Which system came to an end with the introduction of economic reforms focused on liberalisation in India?
- A.Licence-Permit-Quota Raj
- B.Nationalisation of banks
- C.Agricultural subsidy system
- D.Cooperative banking system
Correct answer
Explanation
The correct answer is A, Licence-Permit-Quota Raj. The New Industrial Policy of 24 July 1991 abolished industrial licensing for all but a short list of industries, so a firm no longer needed a government permit to start production, to expand or to import. That system of licences, permits and quotas, named the Licence-Permit-Quota Raj by C. Rajagopalachari, had governed Indian industry since the Industries Act of 1951. The reforms came in a balance of payments crisis under Prime Minister P. V. Narasimha Rao and Finance Minister Manmohan Singh, and are remembered as liberalisation, privatisation and globalisation. Option B is wrong because the banks nationalised in 1969 and 1980 stayed in public hands. Option C is wrong because subsidies on fertiliser, food and power continue to this day. Option D is wrong because cooperative banks still work under the Reserve Bank and state registrars. Exam tip: 1991 reforms, licensing kept for only a handful of industries.
Practice Questions
View allAccording to the law of diminishing marginal utility, as the amount of a good consumed increases, the marginal utility of that good tends to
- A.improve
- B.diminish
- C.remain constant
- D.first diminish and then improve
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Each extra unit of a good gives a consumer less additional satisfaction than the unit before it, so marginal utility falls as consumption rises.
Read the full explanation →Consider the following statements about impact of tax : 1. A tax is shifted forward to consumers if the demand is inelastic relative to supply. 2. A tax is shifted backward to producers if the supply is relatively more inelastic than demand. Which of the statements given above is/are correct?
- A.1 only
- B.2 only
- C.Both 1 and 2
- D.Neither 1 nor 2
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The burden of a tax falls more heavily on whichever side of the market is less elastic, the side that cannot easily walk away.
Read the full explanation →UBI, as an alternative for subsidies in poverty alleviation, stands for
- A.Union Basic Income
- B.Undefined Basic Income
- C.Unconditional Basic Income
- D.Universal Basic Income
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UBI is the idea of paying every citizen a fixed sum of money regularly, without conditions, in place of a large number of separate subsidies and welfare schemes.
Read the full explanation →Who among the following is the Chairman of the Fourteenth Finance Commission?
- A.C. Rangarajan
- B.Vijay Kelkar
- C.Y. V. Reddy
- D.Rakesh Mohan
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The Fourteenth Finance Commission, set up in 2013 for the award period 2015-2020, was chaired by Y. V. Reddy, a former Governor of the Reserve Bank of India.
Read the full explanation →Why was constitutional amendment needed for introducing GST?
- A.States were not willing to agree with the Union for introduction of GST without amendment in the Constitution.
- B.GST was to be implemented on concurrent base and Article 246 was inadequate for such a case.
- C.The Empowered Committee of Finance Ministers had recommended for constitutional amendment.
- D.The GST Council had recommended for constitutional amendment so that its power enhances.
Show answer
GST is levied by the Union and the States together on the same supply, and Article 246, which splits taxing powers between them through separate lists, did not allow such a concurrent tax.
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