NCERT Questions & Answers + Important Extra Questions
NCERT Textbook Questions
What do you understand by globalisation? Explain in your own words.
Answer
Globalisation is the process of increasing integration and interconnection among countries in terms of trade, investment, technology, culture, and ideas. It means that what happens in one part of the world increasingly affects other parts. Specifically:
(i) Economic globalisation: Countries trade freely with each other, companies invest in foreign countries (FDI), and capital moves across borders. An Indian company can set up factories in Vietnam, and a Japanese company can sell cars in India.
(ii) Cultural globalisation: Ideas, food, music, fashion, and lifestyles spread across borders — McDonald's in India, yoga worldwide, Hollywood everywhere.
(iii) Technological globalisation: The internet, mobile phones, and container shipping have made the world smaller — a designer in India can work for a client in the US in real time.
In simple terms, globalisation means the world is becoming like one interconnected market where goods, services, money, people, and ideas move more freely across national borders.
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?
Answer
Why barriers were put up (1947-1991)
(i) Protect infant industries: After independence, Indian industries were small and couldn't compete with established foreign companies. Without protection (high tariffs, import restrictions), they would have been destroyed by cheap foreign goods.
(ii) Self-reliance: India wanted to build its own industrial base — from steel to heavy machinery — rather than depend on imports. This was the Nehruvian vision of economic independence.
(iii) Foreign exchange conservation: India had limited foreign exchange. Unrestricted imports would drain these reserves.
(iv) Employment protection: Opening markets to foreign companies could destroy domestic businesses and cause unemployment.
Why barriers were removed (1991 onwards — liberalisation)
(i) Inefficiency of protected industries: After 40 years of protection, many Indian industries remained inefficient, produced poor-quality goods, and had no incentive to improve because they faced no competition.
(ii) Balance of payments crisis (1991): India ran out of foreign exchange and had to pledge its gold reserves to the IMF. As a condition for the IMF loan, India had to liberalise its economy.
(iii) Global trend: Most countries were opening up their economies. India couldn't remain isolated.
(iv) Attract foreign investment: FDI brings capital, technology, and management expertise that India needed for growth.
How has liberalisation of trade and investment policies helped the globalisation process?
Answer
Liberalisation has promoted globalisation in India through:
(i) Reduced tariffs: Import duties on many goods were drastically cut (from over 300% on some items to 10-20%), making foreign goods affordable. This increased trade volume enormously.
(ii) Removal of licensing restrictions: Indian companies no longer need government permission for most business activities — they can expand, diversify, and trade freely.
(iii) FDI allowed: Foreign companies can now invest in Indian businesses (buying shares, setting up factories). FDI in India has grown from $100 million (1990) to over $70 billion annually.
(iv) SEZs (Special Economic Zones): Tax-free zones set up to attract foreign investment and boost exports.
(v) Technology: Liberalisation enabled Indian companies to import modern technology and collaborate with foreign firms, improving productivity.
(vi) Services sector: Opening up of services (IT, BPO, telecom, banking, insurance) attracted massive foreign investment and made India a global services hub.
How does foreign trade lead to integration of markets across countries? Explain with an example.
Answer
Foreign trade connects markets in different countries by creating opportunities for producers and consumers beyond domestic borders:
Example — Chinese toys in India: Chinese manufacturers produce toys at very low cost (cheap labour, economies of scale). These toys are exported to India and sold at prices lower than Indian-made toys. Indian consumers get a wider variety of toys at lower prices. However, Indian toy manufacturers face competition and some may go out of business.
This is market integration because: (i) The price of toys in India is now influenced by what happens in Chinese factories — if Chinese production costs fall, Indian toy prices fall too. (ii) Indian consumers are now part of a global market — they can choose between Indian and Chinese toys. (iii) Indian producers must either match Chinese quality and prices or find a niche (e.g., traditional handmade toys).
Similarly, Indian IT companies serve American clients, Indian textiles are sold in European markets, and Japanese cars are bought by Indian consumers. Each trade connection integrates the two markets — prices, quality standards, and production decisions in one country increasingly depend on what happens in the other.
What is the role of MNCs in the globalisation process?
Answer
Multinational Corporations (MNCs) are the main drivers of globalisation:
(i) Foreign investment: MNCs invest in countries around the world — setting up factories, offices, and shops. They bring capital, technology, and management expertise. Example: Samsung (South Korea) has factories in India, Vietnam, Brazil.
