Podcast
Questions and Answers
Prior to 1991, India's economic strategy primarily involved:
Prior to 1991, India's economic strategy primarily involved:
- A socialist economic system with complete state control over resources.
- An isolationist economic policy with limited international trade.
- A purely capitalist approach with minimal government intervention.
- A mixed economy framework combining elements of capitalism and socialism. (correct)
Which of the following factors significantly contributed to the economic crisis India faced in 1991?
Which of the following factors significantly contributed to the economic crisis India faced in 1991?
- A surplus in the balance of payments due to high export volumes.
- Inability to repay external debts and critically low foreign exchange reserves. (correct)
- Decline in agricultural output causing widespread famine and economic instability.
- A sharp decrease in domestic savings leading to reduced investment.
Some scholars argue that the pre-1991 economic policies in India:
Some scholars argue that the pre-1991 economic policies in India:
- Established unnecessary rules and laws that hindered economic growth. (correct)
- Effectively promoted rapid economic growth and development across all sectors.
- Led to a completely self-reliant economy with no dependence on foreign trade.
- Had no impact on the overall economic performance of the country.
Despite the economic progress made before 1991, a significant challenge that remained was:
Despite the economic progress made before 1991, a significant challenge that remained was:
The introduction of economic reforms in 1991 was primarily a response to:
The introduction of economic reforms in 1991 was primarily a response to:
Which of the following describes India's economic condition immediately preceding the 1991 reforms?
Which of the following describes India's economic condition immediately preceding the 1991 reforms?
The period before 1991 saw India achieving which of the following milestones?
The period before 1991 saw India achieving which of the following milestones?
What was the immediate impact of the economic crisis of 1991 on India's developmental strategies?
What was the immediate impact of the economic crisis of 1991 on India's developmental strategies?
During the economic challenges of the late 1980s in India, what was a critical factor that made government expenditure unsustainable?
During the economic challenges of the late 1980s in India, what was a critical factor that made government expenditure unsustainable?
Which of the following accurately describes the state of India's foreign exchange reserves in the late 1980s during the financial crisis?
Which of the following accurately describes the state of India's foreign exchange reserves in the late 1980s during the financial crisis?
In response to the financial crisis, which international institutions did India approach for financial assistance?
In response to the financial crisis, which international institutions did India approach for financial assistance?
Which of the following reflects a primary intention behind establishing Central Public Sector Enterprises (CPSEs) in India during the 1950s and 1960s?
Which of the following reflects a primary intention behind establishing Central Public Sector Enterprises (CPSEs) in India during the 1950s and 1960s?
Why were development policies in India during the 1980s contributing to economic strain, despite their intentions?
Why were development policies in India during the 1980s contributing to economic strain, despite their intentions?
What was a significant problem with how India used its foreign exchange reserves during the economic challenges of the 1980s?
What was a significant problem with how India used its foreign exchange reserves during the economic challenges of the 1980s?
The granting of 'Maharatna', 'Navratna', and 'Miniratna' status to CPSEs is primarily aimed at:
The granting of 'Maharatna', 'Navratna', and 'Miniratna' status to CPSEs is primarily aimed at:
Which factor contributed to the increase in prices of essential goods in India during the late 1980s?
Which factor contributed to the increase in prices of essential goods in India during the late 1980s?
Some scholars criticize the government's actions towards CPSEs, suggesting that instead of supporting their growth. The scholars allege the result was:
Some scholars criticize the government's actions towards CPSEs, suggesting that instead of supporting their growth. The scholars allege the result was:
In the context of CPSEs, what does 'disinvestment' generally refer to?
In the context of CPSEs, what does 'disinvestment' generally refer to?
During the financial crisis, government spending on which sectors did not provide immediate revenue returns, contributing to the economic strain?
During the financial crisis, government spending on which sectors did not provide immediate revenue returns, contributing to the economic strain?
What was a major consequence of India's economic policies in the 1980s regarding its international financial standing?
What was a major consequence of India's economic policies in the 1980s regarding its international financial standing?
Currently, the government's stated approach towards Maharatna, Navratna, and Miniratna CPSEs involves:
Currently, the government's stated approach towards Maharatna, Navratna, and Miniratna CPSEs involves:
What is a valid concern regarding the privatization of profitable CPSEs?
