Question

(i) “Indian economy has hugely benefitted by the disinvestment policy adopted by the Government of India in the post 1991 period.” Defend or refute…

Accepted Answer

(a) (i) The given statement is refuted. The disinvestment policy initiated by the government mobilised a lot of funds, yet it also had its shortcomings. The assets of Public Sector Enterprises (PSEs) had been undervalued and sold to the private sector. Consequently, there was a substantial loss to the government. Moreover, the proceeds from disinvestment were used to offset the shortage of government revenues rather than for the development of PSEs and building social infrastructure in the country. (a) (ii) Tariffs are a tax on imported goods that make imported goods dearer and discourage their usage. Whereas; Quotas specify the quantity of goods that can be imported. OR (b) (i) The financial sector witnessed a major revamp under the economic reform process of 1991 such as redefining the role of RBI from regulator to facilitator of the financial sector. It implies that the financial sector could now take decisions on many matters without consulting the RBI. The reform policies led to the establishment of private sector banks (Indian as well as foreign). (b) (ii) Multilateral trade is the trade by a country with more than two nations to exchange goods and services. Whereas; Bilateral trade refers to the exchange of goods or services between two countries.

(i)
“Indian economy has hugely benefitted by the disinvestment policy adopted by the Government of India in the post $\displaystyle 1991$ period.”
Defend or refute the given statement with valid arguments.
(ii)
Distinguish between Tariffs and Quotas.

Marking-scheme solution

More from Liberalisation, Privatisation and Globalisation: An Appraisal