(ii) Global production networks: MNCs break production into stages across countries — design in one country, manufacture components in another, assemble in a third, sell globally. Example: Apple designs in the US, sources components from Japan/Korea/Taiwan, assembles in China/India, sells worldwide.
(iii) Technology transfer: MNCs bring modern technology to developing countries — better machinery, management practices, and quality standards.
(iv) Trade expansion: MNCs trade raw materials, components, and finished goods across borders, driving foreign trade growth.
(v) Employment: MNCs create jobs in host countries — directly (in their factories/offices) and indirectly (through local suppliers, distributors, and service providers).
(vi) Competition: MNCs force local companies to improve quality and reduce prices. This benefits consumers but can hurt smaller competitors.
Important Extra Questions
What is the World Trade Organisation (WTO)? What role does it play?
Answer
The World Trade Organisation (WTO) is an international body that sets rules for global trade. Established in 1995 (successor to GATT), it has 164 member countries.
Role of WTO
(i) Setting trade rules: WTO creates rules that all member countries agree to follow, ensuring that trade flows smoothly, predictably, and freely.
(ii) Reducing trade barriers: WTO pushes for liberalisation — reducing tariffs, quotas, and subsidies that obstruct free trade.
(iii) Dispute settlement: When countries have trade disputes, WTO acts as an arbitrator. Its rulings are binding.
(iv) Monitoring trade policies: WTO reviews the trade policies of member countries regularly.
Criticism: (i) WTO rules often favour developed countries — they can negotiate better terms. (ii) Developing countries are pressured to open their markets to foreign goods, harming local industries. (iii) Agricultural subsidies by the US and EU (worth hundreds of billions) make their farm products artificially cheap, destroying agriculture in developing countries. (iv) WTO rules restrict developing countries from protecting infant industries — the very strategy that developed countries used to grow.
How has globalisation affected India — both positively and negatively?
Answer
Positive effects
(i) Economic growth: India's GDP has grown significantly since liberalisation (1991). India is now the 5th largest economy in the world.
(ii) IT and services boom: Globalisation created India's IT industry — employing millions and earning billions in exports.
(iii) Consumer choice: Indians now have access to global brands and products at competitive prices — electronics, automobiles, fashion.
(iv) Employment: MNCs have created jobs in India — automobile factories, call centres, retail chains.
(v) FDI inflows: India receives $70+ billion annually in FDI, funding infrastructure and industry.
Negative effects
(i) Small producers hurt: Small-scale industries (toys, textiles, auto parts) face severe competition from cheap imports, especially from China. Many have shut down.
(ii) Agriculture distress: Indian farmers compete with heavily subsidised foreign produce. Removal of import barriers on edible oils, dairy products has hurt Indian farmers.
(iii) Labour exploitation: MNCs and their suppliers often employ workers in poor conditions — low wages, long hours, no benefits, no unions.
(iv) Inequality: Globalisation has benefited the urban, educated middle class more than the rural poor. The gap between rich and poor has widened.
(v) Cultural homogenisation: Local cultures, languages, and traditions face pressure from global (Western) cultural products.
What is meant by fair globalisation? How can the government make globalisation fairer?
Answer
Fair globalisation means that the benefits of globalisation are shared more equitably among all countries and all sections of people, not just the rich and powerful.
Government can make globalisation fairer by
(i) Protecting labour rights: Enforcing minimum wages, safe working conditions, and social security (health insurance, PF) for all workers, including those in MNC supply chains.
(ii) Supporting small producers: Providing credit, technology, and marketing support to small enterprises to help them compete. MUDRA loans, Make in India, and Startup India are steps in this direction.
(iii) Using trade barriers wisely: While free trade is generally good, the government should retain the right to protect vulnerable sectors (agriculture, small industry) through tariffs, quotas, or subsidies when necessary.
(iv) Negotiating at WTO: India should push for fair WTO rules that address the concerns of developing countries — especially on agricultural subsidies by rich countries.
(v) Investing in education and health: Better-educated, healthier workers can benefit more from globalisation's opportunities.
(vi) Strengthening safety nets: MGNREGA, food security programmes, and crop insurance protect those who are hurt by globalisation's disruptions.