“The disinvestment policy of India under the 1991 reforms involved selling of part of the government’s stakes in Public Sector Undertakings (PSUs).”
Explain the rationale behind the decision undertaken by the government.
“The disinvestment policy of India under the 1991 reforms involved selling of part of the government’s stakes in Public Sector Undertakings (PSUs).”
Explain the rationale behind the decision undertaken by the government.
Solution and Explanation
The disinvestment policy was a key component of the New Economic Policy of 1991. The rationale for this decision included:
- To Reduce Fiscal Burden: Loss-making PSUs were draining government resources. Disinvestment helped reduce the fiscal deficit.
- To Improve Efficiency: Private sector participation aimed to increase competitiveness, productivity, and efficiency in PSUs.
- To Encourage Private Investment: Disinvestment opened up sectors for private participation, encouraging investment and innovation.
- To Raise Resources: It generated revenue for the government to fund infrastructure and social sector projects.
- To Professionalize Management: Reducing political interference and bringing in market discipline helped improve performance.
Disinvestment was thus a strategic move to reform the public sector and stimulate economic growth.
Top CBSE CLASS XII Economics Questions
___________ farming is a system that is helpful in restoring, maintaining and enhancing the ecological balance.
(Choose the correct alternative to fill in the blank):The present day rapid industrial growth in China can be traced back to the economic reforms introduced in 1978, where ________ .
(Choose the correct alternative to fill in the blank):
(i) Initially reforms were initiated in agriculture, foreign trade and investment sectors.
(ii) The policy of dual pricing was adopted.
(iii) The Government revoked the policy of Special Economic Zones.Read the following statements: Assertion (A) and Reason (R). Choose the correct alternative from those given below:
Assertion (A): In the recent past, Indian economy has been facing the problem of jobless growth.
Reason (R): Jobless growth refers to a situation where an economy is able to produce more goods and services without generating additional employment.Read the following statements carefully:
Statement 1: India, Pakistan, and China have similar physical endowments but totally different political systems.
Statement 2: Both India and Pakistan laid great emphasis on creating a large private sector.Read the following statements carefully:
Statement 1: India, Pakistan and China have similar physical endowments, but totally different political systems.
Statement 2: Both India and Pakistan laid great emphasis on creating a large private sector.
Top CBSE CLASS XII LPG Reforms of 1991 Questions
- Read the following statements – Assertion (A) and Reason (R). Choose the correct alternative from the options given below :
Assertion (A) : Under the financial sector reforms introduced in 1991, foreign investment limit in banks was raised up to around 74%.
Reason (R) : Foreign Institutional Investors (FIIs) were allowed to invest in Indian financial markets, post-1991. - Read the following text carefully and compare the impact of subsequent reforms initiated by China and India.
China underwent substantial policy changes to stimulate their economy. China's economic growth was rapid in the late 1970s across various sectors. However, India had to wait much longer for its economic transformation. India's significant economic progress was only realised after the economic reforms of 1991, which were implemented out of compulsion.
On the basis of given text and common understanding, compare the impact of subsequent reforms initiated by China and India.
Top CBSE CLASS XII Questions
- 2, b, c are in A.P. and the range of determinant $\begin{vmatrix}1&1&1\\ 2&b&c\\ 4&b^{2}&c^{2}\end{vmatrix}$ is [2, 16]. Then find range of c is
- A boy of mass 50 kg is standing at one end of a, boat of length 9 m and mass 400 kg. He runs to the other, end. The distance through which the centre of mass of the boat boy system moves is
- A capillary tube of radius r is dipped inside a large vessel of water. The mass of water raised above water level is M. If the radius of capillary is doubled, the mass of water inside capillary will be
- A circular disc is rotating about its own axis. An external opposing torque 0.02 Nm is applied on the disc by which it comes rest in 5 seconds. The initial angular momentum of disc is
- A circular disc is rotating about its own axis at uniform angular velocity \(\omega.\) The disc is subjected to uniform angular retardation by which its angular velocity is decreased to \(\frac {\omega}{2}\) during 120 rotations. The number of rotations further made by it before coming to rest is