Podcast
Questions and Answers
What was a primary reason India initiated economic liberalisation?
What was a primary reason India initiated economic liberalisation?
- To reduce external debts
- To combat a declining economic trend (correct)
- To increase foreign exchange reserves
- To strengthen internal debt management
Which factor contributed significantly to India's recognition of the need for liberalisation?
Which factor contributed significantly to India's recognition of the need for liberalisation?
- Growth of domestic industries
- Political isolation from global markets
- Technological advancements worldwide (correct)
- A stable political environment
What was the first measure taken by Dr. Manmohan Singh to recover India's monetary system?
What was the first measure taken by Dr. Manmohan Singh to recover India's monetary system?
- Increasing tariffs on imports
- Securing international loans
- Changing the exchange rate structure (correct)
- Implementing stringent regulations
What does the emergence of an Asian Common Market signify for countries in the region?
What does the emergence of an Asian Common Market signify for countries in the region?
Which of the following was NOT mentioned as a requirement for India in the global market?
Which of the following was NOT mentioned as a requirement for India in the global market?
What was one effect of increasing the inflow of foreign capital into India?
What was one effect of increasing the inflow of foreign capital into India?
What challenge did India face regarding foreign investors before liberalisation?
What challenge did India face regarding foreign investors before liberalisation?
Which countries are identified as having successful business operations in the Asia-Pacific block?
Which countries are identified as having successful business operations in the Asia-Pacific block?
What was the primary reason for the establishment of the Life Insurance Corporation of India in 1956?
What was the primary reason for the establishment of the Life Insurance Corporation of India in 1956?
Which of the following challenges is NOT identified in the content as faced by the LIC?
Which of the following challenges is NOT identified in the content as faced by the LIC?
How has the introduction of the new economic policy in 1991 affected the Indian life insurance industry?
How has the introduction of the new economic policy in 1991 affected the Indian life insurance industry?
What is one of the main objectives of the LIC?
What is one of the main objectives of the LIC?
Which aspect contributes to the LIC achieving relatively little compared to developed countries' insurance industries?
Which aspect contributes to the LIC achieving relatively little compared to developed countries' insurance industries?
What is a highlighted impact of liberalization, privatization, and globalization on LIC?
What is a highlighted impact of liberalization, privatization, and globalization on LIC?
Which research methodology is primarily employed to analyze the LIC's performance?
Which research methodology is primarily employed to analyze the LIC's performance?
What has contributed to the establishment of various challenges in the Indian life insurance industry?
What has contributed to the establishment of various challenges in the Indian life insurance industry?
What was one of the primary reasons for the liberalization of the Indian economy in 1991?
What was one of the primary reasons for the liberalization of the Indian economy in 1991?
How did the Indian government aim to appease public fears about foreign investments?
How did the Indian government aim to appease public fears about foreign investments?
Which of the following was NOT a key change introduced at the domestic level during the liberalization process?
Which of the following was NOT a key change introduced at the domestic level during the liberalization process?
What specific measure was taken to address the issues of chronic public sector enterprises?
What specific measure was taken to address the issues of chronic public sector enterprises?
What was a significant outcome of the LPG model introduced in 1991?
What was a significant outcome of the LPG model introduced in 1991?
What type of foreign direct investment was the Indian government willing to permit under the liberalization policies?
What type of foreign direct investment was the Indian government willing to permit under the liberalization policies?
Which of the following factors contributed to the failure to privatize certain loss-making PSUs?
Which of the following factors contributed to the failure to privatize certain loss-making PSUs?
Which action taken during the liberalization process was aimed at improving the quality of goods and services?
Which action taken during the liberalization process was aimed at improving the quality of goods and services?
What was a primary aim of the nationalization of the life insurance industry in India?
What was a primary aim of the nationalization of the life insurance industry in India?
Which organization was formed as a result of merging about 250 life insurance corporations in India?
Which organization was formed as a result of merging about 250 life insurance corporations in India?
What was one of the significant findings of the R.N. Malhotra committee regarding the Life Insurance Corporation?
What was one of the significant findings of the R.N. Malhotra committee regarding the Life Insurance Corporation?
What was one of the provisions of the Insurance Regulatory and Development Authority Act, 1999?
What was one of the provisions of the Insurance Regulatory and Development Authority Act, 1999?
How much did the annual business of LIC grow from 1957 to 1999?
How much did the annual business of LIC grow from 1957 to 1999?
What issue was the Life Insurance Corporation facing prior to the entry of private insurers?
What issue was the Life Insurance Corporation facing prior to the entry of private insurers?
Which of the following was a consequence of privatization in the Indian insurance market?
Which of the following was a consequence of privatization in the Indian insurance market?
