I.

Background and Context of Reforms

1. Consider the following statements regarding the economic conditions prevailing in

India in the 1980s:

1. Government expenditure increasingly exceeded revenue, leading to

unsustainable levels of borrowing.

2. Foreign exchange reserves declined to a level insufficient to finance imports

for more than two weeks.

3. India approached the World Bank and the International Monetary Fund (IMF)
for financial assistance to manage the crisis.

Which of the statements given above is/are correct?

A) 1 and 2 only

B) 2 and 3 only

C) 1 and 3 only

D) 1, 2 and 3

2. Which of the following factors contributed to the economic crisis in India in the early
1990s?

1. Inefficient management of the Indian economy in the 1980s.

2. The government's inability to generate sufficient revenue from internal

sources such as taxation.

3. Spending a large share of government income on social sector and defense,

which did not provide immediate returns.

Select the correct answer using the code given below:

A) 1 and 2 only

B) 2 and 3 only

C) 1 and 3 only

D) 1, 2 and 3

3. The International Monetary Fund (IMF) and the World Bank prescribed certain
conditions for the loans provided to India. These conditions included:

1. Liberalizing the economy by removing restrictions on the private sector.

2. Reducing the role of the government in many areas.

 3. Removing trade restrictions between India and other countries.

Which of the statements given above is/are correct?

A) 1 and 2 only

B) 2 and 3 only

C) 1 and 3 only

D) 1, 2 and 3

4. The New Economic Policy (NEP) announced by India in response to the economic
crisis consisted of:

1. Stabilization measures aimed at correcting weaknesses in the balance of

payments and controlling inflation.

2. Structural reform measures aimed at improving the efficiency of the economy

and increasing its international competitiveness.

3. Policies focused on creating a more competitive environment in the economy

and removing barriers to entry and growth of firms.

Select the correct answer using the code given below:

A) 1 and 2 only

B) 2 and 3 only

C) 1 and 3 only

D) 1, 2 and 3

II. Liberalization

5. Liberalization, as part of the economic reforms, was introduced to:

A) Increase the role of government in regulating economic activities.

B) Put an end to restrictions and open various sectors of the economy.

C) Strengthen the industrial licensing regime.

D) Promote the growth of small-scale industries.

6. Which of the following sectors experienced significant reforms under the

liberalization policy?

1. Industrial sector

2. Financial sector
 3. Taxation

4. Foreign exchange markets

5. Trade and investment sectors

Select the correct answer using the code given below:

A) 1, 2, and 3 only

B) 1, 2, 4, and 5 only

C) 2, 3, 4, and 5 only

D) 1, 3, 4, and 5 only

7. In the context of industrial sector reforms, consider the following:

1. Industrial licensing was abolished for most product categories, except for a
few like alcohol, cigarettes, and hazardous chemicals.

2. The number of industries reserved for the public sector was significantly
reduced.

3. Restrictions on price fixation and distribution of selected industrial products

were removed.

Which of the statements given above is/are correct?

A) 1 and 2 only

B) 2 and 3 only

C) 1 and 3 only

D) 1, 2 and 3

8. Financial sector reforms aimed to:

A) Increase the regulatory role of the Reserve Bank of India (RBI).

B) Reduce the role of RBI from regulator to facilitator of the financial sector.

C) Prohibit the establishment of private sector banks.

D) Restrict foreign investment in banks.

9. Which of the following is/are the objectives of financial sector reforms?

1. To allow the financial sector to make decisions on various matters without

consulting the RBI.
 2. To encourage the establishment of private sector banks, including foreign
banks.

3. To permit Foreign Institutional Investors (FIIs) to invest in Indian financial

markets.

Select the correct answer using the code given below:

A) 1 only

B) 1 and 2 only

C) 2 and 3 only

D) 1, 2 and 3

10. Tax reforms in India focused on:

1. Increasing the rates of direct taxes on individual incomes.

2. Reducing taxes on individual incomes and corporate profits.

3. Reforming indirect taxes to facilitate the establishment of a common national

market.

Which of the statements given above is/are correct?

A) 1 and 2 only

B) 2 and 3 only

C) 2 and 3 only

D) 1, 2 and 3

11. The introduction of the Goods and Services Tax (GST) in India was aimed at:

1. Generating additional revenue for the government.

2. Reducing tax evasion.

3. Creating ‘one nation, one tax and one market’.

Select the correct answer using the code given below:

A) 1 and 2 only

B) 2 and 3 only

C) 1 and 3 only

D) 1, 2 and 3

12. Foreign exchange reforms in India in 1991 included:

A) Increasing government control over the determination of rupee value.

