Globalisation and The Indian Economy Question Answer Solutions Class 10 Economics

Solutions to ‘Globalisation and the Indian Economy’, the fourth chapter of class 10 Economics are given here. Answers are given in points and different paragraphs for the best scoring in Board exams.

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Video Tutorials

Chapter Notes-Series Videos

Globalisation and the Indian Economy -Part 1
Globalisation and the Indian Economy -Part 2
Globalisation and the Indian Economy -Part 3

Chapter Explanation-Series Videos

Globalisation And The Indian Economy- 1
Globalisation And The Indian Economy- 2
Globalisation And The Indian Economy- 3
Globalisation And The Indian Economy- 4
Globalisation And The Indian Economy- 5
Globalisation And The Indian Economy- 6
Globalisation And The Indian Economy- 7
Globalisation And The Indian Economy- 8
Globalisation And The Indian Economy- 9
Globalisation And The Indian Economy- 10

Textbook Exercise Solutions

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

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

  • Export and import of techniques of production.  
  • Migration of people from own country to another.  
  • Increase in foreign trade 

Q. 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, after Independence, had put barriers to foreign trade and foreign investment. This was considered necessary to protect the producers within the country from foreign competition, especially when industries had just begun to come up in the 1950s and 1960s. 

It wished to remove these barriers, around 1991, because the government decided that the time had come for Indian producers to compete with producers around the globe. It felt that competition would improve the performance of producers within the country since they would have to improve their quality.  

Thus, barriers on foreign trade and foreign investment were removed to a large extent. This meant that goods could be imported and exported easily and also foreign companies could set up factories and offices here. 

Q. 3. How would flexibility in labour laws help companies?  

Ans. Flexibility in labour laws help in reducing the cost of labour in production. For companies to sustain themselves in competition and progress, flexibility in labour plays a major role. By easing up on labour laws, company heads can negotiate wages and terminate employment depending on market conditions. This results in an increase in the company’s competitiveness.  

Flexibility in labour laws helps companies in the following ways:  

(i) Companies could employ workers on a temporary basis so that they do not have to pay them for the whole year.  

(ii) They could keep workers in very long working hours and workers also work in night shift during peak season. Thus, employers are able to meet production demand on time.  

(iii) They could pay low wages to the workers and no other benefits like provident fund, health insurance, paid holiday etc. are given to them.  

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


What are multinational Companies? How do they control production in other countries? Explain with examples. [2009]  

Ans. MNC is a company that owns and controls production in more than one nation. The production units of Multinational Companies are set up mainly close to the markets where they can get the desired skilled or unskilled labour at low cost along with other factors of production.  

MNCs set up or control production in through the following measures:  

  • Cose regions where they can get cheap labour and other resources at lower costs.  
  • Set up production jointly with some of the local companies of other countries. 
  • Buy the local companies and then expand its production with the help of modern technology.   
  • The order is placed by them for small producers to sell these products under their own brand name to the customers worldwide. 

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

Ans. Developed countries want developing countries to liberate their trade and investment because the MNCs belonging to the developed countries can set up factories in less-expensive developing nation and could increase their own profits. It would be beneficial for them as the manufacturing price would be lower but the sales price would remain the same. In my opinion, the developing countries should demand for some sorts of protection of domestic producers against competition from imports in return. Also, charges should be levied on MNCs planning to set base in developing countries. 

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

Ans. The statement is justified with its positive and negative impacts.  

Negative Impacts: 

Small producers of goods such as barriers, capacitors, plastic toys, tyres, dairy products and vegetable oil have been hit hard by the competition from cheaper imports. 

Also, due to the growing competition, the workers are hired on flexible wages. This has reduced their job security.  

Though efforts are there now to make globalisation ‘fair’ for all since it has become a worldwide phenomenon.  

Positive Impacts: 

(i) Consumers have wider choice who now enjoy improved quality and lower prices. They enjoy higher standard of living.  

(ii) A large number of jobs have been created for the educated and skilled workers in the field of electronics, automobiles, banking and service sector.  

(iii) Local companies supplying raw material etc. to MNCs have been prospered.  

(iv) Some big Indian companies have been able to benefit from the increased competition by adopting advance technology.  

