Test: Development Experience (1947-90) and Economic Reforms since 1991- Case Based Type Questions - Commerce MCQ

Read the news report given below and answer the question that follow:

In a 40 minute long speech Prime Minister Narendra Modi announced the demonetization of existing notes of ₹500 and ₹1,000 during a televised address on Tuesday evening.

Modi announced that the notes of ₹500 and ₹1,000 “will not be legal tender from midnight tonight” and these will be “just worthless pieces of paper. The PM also urged people to ‘join this mahayojna against the ills of corruption.

Here is a guide for you explaining everything about the move.

What is demonetization of currency?

Demonetization for us means that the Reserve Bank of India has withdrawn the old `500 and ₹1,000 notes as an official mode of payment. According to Investopedia, demonetization is the act of stripping a currency unit of its status as legal tender.

What was the reason?

The reasoning given by Modi was: (A) To tackle black money in the economy. (B) To lower the cash circulation in the country which “is directly related to corruption in our country, “ according to PM Modi. (C) To eliminate fake currency and dodgy funds which have been used by terror groups to fund terrorism in India. (D) The move is estimated to scoop out more than ₹5 lakh crore black money from the economy, according to Baba Ramdev, a staunch Modi supporter.

Q. What is not the benefit of demonetisation:

Read the following hypothetical text and answer the question that follow:

The performance of the Indian economy during the period of first seven five-year plans (1950-1990) was satisfactory if not very impressive. On the eve of independence, India was an industrially backward country, but during this period of first seven plans our industries became far more diversified, with the stress being laid on the public investments in the industrial sector. The policy of import substitution led to protection of the domestic industries against the foreign producers

but we failed to promote a strong export surplus. Although public sector expanded to a large extent but it could not bring desired level of improvement in the secondary sector. Excessive government regulations prevented the natural trajectory of growth of entrepreneurship as there was no competition, no innovation and no modernization on the front of the industrial sector. Many Public Sector Undertakings (PSUs) incurred huge losses due to operational inefficiencies, red-tapism, poor technology and other similar reasons. These PSUs continued to function because it was difficult to close a government undertaking even it is a drain on country’s limited resources. On the Agricultural front, due to the measures taken under the Green Revolution, India more or less became self-sufficient in the production of food grains. So, the needs for reform of economic policy was widely felt in the context of changing global economic scenario to achieve desired growth in the country.

Q. Mechanization of Indian agriculture was one of the causes of ___________ in India.

Read the following hypothetical text and answer the question that follow:

The performance of the Indian economy during the period of first seven five-year plans (1950-1990) was satisfactory if not very impressive. On the eve of independence, India was an industrially backward country, but during this period of first seven plans our industries became far more diversified, with the stress being laid on the public investments in the industrial sector. The policy of import substitution led to protection of the domestic industries against the foreign producers

but we failed to promote a strong export surplus. Although public sector expanded to a large extent but it could not bring desired level of improvement in the secondary sector. Excessive government regulations prevented the natural trajectory of growth of entrepreneurship as there was no competition, no innovation and no modernization on the front of the industrial sector. Many Public Sector Undertakings (PSUs) incurred huge losses due to operational inefficiencies, red-tapism, poor technology and other similar reasons. These PSUs continued to function because it was difficult to close a government undertaking even it is a drain on country’s limited resources. On the Agricultural front, due to the measures taken under the Green Revolution, India more or less became self-sufficient in the production of food grains. So, the needs for reform of economic policy was widely felt in the context of changing global economic scenario to achieve desired growth in the country.

Q. Which of the following was not a reason for the public sector to play a major role in the initial phase of Indian Economic Planning?

Read the following hypothetical text and answer the question that follow:

The performance of the Indian economy during the period of first seven five-year plans (1950-1990) was satisfactory if not very impressive. On the eve of independence, India was an industrially backward country, but during this period of first seven plans our industries became far more diversified, with the stress being laid on the public investments in the industrial sector. The policy of import substitution led to protection of the domestic industries against the foreign producers

but we failed to promote a strong export surplus. Although the public sector expanded to a large extent but it could not bring desired level of improvement in the secondary sector. Excessive government regulations prevented the natural trajectory of growth of entrepreneurship as there was no competition, no innovation and no modernization on the front of the industrial sector. Many Public Sector Undertakings (PSUs) incurred huge losses due to operational inefficiencies, red-tapism, poor technology and other similar reasons. These PSUs continued to function because it was difficult to close a government undertaking even it is a drain on the country's limited resources. On the Agricultural front, due to the measures taken under the Green Revolution, India more or less became self-sufficient in the production of food grains. So, the need for reform of economic policy was widely felt in the context of changing the global economic scenario to achieve desired growth in the country.

Q. Read the following statements - Assertion (A) and Reason (R).

Assertion (A): Many public sector undertakings incurred huge losses due to operational inefficiencies.

Reason (R): Red-tapism was one of the reasons for continuation of such enterprises.

