Ramesh Singh Test : Economic Reforms


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QUESTION: 1

Why most of the countries went for a protectionist economic policy with import substitution?

1. This Economies were dominated by foreign colonisers

2. They worried that opening the economy to foreign investment would lead to a new form of domination, the domination by large multinationals

Which of these statements is/are incorrect?

Solution:
  • As these economies were dominated by foreign colonisers, they worried that opening the economy to foreign investment would lead to a new form of domination, the domination by large multinationals.

  • That is why most of these countries went for a protectionist economic policy with import substitution as one method, side by side.

 

 

 

 

 

QUESTION: 2

Which of the following strategies are associated with the Washington Consensus?

1. Government of the planned Economies were urged to privatise and liberalise.

2. Governments was suggested to sell off state-owned companies.

3. Governments were also suggested to take measures which could boost the aggregate demand in the economy.

Which of these statements is/are correct?

Solution:
  • By the early 1980s, a new development strategy emerged. Though it was not new, it was the old idea getting vindicated after failure a comparatively newer idea.

  • Governments of the socialist or the planned economies were urged/ suggested to privatise and liberalise, to sell off state-owned companies and eliminate government interventions in the economy.

  • These governments were also suggested to take measures which could boost the aggregate demand in the economy (i.e., macroeconomic stability measures). The broad outlines of such a development strategy were regarded as being inspired by the Washington Consensus.

QUESTION: 3

Consider the following statements.

1. In 1991, India launched a process of economic reforms in response to a fiscal and balance of payment crisis.

2. Reforms started in the 1990s much wider and deeper than reforms of 1980s.

Which of these statements is/are correct?

Solution:
  • On July 23, 1991, India launched a process of economic reforms in response to a fiscal balance-of-payment (BoP) crisis. The reforms launched a process to a fiscal and balance of payment crisis.

  • The reforms were going to change the very face and the nature of the economy in the coming times.

  • Back in the mid-1980s, the governments had taken its first steps to economic reforms. While the reforms of the 1980s witnessed rather limited deregulation and partial liberalisation of only a few aspects of the existing control regime, the reforms started in early 1990s in the fields of industries, trade, investment and later to include agriculture, were much wider and deeper.

QUESTION: 4

Consider the following statements.

1. The process of economic reforms started in India with the slogan 'reforms with human face'

2. The slogan was much effective to garner the empathy of the masses

Which of these statements is/are correct?

Solution:
  • The process of economic reforms started in India with the slogan 'reforms with human face'

  • The slogan has utterly failed to garner the empathy of the masses.

QUESTION: 5

Which among the following conditions were put forth for India by the IMF at the time of reforms in the 1990s?

1. Devaluation of the Rupee

2. Drastic reduction in import tariff

3. Excise duties to be hiked

Which of these statements is/are correct?

Solution:

The IMF conditions put forth for India were as under

  • (i) Devaluation of the rupee by 22 per cent.

  • (ii) Drastic reduction in the peak import tariff from the prevailing level of 130 per cent to 30 per cent.

  • (iii) Excise duties to be hiked by 20 per cent to neutralise the revenue shortfalls due to the custom cut.

  • (iv) All government expenditure to be cut down by 10 per cent, annually (i.e., cutting the cost of running the government and denotes, interests, pays, pension PF and subsidies).

QUESTION: 6

Structural Reform measures included:

1. Policies to enhance domestic demand

2. Policies to boost the aggregate supply of services in the economy

Which of these statements is/are correct?

Solution: It includes all the policy reforms which have been initiated by the government to boost the aggregate supply of goods and services in the economy.

QUESTION: 7

Consider the following statements.

1. Liberalisation shows the path of the reform.

2. Privatisation shows the direction of the reform.

3. Globalisation shows the ultimate goal of the reform.

Which of these statements is/are correct?

Solution:
  • Precisely seen, liberalisation shows the direction of reform, privatisation shows the path of reform and globalisation shows the ultimate goal of the reform.

  • However, it would be useful to see the real meanings of these terms and the exact sense in which they are being used worldwide and particularly in India.

 

 

 

 

 

QUESTION: 8

Consider the following statements about de-Nationalisation:

1. The process includes selling of shares of the state-owned enterprises to the private sector.

2. All the economic policies which directly or indirectly seem to promote the expansion of the private sector or the market (economy) have been termed by experts and the governments as the process of privatisation.

Which of these statements is/are correct?

Solution:
  • All the economic policies which directly or indirectly seem to promote the expansion of the private sector or the market (economy) have been termed by experts and the governments as the process of privatisation.

  • We may cite a few examples from India-de-licencing and de-reservation of the industries, even cuts in the subsidies, permission to foreign investment, etc.

QUESTION: 9

Consider the following statements about Fourth Generation Reforms.

1., in early 2002, some experts coined this generation of reforms which entail a fully ‘information technology-enabled' India.

2. They hypothesised a two-way connection between the economic reforms and the information technology (IT), with each one reinforcing the other.

Which of these statements is/are correct?

Solution:
  • Fourth Generation Reforms. This is not an official generation' of reform in India. Basically, in early 2002, some experts coined this generation of reforms which entail a fully ‘information technology-enabled India.

They hypothesised a ‘two-way connection between the economic reforms and the information technology (IT), with each one reinforcing the other.

QUESTION: 10

 Consider the following statements with respect to Industrial Deregulation and state the correct combination.

I) Restrictions imposed by Licensing policy was removed

II) Price fixation and controls were removed

III) Private sector was not allowed to enter the public space.

Solution: