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

   

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

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Samacheer Kalvi 12th Commerce Liberalization, Privatization and Globalization Textbook Exercise Questions and Answers

I. Choose the Correct Answer

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) Liberalisation
(b) Privatisation
(c) Globalisation
(d) Public Enterprise
Answer:
(b) Privatisation

Question 3
_______ ownership makes bold management decisions due to their strong foundation in
the international level.
(a) Private
(b) Public
(c) Corporate
(d) MNC’s
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) Privatisation
(b) Liberalisation
(c) Globalisation
(d) Foreign Trade
Answer:
(c) Globalisation

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:

  • Liberalization
  • Privatization
  • Globalization

Question 2.
What is Privatisation?
Answer:
Privatization is the incidence or process of transferring ownership of a business enterprise, agency or public service from the government to the private sector.

Question 3.
Mention any three disadvantages of Liberalisation.
Answer:

  • Increased dependence on foreign countries
  • The loss to domestic units
  • Unemployment increased

Question 4.
Name the industries which are reserved for the public sector.
Answer:
The number of industries reserved for the public sector was reduced from 17 (as per 1956 policy) to only 8 industries viz, Arms and Ammunition, Atomic Energy, Coal and Lignite, Mineral oils, Mining of ores, Mining of copper, lead, zinc, etc., Minerals for atomic energy and Railways.

Question 5.
Give any three advantages of Globalisation.
Answer:
Advantages of Globalisation:

  • Technological Development
  • Increase in Foreign Collaboration
  • Expansion of Market
  • Reduction of Brain Dram

III. Short Answer Questions

Question 1.
What do you mean by Liberalisation?
Answer:
Liberalization refers to laws or rules being liberalized, or relaxed, by a government. Liberalizing trade policy by the government includes removal of tariff, subsidies and other restrictions on the flow of goods and services between countries. Liberalization is the result of New Industrial Policy which abolished the “License system” or “Licence Raj”.

Question 2.
Explain the concept of Privatisation.
Answer:
Privatisation means permitting the private sector to set up industries which were previously reserved for the public sector. Under this policy many Public Sector Units (PSUs) were sold to private sector. The main reason for privatisation was that PSUs were running in losses due to mismanagement and political interference.

Question 3.
What are the advantages of disinvestment?
Answer:
Disinvestment in PSUs: The Govt, has started the process of disinvestment in those PSUs which had been running into loss. It means that Govt has been selling out these industries to the private sector. So disinvestment is a system of privatizing government enterprises.

Question 4.
State any three impacts on Globalisation.
Answer:

  • MNCs can manufacture, buy and sell goods worldwide.
  • Globalization has led to a boom in the consumer product market.
  • Reduce the operating costs and access to new raw materials.

Question 5.
Write a short note on New Economic Policy.
Answer:
India agreed to the conditions of the World Bank and IMF and announced New Economic Policy (NEP) which consists of wide range of economic reforms. This new set of economic reforms is commonly known as the LPG or Liberalisation, Privatisation and Globalisation model.

IV. Long Answer Questions

Question 1.
Explain the advantages and disadvantages of liberalization.
Answer:
Liberalization means relaxation of various government restrictions in the areas of social and economic policies of the country.
Advantages of Liberalisation:

  1. Increase in foreign investment: If a country liberalizes its trade, it will make the country – more attractive for inward investment.
  2. Increase the foreign exchange reserve: Relaxation in the regulations covering foreign investment and foreign exchange has paved way for easy access to foreign capital.
  3. Increase in consumption: Liberalization increases the number of goods available for consumption within a country

Disadvantages of Liberalisation:

  1. Increase in unemployment: Due to liberalization some industries grow, some decline. Therefore, there may be unemployment from certain industries closing.
  2. Increased dependence on foreign nations: Trade liberalization means firms will face greater competition from abroad.
  3. Unbalanced development: Trade liberalization may be damaging for developing economies. which cannot compete against free trade.

Question 2.
Explain the impact of LPG on the Indian Economy.
Answer:
Impact of Liberalisation: (OFF)

  • Obtain loans from Banks easily.
  • FDI – increase
  • Foreign collaboration is the latest outcome of Liberalisation.

Impact of Privatisation (PIP)

  • A positive impact on financial growth is decreasing the deficits and debts.
  • Increase in the efficiency of Government undertakings.
  • Provide better goods and services to the consumers.

Impact of Globalisation: (MGR)

  • MNCs can manufacture, Buy and sell goods worldwide.
  • Globalisation has led to a boom in the consumer product market.
  • Reduce operating costs and access to new raw materials.

Samacheer Kalvi 12th Commerce Liberalization, Privatization, and Globalization Additional Questions and Answers

I. Choose the Correct Answer

Question 1.
…………………………. refers to laws and rules being relaxed by a Government.
a) Liberalization
b) Privatization
c) Globalization
d) Nationalization
Answer:
a) Liberalization

Question 2
is the latest outcome of liberalisation.
(a) Privatisation
(b) Globalisation
(c) Foreign collaboration
(d) None of these
Answer:
(c) Foreign collaboration

Question 3.
………………………. Stands for the consolidation of the various economies of the world.
a) Privatization
b) Globalization
c) Nationalization
d) Liberalization
Answer:
b) Globalization

II. Very Short Answer Questions

Question 1.
What are forms of LPG?
Answer:
Form of Liberalisation (FIL):
Freedom for Expansion: The industries are free to decide their production limits by their own on the basis of the requirement of the markets.

Investment Limit:
The investment limit of the small scale industries has been raised to a crore

Liberalization of Export and Import:
By simplifying the procedures for Imports and Exports the Government wanted to permit the inflow of Goods and Services, capital, HR, and technology.

Question 2.
What are the forms of Globalisation?
Answer:
Forms of Globalization:

  • Foreign trade policy
  • Export promotion
  • Freedom to repatriate
  • Reduction in tariffs
  • Encouraging open competition

III. Short Answer Questions

Question 1.
What are the Advantages and Disadvantages of Globalisation?
Answer:
Advantage: (TIER)

  • Technological Development: Technological advancement paves way for a company to enter a foreign market.
  • Increase in foreign: It increases the foreign collaboration such as joint venture collaboration merger -Franchise etc.
  • Expansion of market: ‘The operation of business moves from national to international.
  • Reduction in Brain Drain: It paves, way for employment opportunities in the home country and utilise the manpower efficiently.

DisAdvantages (DIL)

  • The dominance of Foreign Institution: Economic powers shifted from independent industries to foreign institutions which is a threat to national sovereignty.
  • Increase inequalities: It widens the gap between rich and poor.
  • Loss of domestic industries: It causes a decline in the demand for domestic, products.

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