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Globalization and Indian economy
GLOBALISATION AND INDIAN ECONOMY
2 MARK QUESTIONS
Question 1.
Differentiate between investment and foreign investment.
Answer:
The money that is spent to buy assets such as land, building, machines etc. is called investment whereas investment made by a MNC to buy such assets is called foreign investment.
Question 2.
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 offices and factories in those regions where they get cheap labour and other resources because they bring down the cost of production and ensure more profits for themselves.
3 MARK QUESTIONS
Question 4
‘Barriers on foreign trade and foreign investment were removed to a large extent in India since 1991.’ Justify the statement.
Answer:
In 1991, the Indian government decided that the time has come for Indian producers to compete with producers around the world. It felt that foreign competition would improve the quality of goods produced by Indian producers within the country.
Thus, barriers on foreign trade and foreign investment were removed to a large extent. It meant goods could be imported or exported easily and foreign companies could set up factories and offices in India.
Question 5.
“A wide ranging choice of goods are available in the Indian markets.” Support the statement with examples in context of globalisation.
Answer:
The Indian market has been trAnswer:formed in recent years. The consumers have a wide variety of goods and services to choose from, which were not available earlier. For example:
The latest models of mobile phones, television, digital cameras of leading manufacturers and other well known brands of the world are easily available in the markets.
New models of cars and automobiles are launched every season.
The top companies in the world have introduced their popular brands in India for various products like shirts, fruit juices, cosmetics, toys, furniture, stationery etc.
All this has been possible only due to globalisation.
Question 6.
“Globalisation and greater competition among producers has been of advantageous
to consumers.” Justify the statement with examples.
Answer:
Globalisation and greater competition among producers has been of advantageous to consumers in the following ways:
Consumers in today’s world have a wide variety of goods and services to choose from. The latest models of digital cameras, mobile phones and televisions made by the leading manufacturers are available to them.
Consumers now enjoy better and improved quality at lower prices.
It has resulted in higher standards of living.
There has been a varying impact on producers and workers.
Many top Indian companies have been able to establish themselves as multinational corporations.
Latest technology and production methods have raised production standards.
Question 7.
Why had the Indian government put barriers to foreign trade and foreign
investment after independence? Analyse the reasons.
Answer:
The Indian government put barriers on foreign trade and foreign investment after independence because:
(a) It was considered necessary to protect the producers within the country from foreign competition.
(b) In 1950s and 1960s, the industries were in nascent stage and competition from imports at that stage would not have allowed these industries to develop.
(c) Therefore, India allowed the imports of only essential items like machinery, fertilizers, petroleum etc.
Question 8.
Explain by giving examples how Multinational Corporations (MNCs) are spreading their products in different ways.
Answer:
Multinational Corporations (MNCs) are spreading their production in different ways. Some of them are:
By buying local companies and, then expanding production. For example, Cargill Foods, a very large American MNC, purchased small Indian company, Parakh foods. Cargill Foods is, now, the largest producer of edible oil in India with a capacity making 5 million pouches daily.
By placing orders for production with small producers. Garments, footwears, sports items are examples where production is carried out by small producers for large MNCs around the world.
By producing jointly with some of the local companies. It benefits the local company in two ways.
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5MARK QUESTIONS
Question 9
What is trade? Explain the importance of international trade.
Answer:
The exchange of goods among people, states and countries is referred to as trade.
The international trade is important because:
It helps in exchange of surplus goods with those of deficit countries through foreign trade.
It helps in improving the quality of domestic goods.
It contributes to the economic growth of the country by raising income level of the people and increasing foreign exchange reserves.
It enables a country to import advanced technology of other countries to improve its own production.
Question 10
Describe the impact of globalisation on Indian economy with examples.
Answer:
The impact of globalisation on Indian economy is as follows:
It has created competition among producers, both local and foreign, which is advantageous to the consumers, particularly the well off. Now, there is a greater choice of goods before the consumers.
It has enabled many Indian companies to become multi-national companies such as Tate Motors, Infosys and Ranbaxy.
It has created new employment opportunities for companies providing services specially information technology. A lot of services such as data entry, accounting, administrative tasks are done cheaply in India and exported to other countries.
New jobs are created in industries such as electronics, cell phones, automobiles and fast food.
It had a negative impact on small manufacturers. Due to competition, some industries has been hit hard such as batteries, capacitors, plastic toys, vegetable oil etc. A number of units have shut down and a lot of workers, have become jobless.
Question 11
Describe the major problems created by the globalisation for a large number of small producers and workers.
Answer:
The major problems created by the globalisation for a large number of small producers and workers are:
The small producers or workers either have to compete or perish.
Small scale industries like batteries, capacitors, plastic toys etc. have been hit hard due to global products and have suffered great losses in their businesses.
Several small factory units are forced to shut down.
Millions of workers have gone jobless and jobs are no longer secure.
It has increased income inequalities among various countries.
Unorganised sector has expanded. {any five)
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