B) Devaluation of the rupee against foreign currencies.

C) Fixing the exchange rates by the government.

D) Restricting the inflow of foreign exchange.

13. Trade and investment policy reforms were initiated to:

1. Decrease international competitiveness of industrial production.

2. Increase international competitiveness of industrial production.

3. Discourage foreign investments and technology.

4. Promote the efficiency of local industries and adoption of modern

technologies.

Select the correct answer using the code given below:

A) 1 and 3 only

B) 2 and 4 only

C) 1 and 4 only

D) 2 and 3 only

14. Which of the following was/were the feature(s) of India’s trade policy reforms?

1. Dismantling of quantitative restrictions on imports and exports.

2. Reduction of tariff rates.

3. Removal of licensing procedures for imports.1

A) 1 only

B) 1 and 2 only

C) 2 and 3 only

D) 1, 2 and 3

III. Privatization

15. Privatization refers to:

A) Increasing government ownership of enterprises.

B) Shedding the ownership or management of a government-owned enterprise.

C) Increasing government control over public sector companies.

D) Nationalization of private companies.

16. Government companies can be converted into private companies by:

1. Withdrawal of the government from ownership and management of public

sector companies.

2. Outright sale of public sector companies.

3. Increasing the equity of Public Sector Enterprises (PSEs).

Select the correct answer using the code given below:

A) 1 only

B) 1 and 2 only

C) 2 and 3 only

D) 1, 2 and 3

17. Disinvestment involves:

A) Increasing government investment in Public Sector Enterprises (PSEs).

B) Selling off part of the equity of PSEs to the public.

C) Nationalizing private companies.

D) Increasing government control over PSEs.

18. According to the government, the purpose of disinvestment was mainly to:

1. Reduce competition in the market.

2. Improve financial discipline and facilitate modernization.

3. Increase government control over industries.

4. Hinder the growth of private capital.

19. The government identified certain Public Sector Enterprises (PSEs) and granted them
special status to improve their performance. These included:

1. Maharatnas

2. Navratnas

3. Miniratnas

Select the correct answer using the code given below:

A) 1 and 2 only

B) 2 and 3 only
C) 1 and 3 only

D) 1, 2 and 3

20. The granting of Maharatna, Navratna, and Miniratna status to PSEs resulted in:

A) Decreased managerial and operational autonomy.

B) Better performance of these companies.

C) Increased government control over these companies.

D) A decline in their profits.

IV. Globalisation

21. Globalisation refers to:

A) The process of isolating a country's economy from the world economy.

B) Integration of the economy of a country with the world economy.

C) A set of policies aimed at reducing interdependence among nations.

D) Economic activities confined within geographical boundaries.

22. Globalisation is an outcome of:

A) Policies aimed at transforming the world towards greater interdependence and

integration.

B) Policies aimed at increasing protectionism.

C) Policies focused on restricting cross-border interactions.

D) Policies promoting economic nationalism.

23. Outsourcing, as an outcome of globalisation, involves:

A) Hiring employees directly within the company.

B) Hiring regular service from external sources, mostly from other countries.

C) Providing services internally within the country.

D) Focusing on in-house production of all goods and services.

24. Which of the following factors has/have contributed to the intensification of

outsourcing?

A) The decline of Information Technology (IT).

B) The growth of fast modes of communication, particularly the growth of Information

Technology (IT).
C) Restrictions on cross-border data flow.

D) Increase in trade barriers.

25. The World Trade Organisation (WTO) was founded in:

A) 1948

B) 1995

C) 2000

D) 1991

26. The General Agreement on Trade and Tariff (GATT) was established in 1948 with the
following purpose:

A) To promote trade restrictions among countries.

B) To administer all multilateral trade agreements by providing equal opportunities to all

countries in the international market for trading purposes.

C) To focus on bilateral trade agreements only.

D) To protect domestic industries from international competition.

27. The objectives of the WTO include:

1. Establishing a rule-based trading regime.

2. Enlarging production and trade of services.

3. Ensuring optimum utilization of world resources and protecting the

environment.

Select the correct answer using the code given below:

A) 1 and 2 only

B) 2 and 3 only

C) 1 and 3 only

D) 1, 2 and 3

28. WTO agreements cover:

A) Trade in goods only.

