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Globalisation and the Indian Economy Important Questions Class 10 Social Science Economics

Globalisation and the Indian Economy Important Questions Class 10 Social Science Economics

Very Short Answer Type Questions

Question 1. How does liberalisation policy help in trade?

Answer

With liberalisation of trade, businesses are allowed to make decisions freely about what they wish to import or export. The government imposes much less restrictions than before and is, therefore, said to be more liberal.


Question 2. What do you understand by the term ‘Investment’?

Answer

The money that is spent to buy assets such as land, buildings, machines and other equipment is called ‘Investment’ which would later fetch them profits.


Question 3. Why the private sector was subjected to many controls and regulations?

Answer

The private sector was subjected to many controls and regulations so: that wealth could not get concentrated in a few hands.


Question 4. What is Globalisation?

Answer

Globalisation is the process of rapid integration or interconnection between countries.


Question 5. What is meant by the term LQP and LPG in economic reforms?

Answer

LQP: The term LQP means Licence, Quota and Permit. This was the Indian Economic pattern before 1991
LPG: It is meant by Liberalisation, Privatisation and Globalisation. LPG replaced LQP in 1991.


Question 6. What role does WTO play to liberalise trade?

Answer

WTO was started at the initiative of the developed countries. WTO establishes rules regarding international trade, and sees whether rules are obeyed or not.


Question 7. Which regions are favourable for MNCs to set up production?

Answer

MNCs set up production where it is close to the markets, where there is skilled and unskilled labour available at low costs and where the availability of other factors of production is assured.


Question 8. What is the most common route for MNC’s investment?

Answer

The most common route for MNC’s investment is to buy up local companies and then expand the production. MNCs with huge wealth can do so quite easily.


Question 9. What is the basic utility of foreign trade?

Answer

Foreign trade leads to connecting the markets or integration of markets in different countries.


Question 10. Why do MNCs set up their offices and factories in those regions where they get cheap labour and other resources?

Answer

MNCs set up their office and factories in those regions where they get cheap labour and other resource because of:

  1. Low cost of production.
  2. They can earn greater profits.


Question 11. Give examples of industries where production is carried out by a large number of small producers around the world.

Answer

Garments, footwear and sports items are examples of industries where production is carried out by a large number of small producers around the world.


Question 12. What is tariff? Why is it imposed on goods?

Answer

Tariff is a tax imposed on imported goods and services. Tariffs are used to restrict trade, as they increase the price of imported goods and services, making them more expensive to consumers.


Question 13. How were Parakh foods purchased by an American MNC?

Answer

Cargill Foods, a very large American MNC, has taken over a smaller Indian company Parakh Foods. Parakh foods had five oil refineries, whose control has now shifted to Cargill, who is now the largest producer of edible oils.


Question 14. Explain the role of MNCs in globalisation.

Answer

MNCs are playing a major role in the globalisation process. More and more goods and services, investment and technology are moving between countries.


Question 15. What are SEZs?

Answer

SEZ is a special economic zone of a country that is subject to unique economic regulations that differ from other areas in the same country. These regulations tend to be conducive to foreign direct investment. Conducting business in an SEZ typically implies that the company will receive tax incentives and the opportunity to pay lower tariffs.


Question 16. What are the advantages of SEZ to MNCs?

Answer

Companies who set up production units in the SEZs do not have to pay taxes for an initial period of five years. Government has allowed flexibility in the labour laws to attract foreign investment.


Question 17. What is a ‘trade barrier’?

Answer

Tax on imports by the Government is called ‘trade barrier’. It is called a barrier because some restrictions have been set up.


Question 18. After independence, which items were allowed to be imported?

Answer

After independence, imports of only essential items such as machinery, fertilisers, petroleum, etc., were allowed to be imported.


Question 19. In which products, small manufacturers were hit hard?

Answer

Batteries, capacitors, plastics, toys, tyres, dairy products and vegetable oil are some examples of industries where the small manufacturers have been hit hard due to competition.


Short Answer Type Questions

Question 1. What is the role of WTO in international trade?

