expected India to liberalize and opened up economy by removing restrictions on private sector and remove trade restrictions between India and other countries.
3. India agreed to the conditions of World Bank and IMF and announced
   New Economic Policy which consists of wide range of economic reforms.
4. This new economic reforms is commonly known as LPG or Liberalization, Privatization and Globalization model.

Question 11.
Explain the advantages and disadvantages of liberalisation.
Answer:
Advantages of Liberalization:
(i) Increase in foreign investment:
(a) If a country liberalizes its trade, it will make the country more attractive for inward investment.
(b) It leads to capital inflows and also helps the economy through diffusion of more technology techniques and knowledge.

(ii) Increase the foreign exchange reserve:
Liberalization increase the foreign investment and foreign exchange has paved way for easy access to foreign capital.

(iii) Increasing in consumption:
It increases the number of goods available for consumption within a country due to increase in production.

(iv) Control over price:
The removal of tariff barriers can lead to lower prices for consumer.

(v) Reduction in external borrowings:
It will reduce the dependence on external commercial borrowings by attracting more foreign investments.

Disadvantages of Liberalization:

(i) Increase in unemployment:
Some industries grow, some decline. Therefore there may often be structural unemployment from certain industries closing.

(ii) Increased dependence on foreign nations:
Trade liberalization means firms will face greater competition from abroad.

(iii) Unbalanced development:
Trade liberalization may be damaging for developing economies which cannot compete against free trade.

(iv) Loss to domestic Units:
With fewer entry restrictions, which poses a threat and competition to the existing domestic units.

Question 12.
Explain the impact of LPG on Indian Economy.
Answer:

1. Introduction of New Foreign Trade Agreements
2. Foreign Investment (FDI and FII)
3. MRTP Act 1969 (Amended)
4. Deregulation
5. Opportunities for overseas trade
6. Steps to regulate inflation
7. Tax Reforms
8. Abolition of License

Choose the correct answer:

Question 1.
________ is the result of New Industrial Policy which abolished the ‘License System’.
(a) Globalisation
(b) Privatisation
(c) Liberalisation
(d) None of these
Answer:
(c) Liberalisation

Question 2.
_______ means permitting the private sector to setup industries which were previously reserved for public sector.
(a) Liberalisation
(b) Privatisation
(c) Globalisation
(d) Public Enterprise
Answer:
(b) Privatisation

Question 3.
________ ownership makes bold management decisions due to their strong foundation in the international level.
(a) Private
(b) Public
(c) Corporate
(d) MNC’s
Answer:
(a) Private

Question 4.
_________ results from the removal of barriers between national economies to encourage the flow of goods, services, capital and labour.
(a) Privatisation
(b) Liberalisation
(c) Globalisation
(d) Foreign Trade
Answer:
(c) Globalisation

Question 5.
New Economic Policy was introduced in the year:
(a) 1980
(b) 1991
(c) 2013
(d) 2015
Answer:
(b) 1991

TN Board 12th Commerce Important Questions