B) Trade in services only.

C) Trade in goods as well as services.

D) Only bilateral trade agreements.

 29. India's commitments towards liberalization of trade, made in the WTO, include:

1. Increasing quantitative restrictions on imports.

2. Removing quantitative restrictions on imports.

3. Reducing tariff rates.

Select the correct answer using the code given below:

A) 1 and 2 only

B) 2 and 3 only

C) 1 and 3 only

D) 1, 2 and 3

V. Indian Economy During Reforms: An Assessment

30. In the post-reform period, the Indian economy experienced:

A) A decline in GDP growth.

B) A rapid growth in GDP for two decades.

C) Stagnant economic growth.

D) A slowdown in the service sector.

31. Which sector has been the major driver of India's GDP growth in the post-reform
period?

A) Agriculture

B) Industry

C) Services

D) Manufacturing

32. The reform process has been criticized for:

A) Addressing all the basic problems facing the Indian economy.

B) Not being able to address some of the basic problems facing our economy.

C) Leading to a decrease in employment opportunities.

D) Strengthening the agriculture sector.

33. Reforms in the agriculture sector have led to:

A) An increase in public investment.

B) A rise in the growth rate.

C) A deceleration in the growth rate.

D) A decrease in the cost of production.

34. The industrial sector in the post-reform period has experienced:

A) An increase in demand for industrial products.

B) A slowdown in growth.

C) Increased investment in infrastructure.

D) A decrease in cheaper imports.

35. Critics of disinvestment argue that:

A) Assets of PSEs have been overvalued.

B) Proceeds from disinvestment are used for the development of PSEs.

C) There has been a substantial loss to the government due to undervaluation of assets.

D) Disinvestment has led to an improvement in social infrastructure.

36. Economic reforms have placed limits on:

A) The growth of public expenditure, especially in social sectors.

B) The reduction of tax revenue for the government.

C) The increase in tax revenue for the government.

D) Foreign investment.

VI. Globalisation: Impact and Controversies

37. Some scholars view globalisation as:

A) A threat to developing countries.

B) An opportunity for developing countries.

C) A strategy to promote economic self-sufficiency.

D) A way to decrease access to global markets.

38. Critics of globalisation argue that it has:

A) Increased the welfare of people in poor countries.

B) Strengthened the identity of people in poor countries.

C) Widened the economic disparities among nations and people.

D) Reduced income inequality.

39. According to some studies, economic reform policies in India have:

A) Reduced inequalities in Indian society.

B) Aggravated inequalities in Indian society.

C) Led to uniform growth across all sectors.

D) Primarily benefited the agriculture sector.

40. The growth in the post-reform period has been concentrated in:

A) Agriculture and industry.

B) Vital sectors providing livelihoods to millions of people.

C) Select areas in the services sector.

D) Rural areas.

VII. Additional Assertion-Reasoning and Matching Type Questions

41. Assertion (A): India's economic policies changed in 1991 due to a financial crisis and
pressure from international organizations.

Reason (R): The economy was facing problems of declining foreign exchange, growing
imports without a matching rise in exports, and high inflation.

In the context of the above two statements, which one of the following is correct?

A) Both A and R are true and R is the correct explanation of A.

B) Both A and R are true but R is not2 the correct explanation of A.

C) A is true but R is false.

D) A is false but R is true.3

42. Assertion (A): The objective of the WTO is to establish a rule-based trade regime.

Reason (R): This is to ensure optimum utilization of world resources.

In the context of the above two statements, which one of the following is correct?

A) Both A and R are true and R is the correct explanation of A.

B) Both A and R are true but R is not4 the correct explanation of A.

C) A is true but R is false.

D) A is false but R is true.5

43. Assertion (A): Reforms have not benefited the agriculture sector in India.
Reason (R): There has been a decline in public investment in this sector.

In the context of the above two statements, which one of the following is correct?

A) Both A and R are true and R is the correct explanation of A.

B) Both A and R are true but R is not6 the correct explanation of A.

C) A is true but R is false.

D) A is false but R is true.7

44. Match List I with List II

List I (Reform)

a. Liberalisation

b. Privatisation

c. Globalisation

List II (Description)

1. Integration of the economy with the world economy

2. Opening various sectors of the economy

3. Shedding of the ownership of a government-owned enterprise

Choose the correct answer from the options given below.