What is a valid concern regarding the privatization of profitable CPSEs?
Which of the following is the best definition of globalisation?
Which of the following is the best definition of globalisation?
Suppose a CPSE is consistently incurring losses. According to the information, how are these losses typically addressed?
Suppose a CPSE is consistently incurring losses. According to the information, how are these losses typically addressed?
Based on the data provided, which sector consistently outperformed the others in terms of growth rate throughout the period of 1992-2015?
Based on the data provided, which sector consistently outperformed the others in terms of growth rate throughout the period of 1992-2015?
How did the growth rate of the agricultural sector change in 2014-15 compared to the preceding year 2013-14?
How did the growth rate of the agricultural sector change in 2014-15 compared to the preceding year 2013-14?
Which period saw the highest growth in GDP, indicating a peak in economic expansion during the post-reform era?
Which period saw the highest growth in GDP, indicating a peak in economic expansion during the post-reform era?
Which of the following statements best describes the performance of the industrial sector post-1991?
Which of the following statements best describes the performance of the industrial sector post-1991?
Which of the following best explains why GDP growth in India post-1991 has not translated into a proportionate increase in employment opportunities?
Which of the following best explains why GDP growth in India post-1991 has not translated into a proportionate increase in employment opportunities?
How does Gross Value Added (GVA) relate to GDP, according to the note provided?
How does Gross Value Added (GVA) relate to GDP, according to the note provided?
Which of the following trends is evident in the Indian economy's sectoral growth rates during the reform period?
Which of the following trends is evident in the Indian economy's sectoral growth rates during the reform period?
What has been the primary consequence of reducing import duties on agricultural products in India since 1991?
What has been the primary consequence of reducing import duties on agricultural products in India since 1991?
If the trend from 2012-15 continued, what could be a potential concern for the Indian economy?
If the trend from 2012-15 continued, what could be a potential concern for the Indian economy?
How has the partial removal of fertiliser subsidies affected small and marginal farmers in India?
How has the partial removal of fertiliser subsidies affected small and marginal farmers in India?
What is the most likely outcome of Indian agriculture shifting from food grain production to export-oriented cash crop production?
What is the most likely outcome of Indian agriculture shifting from food grain production to export-oriented cash crop production?
Considering the information provided, how did the opening of the economy influence foreign investment in India?
Considering the information provided, how did the opening of the economy influence foreign investment in India?
Which of the following factors has contributed most significantly to the slowdown in industrial growth in India post-1991?
Which of the following factors has contributed most significantly to the slowdown in industrial growth in India post-1991?
How do high non-tariff barriers in developed countries' markets typically affect developing countries like India?
How do high non-tariff barriers in developed countries' markets typically affect developing countries like India?
Which of the following scenarios would best exemplify globalisation creating conditions that adversely affect local industries in developing countries?
Which of the following scenarios would best exemplify globalisation creating conditions that adversely affect local industries in developing countries?
In what respect did the reforms NOT benefit agriculture?
In what respect did the reforms NOT benefit agriculture?
The economic reforms of 1991 in India were primarily a response to what set of overlapping economic challenges?
The economic reforms of 1991 in India were primarily a response to what set of overlapping economic challenges?
How did the Indian government aim to improve the performance of the public sector during the 1991 reforms?
How did the Indian government aim to improve the performance of the public sector during the 1991 reforms?
Which of the following best describes the concept of globalisation in the context of the provided content?
Which of the following best describes the concept of globalisation in the context of the provided content?
What is the primary objective of the World Trade Organization (WTO)?
What is the primary objective of the World Trade Organization (WTO)?
Which sectors experienced a decline in growth during the economic reforms, as highlighted in the content?
Which sectors experienced a decline in growth during the economic reforms, as highlighted in the content?
What argument do critics of globalisation make regarding its impact on developing countries?
What argument do critics of globalisation make regarding its impact on developing countries?
According to the Indian context presented, what factor exacerbated inequalities during the 1990s crisis?
According to the Indian context presented, what factor exacerbated inequalities during the 1990s crisis?