Which achievement of LIC indicates its growth in policy issuance by 1999?
Which achievement of LIC indicates its growth in policy issuance by 1999?
What was the primary reason for the establishment of the Oriental Life Insurance Company in Calcutta in 1818?
What was the primary reason for the establishment of the Oriental Life Insurance Company in Calcutta in 1818?
Which law enacted by the British parliament led to the cessation of 174 life insurance companies in India?
Which law enacted by the British parliament led to the cessation of 174 life insurance companies in India?
What was the status of life insurance companies in India from 1914 to 1940?
What was the status of life insurance companies in India from 1914 to 1940?
Which of the following companies is recognized as the first Indian insurance company?
Which of the following companies is recognized as the first Indian insurance company?
What significant event in the Indian insurance sector occurred in 1948?
What significant event in the Indian insurance sector occurred in 1948?
What was a significant challenge faced by the Indian life insurance industry before nationalization?
What was a significant challenge faced by the Indian life insurance industry before nationalization?
Who were some of the key figures that contributed to the inclusion of Indians in the insurance business?
Who were some of the key figures that contributed to the inclusion of Indians in the insurance business?
What aspect of the life insurance industry was heavily regulated by the Insurance Act 1938?
What aspect of the life insurance industry was heavily regulated by the Insurance Act 1938?
Study Notes
Liberalisation, Privatisation, and Globalisation (LPG) in India
- India’s economic crises in the 1980s led to severe foreign exchange pressure and a debt trap
- Dr. Manmohan Singh, the then Union Finance Minister, introduced measures to recover India’s ailing monetary system
- The increase in foreign capital inflow was a major objective
- The government opened previously reserved sectors to the private sector
- Transferring loss-making units failed due to the lack of takers
- The government started the disinvestment of highly profit-making PSUs to reduce fiscal deficits
- The LPG model of development was introduced in 1991
Life Insurance Corporation of India (LIC)
- LIC was established in 1956 as a wholly-owned corporation of the Government of India
- LIC’s objectives were to spread life insurance widely, mobilize people’s savings, and invest funds for the best advantage of investors and the community
- The LIC struggled to keep up with the life insurance industries in developed foreign countries due to poor quality strategies, lack of standard education and awareness about savings, low capital per income, and lack of employment opportunities
- The introduction of the new economic policy in 1991 transformed the Indian life insurance industry
- Many private players entered the industry, challenging competitors with new strategies
India’s Life Insurance Industry in the Pre-LPG Era
- Life insurance was introduced in 1818 with the formation of the Oriental Life Insurance Company in Calcutta
- The company was established to help widows of European kins
- The first Indian insurance company, the Bombay Life Insurance Society, started operations in 1870
- From 1914 to 1940, the number of companies grew from 44 to 195, and the insurance business in force from 22.44 crores to 304.03
- The government of India nationalized the life insurance industry in January 1956
Post-Nationalisation Trend
- The LIC of India achieved various objectives of nationalization
- LIC's achievements in 40 years are summarized in the table below:
| S/No | Particulars | 1957 | 1999 |
|---|---|---|---|
| 1 | Annual Business | 336.3 Crores | 459201 Crores |
| Sum assured | 8,00,000 | 91726000 | |
| Policies | 14 Crores | 16136 Crores | |
| First year premium | 75606 Crores | 14857000 | |
| 2 | Business in force | 1477 Crores | 4171 Crores |
| Sum assured | 5,686,000 | 21671000 | |
| Policies | 74 Crores | 127389.06 Crores | |
| Renewal premium | 5.29 Crores | 41040 Crores | |
| 3 | Group business in force | 69558 Crores | 21671000 |
| Sum assured | 4.28 Crores | 3010 crores | |
| No.of lives | 4.58 Crores | 177970 Crores |
Setting-up of IRDA and the Entry of Private Insurance Companies
- The government and public were not completely satisfied with the LIC's progress
- The government signed the GATT accord, committing to opening the insurance sector to private, local, and global operators
- The Insurance Regulatory and Development Authority Act, 1999, was enacted, allowing outside insurance companies to operate in India with an Indian partner
IRDA & Entry of Private Companies
- Foreign insurance companies can enter into the insurance sector in India as a joint venture with an Indian partner, with a maximum contribution of 26% of the joint venture capital.
- The Life Insurance Industry of India witnessed a marvelous growth
- LIC introduced several new schemes and products to meet the stiff competition from private insurance companies.
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Description
Explore the significant economic reforms in India through Liberalisation, Privatisation, and Globalisation (LPG) initiated in 1991, and understand the establishment and objectives of the Life Insurance Corporation (LIC) of India. This quiz delves into the major events that shaped India's economy during this pivotal time. Test your knowledge of these critical developments and their implications for Indian society.