A) a-1, b-2, c-3

B) a-2, b-3, c-1

C) a-3, b-1, c-2

D) a-1, b-3, c-2

VIII. More Challenging Questions

45. "The economic reforms of 1991 were a turning point for the Indian economy, but
their long-term impact has been a subject of debate." Critically evaluate this
statement, discussing both the positive and negative consequences of these reforms.

46. To what extent did the liberalization of the financial sector contribute to the growth
and stability of the Indian economy? Analyze the role of the Reserve Bank of India
(RBI) in this process.

47. "Globalization has presented both opportunities and challenges for Indian
industries." Discuss this statement with reference to specific examples from the text,
focusing on the impact of increased competition and technological advancements.
 48. Evaluate the impact of privatization on the performance of Public Sector Enterprises
(PSEs) in India. Has it led to improved efficiency and productivity, or have there been
unintended negative consequences?

49. "The growth of the service sector has been a major success story of the post-reform
period, but it has also raised concerns about inclusive growth." Analyze this
statement, discussing the factors driving service sector growth and its implications
for employment and income distribution.

50. Critically examine the impact of economic reforms on the agricultural sector in India.
What are the key challenges faced by this sector, and how have the reforms
addressed or exacerbated them?

51. "The benefits of economic reforms have not been evenly distributed across different
sections of society." Discuss this statement, analyzing the impact of the reforms on
income inequality, poverty, and social justice.

52. "India's integration with the global economy through the WTO has had a profound
impact on its trade and development." Evaluate this statement, discussing the
opportunities and challenges associated with India's membership in the WTO.

53. "Outsourcing has been a key feature of globalization, with significant implications for
both developed and developing countries." Analyze the economic and social
consequences of outsourcing, with specific reference to India.

54. "Fiscal policy reforms have played a crucial role in shaping India's economic
trajectory in the post-reform period." Discuss the key objectives and outcomes of
these reforms, including their impact on government revenue, expenditure, and
fiscal deficit.

55. "The debate on economic reforms in India continues, with differing perspectives on
their overall impact." Critically analyze the arguments for and against the reforms,
providing a balanced assessment of their achievements and shortcomings.

Answer Key

I. Background and Context of Reforms

1. D) 1, 2 and 3

2. D) 1, 2 and 3

3. D) 1, 2 and 3

4. D) 1, 2 and 3
II. Liberalization

5. B) Put an end to restrictions and open various sectors of the economy.

6. B) 1, 2, 4, and 5 only

7. D) 1, 2 and 3

8. B) Reduce the role of RBI from regulator to facilitator of the financial sector.

9. C) 2 and 3 only

10. C) 2 and 3 only

11. D) 1, 2 and 3

12. B) Devaluation of the rupee against foreign currencies.

13. B) 2 and 4 only

14. D) 1, 2 and 3

III. Privatization

15. B) Shedding the ownership or management of a government-owned enterprise.

16. B) 1 and 2 only

17. B) Selling off part of the equity of PSEs to the public.

18. B) Improve financial discipline and facilitate modernization.

19. D) 1, 2 and 3

20. B) Better performance of these companies.

IV. Globalisation

21. B) Integration of the economy of a country with the world economy.

22. A) Policies aimed at transforming the world towards greater interdependence and
integration.

23. B) Hiring regular service from external sources, mostly from other countries.

24. B) The growth of fast modes of communication, particularly the growth of

Information Technology (IT).

25. B) 1995

26. B) To administer all multilateral trade agreements by providing equal opportunities to

all countries in the international market for trading1 purposes.

27. D) 1, 2 and 3
 28. C) Trade in goods as well as services.

29. B) 2 and 3 only

V. Indian Economy During Reforms: An Assessment

30. B) A rapid growth in GDP for two decades.

31. C) Services

32. B) Not being able to address some of the basic problems facing our economy.

33. C) A deceleration in the growth rate.

34. B) A slowdown in growth.

35. C) There has been a substantial loss to the government due to undervaluation of
assets.

36. A) The growth of public expenditure, especially in social sectors.

VI. Globalisation: Impact and Controversies

37. B) An opportunity for developing countries.

38. C) Widened the economic disparities among nations and people.

39. B) Aggravated inequalities in Indian society.

40. C) Select areas in the services sector.

VII. Additional Assertion-Reasoning and Matching Type Questions

41. A) Both A and R are true and R is the correct explanation of A.

42. A) Both A and R are true and R is the correct explanation of A. 43.2 A) Both A and R
are true and R is the correct explanation of A. 44.3 B) a-2, b-3, c-1