Samacheer Kalvi 12th Commerce Guide Chapter 20 Liberalization, Privatization and Globalization

Tamilnadu State Board New Syllabus Samacheer Kalvi 12th Commerce Guide Pdf Chapter 20 Liberalization, Privatization and Globalization Text Book Back Questions and Answers, Notes.

Tamilnadu Samacheer Kalvi 12th Commerce Solutions Chapter 20 Liberalization, Privatization and Globalization

12th Commerce Guide Liberalization, Privatization and Globalization Text Book Back Questions and Answers

I. Choose the Correct Answers
Question 1.
……………………….. is the result of New Industrial Policy which abolished the ‘License System’
a) Globalisation
b) Privatisation
c) Liberalisation
d) None of these
Answer:
c) Liberalisation

Question 2.
………….. means permitting the private sector to setup industries which were previously reserved for public sector.
a) Liberalization
b) Privatization
c) Globalization
d) Public enterprise
Answer:
b) Privatization

Question 3.
…………….. Ownership makes bold management decisions due to their strong foundation in the international level.
a) Private
b) Public
c) Corporate
d) MNCS
Answer:
a) Private

Question 4.
………….. results from the removal of barriers between national economies to encourage the flow of goods, services, capital and labour.
a) Privatization
b) Liberalization
c) Globalization
d) Foreign trade
Answer:
c) Globalization

Question 5.
New Economic Policy was introduced in the year ……….
a) 1980
b) 1991
c) 2013
d) 2015
Answer:
b) 1991

II. Very Short Answer Questions

Question 1.
State the branches of new Economic policy
Answer:
There are three dimensions of New Economic Policy.
They are explained as:

1. Liberalization
2. Privatization
3. Globalization

Question 2.
What is privatization?
Answer:

• Public sector units sold to the private sector
• Privatization means permitting the private sector to set up industries which already run by the government.

Question 3.
Mention any two disadvantages of liberalization. [ILU]
Answer:
Disadvantages of Liberalisation:

1. Increase in unemployment
2. Loss to domestic units
3. Increased dependence on foreign nations
4. Unbalanced development

Question 4.
Name the industries which are reserved for the public sector. [AMMA]
Answer:

• Arms and ammunition
• Mineral oils
• Mining ore
• Atomic energy

Question 5.
Give any two advantages of globalization. [TIERI]
Answer:

• Increase in foreign collaboration
• Expansion of market
• Technological development
• Reduction in brain drain

III. Short Answer Questions

Question 1.
What do you mean by liberalisation?
Answer:

• Liberalisation means the laws and rules liberalized or relaxed by the Government
• It means relaxation of various Government restrictions in the areas of social and economic policies in order to make the economics free to enter the market and establish their venture [Business] in the country.

Question 2.
What is meant by Public Sector Units (PSUs)?
Answer:

• A public sector undertaking known as PSU is a company in which the majority of the state is owned by the Government.
• Depending upon where it is owned by Central Government or State Government we call them as central PSU or State PSU.

Question 3.
State any three impacts on globalization. [MGR]
Answer:
Impact of Globalization:

1. Corporations got a competitive advantage from lower operating costs and access to new raw materials and additional markets.
2. Multinational corporations (MNCs) can manufacture, buy and sell goods worldwide.
3. Globalisation has led to a boom in the consumer products market.

Question 4.
Write a short note on New Economic Policy.
Answer:

• India agreed on the conditions of IBRD [World bank] and IMF and announced New Economic Policy [NEP] Which consists of a wide range of economic reforms.
• This new set of economic reforms is commonly known as LPG.
• Liberalization – Relaxation of laws and rules by the Government
• Privatization – PSUs sold to the private sector.
• Globalization – Integration of domestic economy with the world economy.

IV. Long Answer Questions

Question 1.
Explain the Advantages and Disadvantages of Liberalization.
Answer:
Advantages:
Control over price: ’[he removal of Tariff Barriers can lead to lower prices for consumers and benefit
Reduction in external borrowing: It reduces the dependence on external – Commercial borrowings by attracting more FDls.
Increase in Consumption: It increases the number of goods available for consumption within a country due to an increase in production.

Disadvantages (ILU)
Increased dependence on Foreign Countries:

• It will face greater competition from abroad.
• When completion is not automatically enhanced, it can lead to domination by big institutions that has market controlling powers.

Loss to domestic units:
Because of liberalisation more foreign companies entered the market, its threats and make loss to the domestic units.

Unemployment (Increased):

• It leads to shifts in the balance of an economy.
• Some industries grow, some decline.
• Because of declining of some industries creates unemployment.

Question 2.
Explain the Impact of LPG on the Indian Economy.
Answer:
Impact of Liberalisation:

1. Liberalization has opened up new business opportunities abroad and increased foreign direct investment.
2. Newmarket for various goods came into existence and resulted not only in urban but also in rural development.
3. It became very easy to obtain loans from banks for business expansion.

Impact of Privatisation:

1. Privatization has a positive impact on financial growth by decreasing deficits and debts.
2. Increase in the efficiency of government undertakings.
3. Provide better goods and services to the consumers.

Impact of Globalization:

1. Multinational corporations can manufacture, buy and sell goods worldwide.
2. Globalization has led to a boom in the consumer products market.
3. The advent of foreign companies and growth in the economy has led to job creation.

