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Indian economy during reforms - class-XII

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Select the correct statement/statements using the code given below:
1. Industrial lockouts caused by the striking contractual labour has increased during the last $5$ years, which indicates immediate need of labour reforms in India pending since long.
2. Increasing labour unrest in India is emerging as the main determinant in attracting FDI. 

  1. Only I

  2. Only 2

  3. I and 2

  4. Neither 1 nor 2


Correct Option: D
Explanation:

Both the statements are incorrect. The number of strikes and lockouts show a decreasing trend at least in the instances of lockouts, in the country. Labour unrest in India is not seen as a major deterrent in attracting FDI to the country. 

Regional disparity in per capita income in India has increased in the post reform period due to many factors. Which among the following factors has not contributed to the growth in such disparity?

  1. Decline in the share of public investment.

  2. Change in policy regime regulating investment locations.

  3. Poor governance and poor infrastructure.

  4. Allocation of central government funds through the award of finance commission.


Correct Option: D

Growth in GDP during reform period was mainly driven by growth in _______.

  1. service sector

  2. agriculture sector

  3. industrial sector

  4. both A and C


Correct Option: A
Explanation:

Growth in GDP during reform period was mainly driven by the growth in the service sector. During the reform period, the growth of agriculture and industrial sectors has declined whereas the growth of service sector has gone up.

As a result of foreign investment _____________.

  1. India has seen a tremendous rise in new technology

  2. India is the fifth largest foreign exchange reserve holder in the world

  3. rising prices could not be kept under control

  4. all of the above


Correct Option: A
Explanation:
The opening up of the economy has led to rapid increase in foreign direct investment and foreign exchange reserves. At present, India is the sixth largest foreign exchange reserve holder in the world. Rising prices have also been kept under control. and India has seen tremendous rise in new technology.

Foreign investment includes ________.

  1. FDI

  2. FII

  3. both A and B

  4. none of the above


Correct Option: C
Explanation:
The foreign investment includes foreign direct investment and foreign institutional investment.

Developing countries don't have access to developed countries market because _______.

  1. high non-tariff barriers like quota restriction

  2. inability to produce

  3. lack of labour

  4. none of the above


Correct Option: A
Explanation:
A developing country like India still does not have the access to developed countries’ markets because of high non-tariff barriers. For example, although all quota restrictions on exports of textiles and clothing have been removed from India, U.S.A. has not removed their quota restriction on import of textiles from India and China.

Which of the following is true regarding disinvestment?

  1. Assets of PSUs were sold at correct value

  2. Proceeds from disinvestment were used to build social infrastructure

  3. Proceeds from disinvestment were used to offset the shortage of government revenues

  4. There was a substantial loss to the government due to disinvestment


Correct Option: C,D
Explanation:
The assets of PSUs have been undervalued and sold to the private sector. This means that there has been a substantial loss to the government. Moreover, the proceeds from disinvestment were used to offset the shortage of government revenues rather than using it for the development of PSUs and building social infrastructure in the country.

Which of the following led to decline in industrial growth?

  1. Decreasing demand of domestic products

  2. Domestic manufacturers were facing competition from imports

  3. Inadequate investment in infrastructure

  4. All of the above


Correct Option: D
Explanation:
Industrial growth has recorded a slowdown. This is because of decreasing demand of industrial products due to various reasons such as cheaper imports, inadequate investment in infrastructure etc. Cheaper imports have replaced the demand for domestic goods. Domestic manufacturers are facing competition from imports.

At present, India is the _______ largest foreign exchange reserve holder in the world.

  1. fifth

  2. sixth

  3. seventh

  4. eighth 


Correct Option: D
Explanation:
The opening up of the economy has led to rapid increase in foreign direct investment and foreign exchange reserves. At present, India is the sixth largest foreign exchange reserve holder in the world.

Which of the following led to the Sircilla tragedy?