Answer

(i) WTO’s aim is to liberalise international trade.
(ii) It establishes rules regarding international trade and sees that these rules are obeyed.
(iii) 164 countries of the world are its members currently.
(iv) It is seen that the developed countries have unfairly retained trade barriers. On the other hand, WTO rules have forced developing countries to remove trade barriers.


Question 2. Explain with example how a MNC functions in another country.

Answer

MNCs invest to buy up local companies and in turn expands production. MNCs, with huge wealth, can do this easily. To take an example, Cargill Foods, a very large American MNC, has bought over smaller Indian companies such as Parakh Foods.

Parakh Foods had built a large marketing network in parts of India, where its brand was well-reputed. Also, Parakh Foods had four oil refineries, whose control has now shifted to Cargill. Cargill is now the largest producer of edible oil in India, with a capacity to make5 million pouches daily.


Question 3. Why are trade barriers imposed on the foreign trade and investment in a country? Explain with the help of two illustrations.

Answer

Trade barriers are used by the governments –

  1. To increase, decrease or regulate foreign trade.
  2. To decide what kinds of goods and how much of each, should come into the country.
  3. To protect the producers within the country from foreign competition.


Question 4. Define sustainable economic development.

Answer

Sustainable economic development is meant by the development that takes place without damaging the environment. This kind of development does not compromise on the needs of the future generation. Sustainable economic development, in fact, is an issue that has emerged from rapid industrialisation of the world in the past century. The need for sustainable development stems from the concern for environment.


Question 5. What are the basic functions of foreign trade?

Answer

  • Foreign trade creates an opportunity for the produces to reach beyond the domestic markets.
  • Producers can sell their produce not only in markets located within the country but can also compete in markets located in other countries of the world.
  • For the buyers, import of goods produced in another country is one way of expanding the choice of goods beyond what is domestically produced.


Question 6. Define liberalisation?

Answer

The term liberalisation contains two components

  1. To allow private sector to run those activities which we restricted earlier only to public sector.
  2. Realisation of all the rules and regulations which put restrictions in the growth of the private sector.
    Thus liberalisation is the process that provides more and more facilities to the private sector so that it can make fast progress.


Question 7. Point out the main objectives of new Economic policy.

Answer

The main objectives of the new economic policy are the following

  • Liberalisation of economy.
  • Dispensing with too many controls.
  • Expansion of private sector.
  • Encouragement of foreign direct investment
  • Controlling fiscal deficit.


Question 8. What is investment? How is foreign investment different from it?

Answer

The money that is spent to buy assets such as land, building, machines and other equipment is called investment.

Investment made by MNCs is called foreign investment. Every investment is made with the hope that the assets will earn profits for these companies.


Question 9. Why had the Indian government put barriers to foreign trade and foreign investments after independence? Analyse the reasons.

Answer

Indian government has put barriers to foreign trade and foreign investments after independence because:

  1. It wanted to protect the producers within the country from foreign competition.
  2. As the industries were just coming up in 1950s and 1960s, the competition from inputs at that stage would not have allowed these industries to come up.
  3. Indian allowed imports of only essential items such as machinery fertilizers, petroleum, etc.


Question 10. Why do you think the company wants to develop India as a base for manufacturing car components for its global operations? Discuss the following factors:
(a) cost of labour and other resources in India.
(b) the presence of several local manufacturers who supply auto-parts to Ford Motors
(c) closeness to a large number of buyers in India and

Answer

India provides Ford Motors an opportunity for market in other countries.

(a) Cost of labour and other resources, in India, is relatively very low

(b) Motor raw-material industries in India is very rich industries provide Ford Motors necessary auto parts at low price.

(c) India’s geographical location is good for Ford Motors markets close to other nations in the region.


Question 11. Besides the movement of goods, what are the ways in which countries can be linked?

Answer

(i) Besides the movement of goods, services, investment and technology, there is one more way in which the countries can be connected.

(ii) It is done through the movement of people between countries.

(iii) People usually move from one country to another in search of better income, better jobs or better education.


Question 12. Classify industries on the basis of capital investment. How are they different from one another? Explain with examples.