12th Commerce Guide Liberalization, Privatization and Globalization Additional Important Questions and Answers

I. Choose the Correct Answers

Question 1.
It is a situation in which a country loses its most educated and talented workers to other countries is known as
(a) Liberalisation
(b) Foreign trade
(c) Brain Drain
(d) Nationalisation
Answer:
(c) Brain Drain

Question 2.
………………….. is the incidence or process of transferring ownership of a business enterprise from the Government to the private sector.
a) Nationalization
b) Globalization
c) Liberalization
d) Privatization
Answer:
d) Privatization

Question 3.
refers to laws or rules being liberalised or relaxed by a government.
(a) Liberalisation
(b) Privatisation
(c) Nationalisation
(d) Foreign Collaboration
Answer:
(a) Liberalisation

Question 4.
………………… Considered as the architect of Indian Economic Reforms.
a) Dr. Manmohan Singh
b) Dr. Ambedkar
c) Dr. MGR
d) Dr.Munshi
Answer:
a) Dr. Manmohan singh

Question 5.
Which one of the following is not correctly matched:
a) FDI – Foreign direct investment
b) TRIPS – Trade-related intellectual property rights
c) GATS – General agreement on trade-in service
d) PSU – Public state units
Answer:
d) PSU – Public state units

Question 6.
Pick the odd one out:
a) BALCO
b) IPCL
c) MFIL
d) CDP
Answer:
d) CDP

Question 7.
Pick out the correct statements.
i. India agreed to the conditions of IBRD and IMF and announced the NEP which consists of a wide range of economic reforms
ii. Privatization has a positive impact on financial growth by decreasing deficits and debts.
iii. Globalization has led to a boom in the consumer products market
a) (i) is correct
b) (ii) is correct
c) (iii) is correct
d) (i) (ii) (iii) are correct
Answer:
d) (i) (ii) (iii) are correct

II. Match the following.

Question 1.

List -I	List –II
i Globalization	1 Relaxation
ii Privatization	2 Private to Government
iii Nationalization	3 Government to private
iv Liberalization	4 Nations economy to world economy

a) i-4, ii-3, iii-2, iv-1
b) i-4, ii-3 iii-1, iv-2
c) i-4, ii-1, iii-2, iv-3
d) i-4, ii-2, iii-1, iv-3
Answer:
a) i-4, ii-3, iii-2, iv

III. Assertion and Reason

Question 1.
Assertion (A): Many PSU were sold to the private sector
Reason (R): Due to PSU was running in losses.
a) (A) and (R) are correct (R) is the correct explanation of (A)
b) (A) and (R) are incorrect (R) is the correct explanation of (A)
c) (A) and (R) are correct (R) is not the correct explanation of (A)
d) (A) and (R) are not correct (R) is not the correct explanation of (A)
Answer:
(A) and (R) are correct (R) is the correct explanation of (A)

IV. Very short answer questions

Question 1.
What do you mean by Globalisation?
Answer:
Globalisation means the interaction and integration of the domestic economy with the rest of the world with regard to foreign investment, trade, and production.

Question 2.
Forms of privatization (MSC):
Answer:
Memorandum of Understanding (MOU)

• It was introduced in 1991 to raise the productivity and performance of PSUs.
• The main work of MOU is to judge the PSUs and level their performance.

Sale of PSU shares to private sector:

• Indian Government started selling of shares of PSUs to private sector.
• The private sector share increased from 45% to 55% in the year 2011

Contraction of PSUs:
The number of industries reserved for PSU was reduced from 17 to only 8 industries.

Question 3.
Forms of Globalisation (FREE)
Answer:
Foreign Trade policy:
India has signed in many agreements to expand Indian trade worldwide and such agreements are TRIPS – GATS etc.

Reduction in tariffs:
To attract Global investors, tariffs imposed on imports and exports are reduced.

Export promotion:
Globalization promotes Export by reducing tariffs and simplifying trade procedures.

Encouraging open competition:
Domestic companies start their operations at the international level and therefore there is an open competition.

V. Short Answer Questions

Question 1.
What are the Highlights? LPG? (SOFI) [MD]
Answer:

• Steps to regulate inflation.
• Opportunities for overseas trade
• Foreign Investments (FDI & FII)
• Introduction of Foreign Trade Agreement
• MRTP Act 1969 (Amended)
• Deregulation

Question 2.
What are the Advantage and Disadvantages of Privatisation?
Answer:
Advantages: (RIP)

• Reduction in the economic burden of Government: Ownership of PSUs transferred to the private sector reduces the burden of the Government.
• Increase in efficiency: Privatisation is associated with improved efficiency due to the profit incentive.
• Professional Management: Private ownership makes bold management decisions due to its strong foundation at the international level.

Disadvantages: (LIP)

• Lack of welfare: Private concern’s main motive is profit and they do not give importance to public welfare.
• Ignores weaker sections: It ignores the public services to weaker sections.
• Political pressure: When it fails to deliver, the public has no right to intervene and Government does not always have the time or expertise to force them to keep its promises.

Question 3.
Explain the highlights of LPG policy.
Answer:
The salient highlights of the Liberalisation, Privatisation, and Globalisation Policy in India:

1. Introduction of New Foreign Trade Agreements
2. Foreign Investment (FDI and FII)
3. MRTP Act, 1969 (Amended)
4. Deregulation
5. Opportunities for overseas trade
6. Tax reforms
7. Abolition of License

Question 4.
Explain the concept of Privatization.
Answer:

• Privatization is the incidence or process of transferring ownership of a business enterprise, Agency, PSU from the Government to the private sector.
• PSU sold to the private sector. [HZL-IPCL- MUL]
• The main reason for privatization was that PSUs were running in losses due to mismanagement and political interference.

Question 5.
What are the advantages of disinvestment?
Answer:

• To achieve a greater inflow of private capital
• To sell PSUs which had been running in loss
• To force the companies to become more efficient and survive.
• To increase the overall economic activity.