  1. Hike in prices of cloth

  2. Hike in power tariff

  3. Both A and B

  4. Insufficient labour


Correct Option: B
Explanation:
As a part of liberalisation, privatisation and globalisation, the government hiked the power tariff. Further, while the power sector reforms have led to hike in tariffs, the power producers have failed in providing quality power to the powerloom industry. Since the wages of the powerloom workers are linked to the production of cloth, power-cut means cut in wages of weavers who were already suffering from hike in tariff. This led to a crisis in the livelihood of the weavers.

Which of the following is true regarding the LPG reforms?

  1. Sufficient employment opportunities were generated

  2. Industrial sector recorded growth

  3. Growth rate of agriculture sector decelerated

  4. It had a positive impact on developmental and welfare expenditures.


Correct Option: C
Explanation:
Scholars point out that the reform-led growth has not generated sufficient employment opportunities in the country. Reforms have not been able to benefit agriculture, where the growth rate has been decelerating. Industrial growth has also recorded a slowdown. Reforms reduced the scope for raising tax revenues. This has a negative impact on developmental and welfare expenditures.

Hike in power tariff during reform period led to 50 powerloom workers committing suicide in a small town called _____ in ______. 

  1. Sircilla, Andhra Pradesh

  2. Sircilla, Uttar Pradesh

  3. Sircilla, Telangana

  4. None of the above


Correct Option: A
Explanation:
Hike in power tariff combined with cut in wages of weavers led to a crisis in the livelihood of weavers and fifty powerloom workers committed suicide in a small town called ‘Siricilla’ in Andhra Pradesh.

How did disinvestment cause loss to the government? 

  1. Proceeds from disinvestment were used to offset the shortage of government revenues

  2. Proceeds from disinvestment were not used to development of PSUs and building social infrastructure

  3. Assets of PSUs were undervalued and sold to the private sector

  4. All of the above


Correct Option: D
Explanation:
The assets of PSUs have been undervalued and sold to the private sector. This means that there has been a substantial loss to the government. Moreover, the proceeds from disinvestment were used to offset the shortage of government revenues rather than using it for the development of PSUs and building social infrastructure in the country.

State whether the following statement is True or False.
Purchasing power of the Indians is increasing.

  1. True

  2. False


Correct Option: A
Explanation:

Purchasing power of Indians is increasing. Because of globalization, India is progressing at a rapid pace. Thus, Indians have been able to buy more goods and services due to rise in real income. Purchasing power is the value of currency expressed in terms of goods or services that one unit of money can buy.

State whether the following statements are True or False.
India has emerged as one the leading countries of the world.

  1. True

  2. False


Correct Option: A
Explanation:

India has emerged as one of the leading countries in the world since because of the new economic policy which includes liberalization, privatization and globalization, India has been developing at a rapid pace and enhanced the market orientation capability and sustained in the competitive global market.

In India disinvestment process started in ________.

  1. 1991-92

  2. 1990-92

  3. 1996-97

  4. 2000-01


Correct Option: A
Explanation:

In India disinvestment and privatization process started in 1991-92 since new economic policy was adopted in 1991 by Indian government. Disinvestment refers to the process of transferring and selling of public assets to private ownership.

FDI in Hotels and Tourism sector is allowed up to _______.

  1. 26%

  2. 49%

  3. 74%

  4. 100%


Correct Option: D
Explanation:
FDI stands for Foreign Direct Investment. FDI refers to the investment made by an individual or firm from one country into business interests of different country.
FDI in Hotels and Tourism sector is allowed up to 100% in India.

FDI in Private Security Agencies is allowed up to _______.

  1. 26%

  2. 49%

  3. 74%

  4. 100%


Correct Option: C
Explanation:

FDI stands for Foreign Direct Investment. FDI refers to the investment made by an individual or firm from one country into business interests of different country. FDI in Private Security Agencies is allowed up to 74% in India.

FDI in power trading sector is allowed up to ________.

  1. 26%

  2. 49%

  3. 74%

  4. 100%


Correct Option: D
Explanation:
FDI stands for Foreign Direct Investment. FDI refers to the investment made by an individual or firm from one country into business interests of different country.
FDI in Power trading sector is allowed up to 100% in India.