Answer

Classification of the industries on the basis of capital investment:
(i) Small Scale industry
(ii) Large Scale industry

Difference:

(i) If the investment is more than one crore on any industry is considered as a large scale industry, for example, Iron and Steel Industry/Cement Industry.

(ii) While the investment is less than one crore on an industry is considered as a small scale industry, for example, Plastic industry, Toy industry.


Question 13. What changes do you find with the arrival of MNCs in the markets?

Answer

  • As consumers in today’s world, some of us have wider choice of goods and services before us.
  • The latest models of digital cameras, mobile phones and televisions made by the leading manufacturers of the world are within our reach.
  • Every season, new models of automobiles can be seen on the Indian roads.


Question 14. Describe the main steps that have been taken for globalisation of the economy?

Answer

Following are the steps that have mainly been taken for the globalisation of the economy

  • Devaluation of rupee.
  • Full convertibility of rupee.
  • Long-period trade policy for removal of restrictions.
  • Encouragement to open competition.
  • Modification of custom and tariff.


Question 15. Under what conditions do MNCs set up production units?

Answer

MNCs set up production units on the basis of:

  1. Proximity to the markets;
  2. Availability of skilled and unskilled labour at low cost;
  3. Availability of other factors of production is assured; and
  4. Government policies that look after their interests.
  5. Developed infrastructure
  6. Safety measures.


Question 16. ‘Barriers on foreign trade and foreign investment were removed to a large extent in India since 1991.’ Justify the statement.

Answer

Removal of barriers on foreign trade and foreign investment:

  1. Barriers on foreign trade and foreign investment were partially removed.
  2. Goods could be imported and exported easily.
  3. Foreign companies could set up factories and offices here.
  4. Opportunities for Indian producers to compete with producers around the globe.


Question 17. “Cheap and affordable credit is crucial for the country’s development.” Assess the statement.

Answer

Cheap and affordable credit is crucial:

  1. Many people want to start an enterprise by borrowing may not do because of high cost of borrowing.
  2. Banks and cooperative societies need to lend more.
  3. This would lead to higher income and many people could then borrow at cheap rates for a variety of needs.
  4. They could grow crops, do business or set up small scale industries.


Long Answer Type Questions

Question 1. Write a short essay on WTO in your own words?

Answer

WTO stands for the World Trade Organisation. It was set p in 1995 by the member countries of the United Nations. The foundation aim of the WTO was to promote trade among the member countries.

The headquarters of WTO is located in Geneva. It has significantly influenced the liberalisation as well as globalization process in most of the developing countries. WTO aims at conducting international trade among countries of the world in an open, uniform and nondiscriminatory manner, while facilitating trade among countries, WTO expects countries to follow what it wants.

WTO deals with three issues:

  1. Bilateral agreements
  2. import quotas
  3. export quotas.

All of these three issues are very significant for India as well as for all other developing countries. Bilateral agreements play crucial role in the trade relations among countries. In order to prevent competition from the producers of other countries with local manufacturers, it is common for countries to impose taxes on the imported goods.

WTO is in fact not only regulating the international trade of goods but also the services. All the members of WTO have to adopt laws and policies in order to comply with the WTO rules.


Question 2. Which factors have stimulated the globalisation process?

Answer

The following factors have stimulated the globalisation process.

  1. Improvement in transportation: In the last fifty years, there have been a lot of improvements in transportation technology. This has made faster delivery of goods across long distances possible, at lower costs.
  2. Development in information and communication technology: Technology in the areas of telecommunication and computers has been advancing rapidly.
  3. Telecommunication: Telecommunication facilities like telephone, telegraph, mobiles, fax are used to connect people in the world. This has been made possible due to satellite communication devices.
  4. Computers: They have now entered almost in every field of activity. In the amazing world of internet, we can obtain and share information on almost anything.
  5. Internet: Internet also allows us to send instant electronic mail (e-mail) and talk (voice mail) across the world at negligible cost. Even the payment of money from one bank to another can be made through e-banking.


Question 3. How did Ford Motors, an MNC, set its foot in India?