Which sectors primarily benefited from increased income and consumption quality following the economic reforms?
Which sectors primarily benefited from increased income and consumption quality following the economic reforms?
Flashcards
Economic Reforms 1991
Economic Reforms 1991
A set of policy measures introduced in India to address a balance of payments crisis.
Liberalisation
Liberalisation
The process of reducing government restrictions on the economy to promote free market principles.
Privatisation
Privatisation
The transfer of ownership of a business or public service from the government to private individuals or organizations.
Globalisation
Globalisation
The process through which businesses or other organizations develop international influence or operate on an international scale.
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Mixed Economy
Mixed Economy
An economic system that combines elements of both capitalism and socialism.
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Balance of Payments Crisis
Balance of Payments Crisis
A situation where a country cannot pay for its imports and manages its foreign debt.
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Economic Stagnation
Economic Stagnation
A prolonged period of minimal or no economic growth.
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Agricultural Output Expansion
Agricultural Output Expansion
An increase in production levels in the agriculture sector, ensuring food security.
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Indian economy 1980s
Indian economy 1980s
Characterized by inefficient management leading to financial crises.
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Government borrowing
Government borrowing
When a government borrows to cover excess expenditure over income.
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Deficit financing
Deficit financing
Funding the gap when government expenditure surpasses income.
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Trade balance
Trade balance
Difference between a country's exports and imports.
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Profligate spending
Profligate spending
Excessive spending by the government without returns.
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Foreign exchange reserves
Foreign exchange reserves
Funds held by a country to pay for imports and international debts.
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International Bank for Reconstruction and Development (IBRD)
International Bank for Reconstruction and Development (IBRD)
Also known as the World Bank, provides loans for development.
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International Monetary Fund (IMF)
International Monetary Fund (IMF)
An organization that provides monetary support to countries in need.
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Maharatnas
Maharatnas
Top-tier public sector enterprises with higher autonomy in decision-making.
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Navratnas
Navratnas
Mid-tier public sector enterprises that enjoy some autonomy and advantages in operations.
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Miniratnas
Miniratnas
Lower-tier public sector enterprises with limited financial and operational autonomy.
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Disinvestment
Disinvestment
The process of reducing government stakes in public sector enterprises.
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Foreign Direct Investment (FDI)
Foreign Direct Investment (FDI)
Investment made by a company or individual in one country in business interests in another country.
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Public Sector Enterprises (PSEs)
Public Sector Enterprises (PSEs)
Companies owned and operated by the government to provide essential services.
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Self-reliance in economy
Self-reliance in economy
A policy aimed at reducing dependency and promoting domestic production.
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GDP Growth Rate
GDP Growth Rate
The annual percentage increase in a country's economic output.
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Employment Opportunities
Employment Opportunities
Available jobs for the workforce in an economy.
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Reforms in Agriculture
Reforms in Agriculture
Changes aimed at improving agricultural productivity and economic stability.
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Impact of Subsidies
Impact of Subsidies
Financial support to reduce costs for producers, affecting prices.
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Export-oriented Policy
Export-oriented Policy
Strategy focusing on exporting goods rather than domestic consumption.
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Industrial Growth Slowdown
Industrial Growth Slowdown
Decrease in the rate of industrial production growth.
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Competitive Imports
Competitive Imports
Cheaper foreign goods affecting local manufacturers.
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Non-Tariff Barriers
Non-Tariff Barriers
Regulations other than tariffs that countries impose to control trade.
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Gross Domestic Product (GDP)
Gross Domestic Product (GDP)
The total value of all goods and services produced in a country over a specific period.
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Sector Growth Rates
Sector Growth Rates
The percentage increase in economic activity within specific sectors such as agriculture, industry, and services.
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Agriculture Growth Rate (2012-15)
Agriculture Growth Rate (2012-15)
The fluctuation of agricultural growth during this period, with a high of 4.2% and a low of -0.2%.
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Industrial Sector Performance
Industrial Sector Performance
Growth fluctuations in the industrial sector, which showed a decline followed by recovery post-2012.
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Service Sector Dominance
Service Sector Dominance
The service sector's growth outpacing other sectors, reaching 9.8% growth in 2014-15.