FDI in Civil Aviation Greenfield projects is allowed upto ________.

  1. 26%

  2. 100%

  3. 74%

  4. 51%


Correct Option: B
Explanation:

FDI stands for Foreign Direct Investment. FDI refers to the investment made by an individual or firm from one country into business interests of different country. FDI in Civil Aviation Greenfield projects is allowed upto 100% in India.

FDI in Civil Aviation schedule Airport services / Domestic schedule passenger sector is allowed upto ______.

  1. 49%

  2. 100%

  3. 74%

  4. 24%


Correct Option: B
Explanation:

FDI stands for Foreign Direct Investment. FDI refers to the investment made by an individual or firm from one country into business interests of different country. FDI in Civil Aviation schedule Airport services / Domestic schedule passenger sector is allowed upto 100% in India.

FDI in defense sector is allowed upto _______.

  1. 100%

  2. not allowed

  3. 49%

  4. 74%


Correct Option: C
Explanation:

FDI stands for Foreign Direct Investment. FDI refers to the investment made by an individual or firm from one country into business interests of different country. FDI in defense sector is allowed upto 49%.

FDI in Non-Banking Finance Companies is allowed up to ________.

  1. 26%

  2. 49%

  3. 74%

  4. 100%


Correct Option: D
Explanation:
FDI stands for Foreign Direct Investment. FDI refers to the investment made by an individual or firm from one country into business interests of different country.
FDI in Non-Banking Finance Companies is allowed up to 100% in India.

FDI in Civil Aviation Non-schedule Air Transport Service is allowed upto ______.

  1. 74%

  2. 46%

  3. 100%

  4. 24%


Correct Option: C
Explanation:

FDI stands for Foreign Direct Investment. FDI refers to the investment made by an individual or firm from one country into business interests of different country. FDI in Civil Aviation Non-schedule Air Transport Service is allowed upto 100% in India.

FDI in private sector banking sector is allowed up to _______,

  1. 26%

  2. 49%

  3. 74%

  4. 100%


Correct Option: C
Explanation:

FDI stands for Foreign Direct Investment. FDI refers to the investment made by an individual or firm from one country into business interests of different country. FDI in private sector banking sector is allowed up to 74% in India.

FDI in Telecommunication sector is allowed up to _______.

  1. 26%

  2. 49%

  3. 74%

  4. 100%


Correct Option: D
Explanation:

FDI stands for Foreign Direct Investment. FDI refers to the investment made by an individual or firm from one country into business interests of different country. FDI in Telecommunication sector is allowed up to 100% in India

FDI in Civil Aviation existing project is allowed upto _______.

  1. 24%

  2. 44%

  3. 76%

  4. 100%


Correct Option: D
Explanation:

FDI stands for Foreign Direct Investment. FDI refers to the investment made by an individual or firm from one country into business interests of different country. FDI in Civil Aviation Existing project is allowed upto 100% in India.

FDI in Civil Aviation Helicopter Service is allowed upto ______.

  1. 100%

  2. 74%

  3. 24%

  4. 49%


Correct Option: A
Explanation:

FDI stands for Foreign Direct Investment. FDI refers to the investment made by an individual or firm from one country into business interests of different country. FDI in Civil Aviation Helicopter Service is allowed upto 100% in India.

FDI in Multi Brand Retail Trading is allowed upto ______.

  1. 20%

  2. 100%

  3. 51%

  4. 49%


Correct Option: C
Explanation:

FDI stands for Foreign Direct Investment. FDI refers to the investment made by an individual or firm from one country into business interests of different country. FDI in Multi Brand Retail Trading is allowed upto 51%.

FDI in Telecom Services is allowed upto ______.

  1. 100%

  2. 29%

  3. 74%

  4. 51%


Correct Option: A
Explanation:

FDI stands for Foreign Direct Investment. FDI refers to the investment made by an individual or firm from one country into business interests of different country. FDI in Telecom Services is allowed upto 100% in India.

Foreign capital is needed to ________.