Answer

  1. Ford Motors, an American company, is one of the world’s largest automobile manufacturers with production spread over twenty-six countries of the world.
  2. It came to India in 1995 and spent ` 1,700 crore to set up a large plant near Chennai.
  3. This was done in collaboration with Mahindra and Mahindra, a major Indian manufacturer of jeeps and trucks.
  4. By the year 2014, Ford Motors was selling 77,000 cars in the Indian markets, while another 77,000 cars were exported from India to South Africa, Mexico and Brazil.
  5. The company wanted to develop Ford India as a component supplying base for its other plants across the globe.


Question 4. Describe the major problems created by the globalization for a large number of small producers and workers.

Answer

Globalization for small producers and workers

  1. It may lead to widening of income inequalities among various countries
  2. Workers jobs are no longer secure.
  3. Expansion of unorganized sector.
  4. Small manufacturers have been hit hard due to severe competition.
  5. Several units have been shut down rendering many workers jobless.
  6. Lives of workers are on the whims of employers.
  7. Workers are denied their fair share of benefits.


Question 5. Analyze the Impact of globalization.

Answer

Positive impact:

  1. Wide variety of good is now available to the consumers.
  2. New jobs are created in industries.
  3. Local companies have prospered through supplying raw materials to the industries.
  4. Top Indian companies have benefitted for successful collaborations with foreign companies.

Negative impact:

  1. Globalization has led to the annihilation of small producers who face stiff competition from cheaper imports.
  2. Workers no longer have job security as they are employed ‘flexibly’.
  3. It may lead to greater dependence of underdeveloped countries on advanced countries.


Question 6. Point out the impact of the World Trade Organisation on the Indian Economy?

Answer

The main impact of the World Trade Organisation on the Indian economy can be described in the following points:

  1. It has provided an opportunity to India for trading with other member countries.
  2. India is now able to export its goods and services to other countries with less restriction from those countries.
  3. Thanks to the WTO that it is expected that the technology from developed countries will be available to India at a reduced cost.
  4. Since a major share of world trade is taking places among the developed countries themselves, the benefit of being a member of WTO to the developing countries, especially to India, is very limited.
  5. It is feared that once India abides by the rules and regulations of WTO, the prices of many essential and life-saving drugs may go up.
  6. It is alleged that WTO is being used by the developed countries to support globalisation in areas that are not directly related to trade. These rules often interfere in the management of the domestic economy of a country.


Question 7. Chinese toys have taken over the Indian toy market due to globalization and promotion of international trade leading to huge losses to Indian toy manufacturers. Do you think the mantra of “Boycott and Swadeshi” would be of any help today? Why or why not?

Answer

We cannot deny the fact that Chinese toys have taken over the Indian toy market due to promotion of international trade and globalisation leading to huge losses to the Indian toy manufactures. In spite of this, ‘Boycott and Swadeshi’ mantra won’t help because

  1. With lifting of trade barriers, import and export of foreign goods have become easier and markets of native countries are flooded with foreign products.
  2. Prices of foreign products especially the Chinese items like toys are cheap and have a great variety to attract customers.
  3. Swadeshi and Boycott movements were relevant and worked because of the movement for Independence of our country. Today, the circumstances are different. Technology has made its mark. Foreign goods increase the revenue for the native countries. Moreover, free trade and marketing needs to be accepted for country’s economic growth.


Question 8. Describe the problems created by globalisation for small producers and workers.

Answer

Problems created by globalizations for Small Producers and Workers

  1. Tough competition with the Big Companies.
  2. Several small units are being shut down.
  3. Unemployment of Workers.
  4. In security of Job.
  5. Small producers and exporters try hard to cut their cost due to competition.
  6. Workers are hired on temporary basis.
  7. Workers have to put in long working hours and work night shifts.
  8. Wages are low and forced to work overtime.
  9. Workers are denied their fair share of benefits brought about by globalisation.


Question 9. What are the various ways in which countries can be linked?

Answer

Besides the movement of goods, services, investments and technology, there is one more way in which the countries can be linked.

  1. This is through the movement of people between countries.
  2. People usually move from one country to another in search of better income, better jobs or better education.
  3. In the past few decades, however, there has not been much increase in the movement of people between countries due to various restrictions.

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