chapter 3

Question 1

reasons for introduction of economic reforms in 1991

Answer 1

1. severe balance of payment problem
2. fountaining fiscal defect
3. high rate of inflation
4. pressure from world bank and IMF

Question 2

stabilisation measure

Answer 2

short terms measures, intended to correct some of the weakness that have developed

Question 3

structural reform measures

Answer 3

long term policies and these drastically affect the economy in the long term

Question 4

new economic policy consists of

Answer 4

1. liberalisation
2. privatisation
3. globalisation

Question 5

liberalisation

Answer 5

freeing the Indian businesses and industries from unnecessary controls and restriction

Question 6

liberalisation consists of

Answer 6

FFITT
1. financial sector reforms
2. foreign sector reforms
3. industrial sector
4. tax reforms
5. trade and investment reforms

Question 7

financial sector

Answer 7

includes financial institutions like commercial banks, investment banks and stock exchange

Question 8

in financial sector the foreign investment limit was increased to

Answer 8

74%

Question 9

major reforms under financial sector

Answer 9

1. redefining the role of rbi
   the role of RBI was reduced from ‘a regulator ‘ to ‘a facilitator’ in financial sector
2. origin of private sector banks

Question 10

major reforms under foreign exchange reforms

Answer 10

1. devaluation of currency
   A deliberate reduction in the value of domestic currency by the government of that country
2. market-driven foreign rate system

Question 11

major reforms under industrial sector

Answer 11

1. abolition of industrial licensing
2. dereservation
3. market-driven pricing

Question 12

two types of taxes

Answer 12

1. direct
2. indirect

Question 13

major reforms for tax reforms

Answer 13

1. rationalisation of direct taxes
2. simplification of tax payments
3. classified indirect tax system in India

Question 14

trade and investment policies reform

Answer 14

1. removal of licensing procedure for imports
2. dismantling of quantitative restrictions
3. removal of exports duties

Question 15

Aim of liberalisation of trade and investment region

Answer 15

1. to increase foreign trade investment and technology in the economy
2. to adopt morden technologies
3. to promote the efficiency of local industries

Question 16

privatisation

Answer 16

privation refer to shielding of the ownership or management of a government owed enterprise

Question 17

two ways in which privatisation work

Answer 17

1. by withdrawal of the government from ownership and management by public sector companies
2. disinvestment

Question 18

advantages of privatisation

Answer 18

1. to improve financial discipline and facilitate modernisation
2. private capital and managerial capacities could be effectively used to improve the performance of psc
3. privatisation could bring inflow of foreign investment

Question 19

government attempts to improve the efficiency of Profit making enterpises

Answer 19

1. identifying profit making pse and grant them special status
2. greater managerial and operational autonomy

Question 20

globalisation

Answer 20

an integration of domestic economy with the world economy

Question 21

positive results of globalisation

Answer 21

1. high technology
2. generation of more employment and job opportunities
3. increased standard of living
4. greater access to global market
5. increase overall GDP of a country

Question 22

negative results of globalisation

Answer 22

1. compromise the welfare and identity of people belonging to poor countries
2. globalisation is concerned with only some sector of economy rather than vital sector which give employment to millions
3. market driven globalisation has widen the economic disparities

Question 23

outsourcing

Answer 23

hiring of regular services from external sources, mostly from foreign country

Question 24

why is India called the ‘outsourcing hub’ to the world ?

Answer 24

1. unskilled labour
2. low wage rate
3. favourable government polices

Question 25

when was WTO found and what was its original name ?

Answer 25

1995 General agreement on trade and tariff

Question 26

objectives of WTO

Answer 26

1. facilitates international trade 2. to ensure optimum utilisation of world resources 3. protect the environment 4. enlarge production 5. it provides greater market access to al the countries

Question 27

Demonetisation

Answer 27

the process of striping a currency unit of its status to be used as a legal tender

Question 28

when was demonetisation incited

Answer 28

November 8 2016

Question 29

criticism of demonitisation

Answer 29

1. there were long questions outside banks and atms 2. the shortage of currency in circulation had an adverse impact on the economy

Question 30

positive impact of demonisation

Answer 30

1. savings were channelised into formal financial sector 2. help in tax administrative 3. shift from cash to electronic payment technologies 4. improved tax compliance

Question 31

when was GST tax law passed?

Answer 31

2016

Question 32

when did GST tax law come to effect ?

Answer 32

1 July 2017

Question 33

advantages of GST

Answer 33

1, higher economic growth 2. expended tax base 3. reduce cost of production