Test: Liberalisation, Privatisation And Globalisation - UPSC MCQ

The growth of agriculture declined.The industrial sectors reported fluctuation. The growth of service sector has gone up. The growth during this phase was mainly driven by the growth in the service sector.

The opening of the economy has led to a rapid increase in foreign direct investment and foreign exchange reserves. The foreign investment, which includes foreign direct investment (FDI) and foreign institutional investment (FII), has increased from about US $100 million in 1990-91 to US $ 30 billion in 2017-18. There has been an increase in the foreign exchange reserves from about US $ 6 billion in 1990-91 to about US $ 413 billion in 2018-19. India is one of the largest foreign exchange reserve holders in the world.

• Statement 1 is correct, as India is recognized for its exports in auto parts, engineering goods, IT software, and textiles.
• Statement 2 is incorrect, as the reform process has faced criticism for not adequately addressing fundamental economic issues like employment, agriculture, industry, infrastructure development, and fiscal management.
  Therefore, only statement 2 is not correct, making option b) 2 only the right answer.

Public investment in agriculture sector especially in infrastructure, which includes irrigation, power, roads, market linkages and research and extension, has fallen in the reform period.

1. Statement 1 is incorrect:

   • India's agricultural policies have not led to international isolation; rather, the country has been integrating with global markets through trade agreements and exports.
   • While certain policy challenges exist, farmers are not entirely cut off from international trade.

2. Statement 2 is correct:

   • The agricultural policies during the reform period have primarily emphasized the production of food grains like wheat and rice, ensuring food security for the domestic population.
   • This focus has often come at the expense of diversification into high-value crops, horticulture, and export-oriented agriculture.

Thus, the correct answer is (d) 2 only.

This is because of decreasing demand of industrial products due to various reasons such as cheaper imports, inadequate investment in infrastructure etc. 
In a globalized world, developing countries are compelled to open up their economies to greater flow of goods and capital from developed countries and rendering their industries vulnerable to imported goods. Cheaper imports have, thus, replaced the demand for domestic goods.
Third statement is true. For e.g. U.S.A. has not removed their quota restriction on import of textiles from India and China.

1. The central government has indeed missed its disinvestment target almost every year, except in four years, from 2000-01 to 2013-14.
2. In 2014-15, the government set a disinvestment target of ₹58,425 crore but could not achieve even 50% of the target.

Since both statements are correct,  therefore correct  answer is option d) Neither 1 nor 2.

The economy of India had undergone significant policy shifts in the beginning of the 1990s. This new model of economic reforms is commonly known as the LPG or Liberalisation, Privatisation and Globalisation model. The primary objective of this model was to make the economy of India the fastest developing economy in the globe with capabilities that help it match up with the biggest economies of the world.

• The WTO was founded in 1995 as the successor organisation to the General Agreement on Trade and Tariffs (GATT), not the International Treaty for Trade (ITT).
• Additionally, the WTO is expected to establish a rule-based trading regime in which nations cannot place arbitrary restrictions on trade.
• Therefore, statements 1 and 2 are incorrect.

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The chain of reforms that took place with regards to business, manufacturing, and financial services industries targeted at lifting the economy of the country to a more proficient level. These economic reforms had influenced the overall economic growth of the country in a significant manner.