Select the correct alternative from the following:

Read the following hypothetical text and answer the question that follow:

The performance of the Indian economy during the period of first seven five-year plans (1950-1990) was satisfactory if not very impressive. On the eve of independence, India was an industrially backward country, but during this period of first seven plans our industries became far more diversified, with the stress being laid on the public investments in the industrial sector. The policy of import substitution led to protection of the domestic industries against the foreign producers

but we failed to promote a strong export surplus. Although public sector expanded to a large extent but it could not bring desired level of improvement in the secondary sector. Excessive government regulations prevented the natural trajectory of growth of entrepreneurship as there was no competition, no innovation and no modernization on the front of the industrial sector. Many Public Sector Undertakings (PSUs) incurred huge losses due to operational inefficiencies, red-tapism, poor technology and other similar reasons. These PSUs continued to function because it was difficult to close a government undertaking even it is a drain on country’s limited resources. On the Agricultural front, due to the measures taken under the Green Revolution, India more or less became self-sufficient in the production of food grains. So, the needs for reform of economic policy was widely felt in the context of changing global economic scenario to achieve desired growth in the country.

Q. Inward looking trade strategy aimed at _________ .

Read the following hypothetical text and answer question that follow:

India’s Micro, Small and Medium Enterprises (MSME) sector is poised for a mega transformation in 2020, with the launch of an Alibaba-like e-marketplace, trendy yet affordable khadi products to appeal to the masses and digital data-based credit ratings to help entrepreneurs avail loans. However, the MSME sector is often considered the bulwark of the economy as it contributes around 29% to the GDP and 48% to the Indian exports. There is an urgent need of major reforms and policy interventions towards ensuring timely availability of low-cost credit, improving ease of doing business and technological upgradation, to take on the formidable challenge of creating millions of jobs, ensure equitable distribution of national income and achieving large-scale import substitution. The World Bank has recently approved loan worth $750 million to address the immediate liquidity and credit needs of India’s MSME sector that has been severely impacted by the Covid-19 crisis. This will give a push to the Atmanirbhar Bharat vision of the government.

Q. Read the following statements - Assertion (A) and Reason (R).

Assertion (A): Small scale industries ensure a more equitable distribution of national income and wealth.

Reason (R): The ownership of small-scale industries is more widespread than the ownership of large-scale industries.

Select the correct alternative from the following:

Read the following hypothetical text and answer question that follow:

India’s Micro, Small and Medium Enterprises (MSME) sector is poised for a mega transformation in 2020, with the launch of an Alibaba-like e-marketplace, trendy yet affordable khadi products to appeal to the masses and digital data-based credit ratings to help entrepreneurs avail loans. However, the MSME sector is often considered the bulwark of the economy as it contributes around 29% to the GDP and 48% to the Indian exports. There is an urgent need of major reforms and policy interventions towards ensuring timely availability of low-cost credit, improving ease of doing business and technological upgradation, to take on the formidable challenge of creating millions of jobs, ensure equitable distribution of national income and achieving large-scale import substitution. The World Bank has recently approved loan worth $750 million to address the immediate liquidity and credit needs of India’s MSME sector that has been severely impacted by the Covid-19 crisis. This will give a push to the Atmanirbhar Bharat vision of the government.

Q. Identify which of the following is not an advantage of the MSME sector?

Read the following hypothetical text and answer question that follow:

India’s Micro, Small and Medium Enterprises (MSME) sector is poised for a mega transformation in 2020, with the launch of an Alibaba-like e-marketplace, trendy yet affordable khadi products to appeal to the masses and digital data-based credit ratings to help entrepreneurs avail loans. However, the MSME sector is often considered the bulwark of the economy as it contributes around 29% to the GDP and 48% to the Indian exports. There is an urgent need of major reforms and policy interventions towards ensuring timely availability of low-cost credit, improving ease of doing business and technological upgradation, to take on the formidable challenge of creating millions of jobs, ensure equitable distribution of national income and achieving large-scale import substitution. The World Bank has recently approved loan worth $750 million to address the immediate liquidity and credit needs of India’s MSME sector that has been severely impacted by the Covid-19 crisis. This will give a push to the Atmanirbhar Bharat vision of the government.

Q. _______________ are the largest employer of the labour force in India.

Read the following hypothetical text and answer question that follow:

India’s Micro, Small and Medium Enterprises (MSME) sector is poised for a mega transformation in 2020, with the launch of an Alibaba-like e-marketplace, trendy yet affordable khadi products to appeal to the masses and digital data-based credit ratings to help entrepreneurs avail loans. However, the MSME sector is often considered the bulwark of the economy as it contributes around 29% to the GDP and 48% to the Indian exports. There is an urgent need of major reforms and policy interventions towards ensuring timely availability of low-cost credit, improving ease of doing business and technological upgradation, to take on the formidable challenge of creating millions of jobs, ensure equitable distribution of national income and achieving large-scale import substitution. The World Bank has recently approved loan worth $750 million to address the immediate liquidity and credit needs of India’s MSME sector that has been severely impacted by the Covid-19 crisis. This will give a push to the Atmanirbhar Bharat vision of the government.

Q. The MSME sector suffered to a large extent in COVID-19 pandemic situation due to ________ .