(v) It has also created new opportunities for companies providing services such as information technology, data entry, engineering etc. 

We can say that “The impact of globalisation has not been uniform”. 

Q. 7. How has liberalisation of trade and investment policies helped the globalisation process?  

Ans. Earlier, several developing countries had placed barriers and restrictions on imports and investments from abroad to protect domestic production. Nevertheless, to improve the quality of domestic goods, these countries have, therefore, removed those barriers.  

Thus, liberalisation is leading to a further spread of globalisation because now business companies are allowed to make their own decisions on imports and exports.  

This has led to a deeper integration of national economies into one business as a whole.  

In India, the process of liberalisation of economy started around 1991 with some major policy changes to open the economy to foreign companies and the imports. 

Q. 8. How does foreign trade lead to integration of markets across countries? Explain with an example other than those given here.  

Ans. Foreign trade provides opportunities for both producers and buyers to reach beyond the markets of their own countries. Goods travel from one country to another which create competition among producers of various countries as well as options for buyers. Thus, foreign trade leads to integration of markets across countries. For example, during Diwali season, buyers in India have option of choosing between Indian and Chinese decorative lights and bulbs. So, this provides an opportunity to expand business.  

Q. 9. Globalisation will continue in the future. Can you imagine what the world would be like twenty years from now? Give reasons for your answer.  

Ans. After twenty years, world would undergo a positive change and enhance human resource efficiency which will possess the following features- healthy competition, improved productive efficiency, increased volume of output, income and employment, better living standards, greater availability of information and modern technology.  

The rapid pace of globalisation is stimulated by technological and efforts of WTO asking nations to liberalise their foreign trade and investment policies.  

These are the favourable factors for globalisation –  

  • Availability of human resources both quantitative and qualitative.  
  • Broad resource and industrial base of major countries.   
  • Growing entrepreneurship  
  • Growing domestic market. 
  • MNCs would produce goods and services in those locations around the world which would be cheap for their production. 

Q. 10. Suppose you find two people arguing: One is saying globalisation has hurt our country’s development. The other is telling, globalisation is helping India develop. How would you respond to these arguments?  


How has globalisation affected the life of Indians? Explain with examples. [CBSE 2019] 

Ans. I would agree that globalisation and its impacts have been beneficial for India.   Following are the benefits of globalisation in India:  

  • There is an increase in the volume of trade in goods and services.  
  • It has led to the rise of quality product.  
  • There is an inflow of private foreign capital and export orientation of the economy.  
  • There is an increase in volume of output, income and employment. Though there are also some negative impacts of globalisation. They are as follows:  
  • It might not help in achieving sustainable growth. 
  •  It might not lead to lessening of income inequalities among various countries.  
  • It might lead to aggravation of income inequalities within countries. 

Whatever may the fear or negative impact of globalisation be, it feels that it has now become a process which is catching the fancy of more and more nations. Therefore, we must become ready to accept globalisation with grace and also maximise economic gains from the world market. 

Q. 11. Fill in the blanks. Indian buyers have a greater choice of goods than they did two decades back. 

Ans. This is closely associated with the process of globalisation. Markets in India are selling goods produced in many other countries. This means there is increasing trade with other countries. Moreover, the rising number of brands that we see in this market might be produced by MNCs in India because of cheaper production costs. While consumers have more choices in the market, the effect of rising demand and purchasing power has meant greater competition among the producers. 

Q. 12. Match the following. 

Ans. (i) b, (ii) e, (iii) d, (iv) c, (v) a 

Q. 13. Choose the most appropriate option.  

(i) The past two decades of globalisation has seen rapid movements in  

(a) goods, services and people between countries.  

(b) goods, services and investments between countries.  

(c) goods, services and people between countries.

Ans. (b) goods, services and investments between countries.  

(ii) The most common route for investments by MNCs in countries around the world is to  

(a) set up new factories  

(b) buy existing local companies.  

(c) form partnerships with local companies  

Ans. (b) buy existing local companies  

(iii) Globalisation has led to improvement in living conditions  

(a) of all the people  

(b) of people in the developed countries.  

(c) of workers in the developing countries.  

(d) none of the above  

Ans. (d) none of the above 

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