NCERT Solutions Class Ten Chapter 4 Economics

Chapter 4: Globalisation and the Indian Economy


1. What do you understand by globalisation? Explain in your own words.

Ans. Globalisation means integrating the economy of a country with the economies of other countries under conditions of the free flow of trade, capital and movement of persons across borders. It includes

(i) Increase in foreign trade.

(ii) Export and import of techniques of production.

(iii) The flow of capital and finance from one country to another.

(iv) Migration of people from one country to another.

2. What were the reasons for putting barriers to foreign trade and foreign investment by the Indian government? Why did it wish to remove these barriers?

Ans. The Indian government had put barriers to foreign trade and foreign investment because at that time it was necessary to protect the Indian producers from the foreign competition.

In New Economic Policy in 1991, it was thought by the government to remove these barriers so that Indian producers can compete with producers around the globe because competition improves the quality of products.

3. How would flexibility in labour laws help companies?

Ans. Flexibility in labour laws helps companies to cut down the cost of production. Now, instead of hiring workers on a regular basis, companies hire workers flexibly for short periods and this reduces the cost of labour for the company. Government has also allowed flexibility in the labour laws to attract foreign investors.

4. What are the various ways in which MNCs set up or control the production in other coun­tries?

Ans. MNCs set up or control the production in the following ways.

(i) MNC’s set up or control the production by investing a huge amount of money in a country’s economy. The investment made by MNCs is called foreign investment.

(ii) MNCs set up production, sometimes, jointly with local companies.

(iii) In most of the cases, the MNC’s buy local companies to expand production.

(iv) Large MNCs in developed countries place orders for production with small producers. Products are supplied to the MNCs which sell these under their own brand names to the customers.

5. Why do developed countries want developing countries to liberalise their trade and investment? What do you think should the developing countries demand in return?

Ans. Developed countries feel that all barriers to foreign trade and investment are harmful to international trade. They want that trade between countries should be free. Developed countries like the USA and UK have high production capacity and the latest technology.

Developing countries should demand fair globalisation which ensures opportunities and benefits for all. The interest of the workers should also be taken care of.

6. “The impact of globalisation has not been uniform.” Explain this statement.

Ans. While globalisation has benefitted the well-off consumers and also producers with skill, education and wealth, many small producers and workers have suffered as a result of the rising competition.

Let us discuss the impact of globalisation.

(i) Positive impact:

(i) Globalisation and greater competition among producers have been of advantage to consumers, particularly the well-off sections in the urban areas.

(ii) There is a greater choice to consumers who now enjoy the improved quality and lower prices for several products.

(iii) Consumers enjoy a higher standard of living that was not possible earlier.

(iv) MNCs have increased their investments in developing countries like India.

(v) Local companies supplying raw materials have prospered.

(vi) Several top Indian companies have been able to benefit from the increased competition.

(vii) Some companies raised their production standards by investing in newer technology and production methods.

(viii) Globalisation has enabled some large companies such as Tata Motors, Infosys, etc., to emerge as multinational companies.

(ix) Globalisation has also created new opportunities for companies providing services, especially those involving Information Technology.

(ii) Negative impact:

(i) Creation of special economic zones has disrupted the lives of people who are displaced such as tribals.

(ii) Flexibility in labour laws has resulted in worsening the condition of workers because they are appointed on a temporary basis. Thus, worker’s jobs are no longer secure.

(iii) Globalisation has hit the small producers because they are unable to compete with MNCs or big producers.

Thus, on the basis of this, we can say that the impact of globalisation has not been uniform in India.