Indian Economy GK Questions with Answers – Page 41

His committee of 1991 recommended reducing the statutory pre-emption of bank funds through the Cash Reserve Ratio and the Statutory Liquidity Ratio, allowing new private banks, introducing prudential norms for the recognition of income and for capital adequacy, and giving banks freedom in branch expansion; a second committee under him…

The Reserve Bank lowered the value of the rupee on 1 July and again on 3 July 1991 to make exports cheaper abroad, discourage imports and restore confidence in the currency during the crisis.

As Finance Minister in the government of P. V. Narasimha Rao he presented the budget of July 1991, which cut subsidies, reduced the fiscal deficit, lowered tariffs and set out the framework of the reforms, following the devaluation of the rupee earlier that month.

Liberalisation removed licensing and other controls on industry and trade, privatisation reduced the ownership and the role of the public sector through disinvestment and strategic sales, and globalisation opened the economy to foreign trade, investment and technology.

The Statement on Industrial Policy of that date ended licensing for all industries except a short reserved list, cut back the industries kept for the public sector, removed the requirement of prior government approval for expansion by large firms under the monopolies law, and allowed foreign direct investment up to…

Liberalisation means freeing economic activity from government controls: industrial licences, import licences and quantitative restrictions, ceilings on investment and administered interest rates.

He became Prime Minister in June 1991, in the middle of the balance of payments crisis, and his government devalued the rupee, borrowed from the International Monetary Fund and announced the New Economic Policy of liberalisation, privatisation and globalisation, with the Statement on Industrial Policy issued on 24 July 1991.

SIDBI was set up in 1990 as the principal financial institution for the promotion, financing and development of micro, small and medium enterprises, and it works mainly by refinancing banks and other lenders rather than by lending directly to every unit.

The Act provides that a buyer shall pay on or before the date agreed in writing and that in no case may the period exceed forty five days from the day the goods were delivered or the service rendered and accepted.

The employment generation programme gives a bank loan with a government margin money subsidy to help a person set up a micro enterprise, and the Commission, set up in 1957 under the Ministry of MSME, is the national nodal agency, working through state boards and district industries centres.

After the New Industrial Policy of 1991 licensing was abolished for almost all industries, and only a short list was kept under licence for reasons of security, health and social policy: defence equipment and aerospace, industrial explosives, specified hazardous chemicals, tobacco products such as cigarettes, and the distillation of alcoholic…

The MRTP Act had been framed for an economy of licences and was concerned with the size of firms; the Competition Act shifted the focus to conduct, prohibiting anti competitive agreements and the abuse of a dominant position and regulating combinations, and it created the Competition Commission of India to…

Under this Act a licence from the government was needed to set up a new factory, to expand capacity, to change the product line or to shift the location of a plant, which is how the state controlled the pattern of industrial growth until 1991.

It set the framework in which Indian industry worked for more than three decades, dividing industry into three schedules: Schedule A reserved seventeen industries for the state, Schedule B marked twelve for growing state participation and Schedule C left the rest to private enterprise.

The MSMED Act came into force on 2 October 2006. It defined micro, small and medium enterprises in law for the first time, provided for a National Board for MSME, required a memorandum of registration and laid down the rule that a buyer must pay a micro or small enterprise…

The National Small Industries Corporation was set up in 1955 to help small units with machinery on hire purchase, raw material supply, marketing and government purchase, and it works under the Ministry of Micro, Small and Medium Enterprises.

This Act of 1985 had created the Board for Industrial and Financial Reconstruction to deal with sick industrial units in the private sector.

Under the composite criteria notified in 2020, an enterprise with investment in plant, machinery or equipment up to one crore rupees and turnover up to five crore rupees is a micro enterprise, and the same ceilings apply whether it manufactures goods or renders services.

The expression comes from the Micro, Small and Medium Enterprises Development Act, which came into force on 2 October 2006 and gave the sector its first statutory definition, replacing the older language of small scale and ancillary industrial undertakings.

By the middle of 1991 India's foreign exchange reserves had fallen to about one billion dollars, enough to pay for only about two weeks of imports, and the country stood close to default on its external payments.