  1. tide over balance of payment crisis

  2. supplement domestic savings

  3. create economic infrastructure

  4. all of the above


Correct Option: D
Explanation:

Foreign capital refers to the reserve money which a nation gets because of trade with foreign nations. It helps to check fiscal deficit or fiscal surplus. Thus, it is needed to tide over balance of payments. It also act as a supplement to domestic savings when the domestic savings are quite low. It also helps to create new economic infrastructures and develop a nation.

FDI in E-Commerce activities is allowed upto ______.

  1. 46%

  2. 51%

  3. 100%

  4. 44%


Correct Option: C
Explanation:
FDI stands for Foreign Direct Investment. FDI refers to the investment made by an individual or firm from one country into business interests of different country.
FDI in E-Commerce activities is allowed upto 100% in India

FDI in which of these sectors is not permitted ________.

  1. lottery

  2. chitfund

  3. gambling

  4. all of the above


Correct Option: D
Explanation:
FDI stands for Foreign Direct Investment. FDI refers to the investment made by an individual or firm into business interests of different country.
FDI is not permitted in sectors such as, lottery, cheat fund and gambling.

FDI is not permitted _______.

  1. atomic energy

  2. rail transport

  3. nidhi companies

  4. all of the above


Correct Option: D
Explanation:
FDI stands for Foreign Direct Investment. FDI refers to the investment made by an individual or firm into business interests of different country.
FDI is not permitted in sectors like, atomic energy, rail transport and Nidhi companies.

FDI is not allowed _______.

  1. real estate development

  2. betting

  3. casinos

  4. all of the above


Correct Option: D
Explanation:
FDI stands for Foreign Direct Investment. FDI refers to the investment made by an individual or firm into business interests of different country.
FDI is not allowed in sectors like, real estate development, betting and casinos.

Disinvestment means selling of _______________________.

  1. Public Investment to a Private Entrepreneur

  2. Private Investment to a Public Sector Unit

  3. Either (a) or (b)

  4. Neither (a) nor (b)


Correct Option: A
Explanation:

In business, disinvestment means to put on the market off convinced resources such as a developed plant, a division or supplementary, or product line. Disinvestment is from time to time described as the conflicting of capital expenditures. Some individuals use the term divestiture or divest when discussing disinvestment.

For example, electric producer manufacturer strength sell off its customer producer product lines and developed facilities in order to raise money that can be used to expand its industrial producer product line.

The correct option is A.


Encouragement of Foreign Direct Investment & removal of Quantitative Restrictions are both parts of ___________________.

  1. Industrial Reforms in India

  2. External Sector Reforms in India

  3. Land Reforms in India

  4. Banking Reforms in India


Correct Option: B

Inspite of the Economic Reforms already carried out in India, there is a further need for ___________________.

  1. Better industrial deregulation

  2. Improvement in Fiscal Discipline

  3. Increase in growth of Infrastructure

  4. All of the above


Correct Option: D

The Economic Reforms in India have failed to -

  1. Keep fiscal deficits to the targeted levels

  2. Fully implement industrial deregulation

  3. Fully open the economy to trade

  4. All of the above


Correct Option: D

Which one of the following statements about the National Agricultural Insurance Scheme (NAIS) is not correct ?

  1. It was introduced from Rabi 2000-2001 season

  2. It replaced the Comprehensive Crop Insurance scheme (CCIS) which was in operation since 1985

  3. It envisages coverage of all the food crops , oilseeds and annual commercial horticultural crops in respect of which past yield data is available for adequate number of years

  4. Among the commercial horticultural crops, eleven crops are correctly covered under the scheme


Correct Option: A
Explanation:

The National Agriculture Insurance Scheme was introduced from Rabi-season 1999-2000.the new scheme is available to all the farmers-Loances and non-Loanee-irres-pective of their size of holdings.It envisages coverage of all the food crops ( cereals , millers, and pulses). Oilseeds and annual horticultural / commercial crops , in respect of which past yield data is available for adequate number of years among the annual commercial / horticulture crops, namely, sugarcane,potato, ginger, onion-turmeric, and chillies are covered.

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