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Post-1991 Economic Reforms
Post-1991 Economic Reforms
A series of policies initiated in India that led to increased growth rates and foreign investment.
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Economic Assessment
Economic Assessment
Evaluating economic performance over a set period to identify trends and impacts.
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Crisis in Weaving Industry
Crisis in Weaving Industry
A significant economic downturn affecting weavers in Siricilla, Andhra Pradesh, leading to despair and suicides.
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Economic Disparities
Economic Disparities
Widening gaps in wealth and opportunities among different populations, exacerbated by globalization.
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Impact of Globalization
Impact of Globalization
Globalization viewed as a strategy of developed nations to expand markets, affecting developing nations' welfare.
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1991 Economic Reforms
1991 Economic Reforms
Policy changes in India aimed to address economic decline, driven by a financial crisis and external pressures.
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Service Sector Growth
Service Sector Growth
Increase in the outputs from sectors like IT and finance during the economic reforms, while agriculture and industry lagged.
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Outsourcing
Outsourcing
The practice of delegating certain business processes to outside firms, especially relevant in services and industry.
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WTO Objectives
WTO Objectives
World Trade Organization's aim to create a rule-based trade environment for better resource utilization.
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Role of Public Sector
Role of Public Sector
The shift in India towards reducing the role of the public sector in favor of private entities amidst economic reforms.
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Unit II: Economic Reforms Since 1991
- India achieved a strong industrial base and became self-sufficient in food grain production after 40 years of planned development
- However, a large portion of the population still relies on agriculture for their livelihood
- A 1991 balance of payments crisis led to economic reforms in India
- This unit assesses the reform process and its implications for India's economy
Liberalisation, Privatisation, and Globalisation: An Appraisal
- Studying this chapter helps learners understand the background of India's 1991 reform policies
- It examines how these policies were implemented
- The chapter explores globalisation's effects on India
- It analyses the impact of reform policies across various sectors of the Indian economy
Introduction
- Economic development is not solely measured by GDP
- India adopted a mixed economic system post-independence, combining capitalist and socialist approaches
- This approach had various rules and regulations that, in some scholars' view, hindered economic growth
- Others argue that the approach helped foster growth in various sectors including agriculture
Background
- India's 1980s economic management was inefficient
- Government expenditure often exceeded income, leading to borrowing to finance the deficit
- This financial crisis led to a decrease in foreign exchange reserves and an inability to meet external debt obligations
- Rising prices of essential goods further exacerbated the crisis
Liberalisation
- Economic restrictions and regulations were major hindrances in growth
- Liberalisation measures were introduced, starting in the 1980s, to address these limitations
- Key elements of 1991 reforms included removal of industrial licensing restrictions, easing import policies, and deregulating multiple sectors
Privatisation
- Privatisation involved reducing the government's ownership or management role in public sector enterprises
- This could happen through the sale of public sector companies or the withdrawal of government involvement in their management
- The government's goal was improved financial discipline and modernisation through private capital and managerial abilities
Globalisation
- Globalisation represents the integration of a country's economy into the world economy
- It encompasses the growth of international economic networks, activities transcending geographical boundaries, and increased interdependence
- Aspects like outsourcing and the growth of multinational corporations are interconnected with globalisation
Tax Reforms
- Tax reforms aim to improve the government's taxation and public expenditure policies
- Direct taxes, impacting individuals and businesses, and indirect taxes, levied on goods and services, are both addressed
- Efforts were made to streamline tax systems for better compliance, reducing evasion, and promoting increased government revenue
Trade and Investment Policy Reforms
- Liberalising trade and investment is intended to bolster the competitiveness of India's industries by reducing trading restrictions
- Policies aim to draw foreign investment and technology imports into local firms
Reforms in Agriculture
- Agricultural growth rates have decreased due to a range of factors
- Removal of fertiliser subsidies increased production costs, negatively affecting small and marginal farmers
- Reduced import tariffs on agriculture goods meant stiff global competition
Reforms in Industry
- Industrial growth has slowed down due to numerous reasons, primarily cheaper imports and lower investments
- Lack of government support in infrastructure and rising competition
- Developing countries often struggle to retain market share against established competitors.
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