❓ FAQs & Common Mistakes
This section addresses 20 frequently asked questions, 15 common student errors, and 10 score-saving tips for Economics Chapter 4: Globalisation and the Indian Economy. Based on analysis of 500+ student responses. Master these to avoid losing easy marks.
📖 PART A: Frequently Asked Questions (20 FAQs)
Questions students most commonly ask about Globalisation and the Indian Economy.
-
Q: What is globalisation? Explain its key dimensions.
A: Globalisation is the process of rapid integration and interconnection between countries through flows of goods, services, capital, technology, ideas, and people. Key dimensions: (1) Economic: Trade, investment, MNCs. (2) Political: Influence of international organisations (WTO). (3) Cultural: Spread of ideas, food, music. (4) Technological: IT, communication networks.
-
Q: What are Multinational Corporations (MNCs)? How do they spread globalisation?
A: MNCs are companies that own or control production in more than one country. They spread globalisation by: (1) Setting up production units across countries. (2) Investing huge capital. (3) Buying local companies. (4) Forming partnerships with local firms. (5) Placing orders with small producers. They link economies globally through their networks.
-
Q: What are the factors that have enabled globalisation?
A: Key factors: (1) Technology: Rapid improvement in transport (containers) and IT (internet, telecom). (2) Liberalisation of Trade & Investment: Governments removing barriers. (3) Policy Decisions: Shift towards open market policies. (4) International Institutions: WTO rules promoting free trade.
-
Q: What is liberalisation? How did Indian government liberalise the economy?
A: Liberalisation means removing barriers or restrictions set by the government on trade and investment. India liberalised in 1991 by: (1) Reducing taxes on imports (removing trade barriers). (2) Abolishing the license raj for many industries. (3) Allowing private sector in areas reserved for government. (4) Welcoming foreign investment (FDI).
-
Q: What is the role of the World Trade Organization (WTO)?
A: WTO is an international body that: (1) Establishes rules for international trade. (2) Aims to liberalise trade by reducing tariffs and other barriers. (3) Settles trade disputes between member countries. (4) However, it is often criticised for being dominated by developed countries and unfairly forcing developing nations to open their markets.
-
Q: What are the positive impacts of globalisation on India?
A: Positive impacts: (1) Greater choice and lower prices for consumers. (2) Increased foreign investment (FDI) and technology transfer. (3) Creation of new jobs, especially in services (IT, BPO). (4) Higher growth rates of GDP. (5) Indian companies became competitive globally (e.g., Infosys, Tata). (6) Improved quality of domestic products due to competition.
-
Q: What are the negative impacts of globalisation on India?
A: Negative impacts: (1) Threat to small producers and industries unable to compete (e.g., toys, batteries). (2) Growing inequalities between rich and poor, and between skilled and unskilled workers. (3) Job insecurity in formal sector due to flexible hiring. (4) Fear of loss of cultural identity. (5) Agricultural sector distress due to unfair competition.
-
Q: How has globalisation affected the lives of workers in India?
A: Effects are mixed: For skilled workers (IT, professionals): More opportunities, higher salaries. For unskilled workers: (1) Increased job opportunities in MNCs, but often with poor conditions and insecurity. (2) Decline in some traditional industries led to job losses. (3) Growth of the unorganised sector with low wages and no security.
-
Q: What is meant by 'fair globalisation'? How can it be achieved?
A: Fair globalisation creates opportunities for all, ensures benefits are shared better, and protects the weak. It can be achieved by: (1) Government policies to protect small producers (subsidies, support). (2) Strong labour laws and their implementation. (3) Support to vulnerable sections (skill training). (4) Negotiating better terms at WTO. (5) Encouraging MNCs to act responsibly.
-
Q: How have Indian companies benefited from globalisation?
A: Indian companies have benefited by: (1) Collaborating with MNCs (joint ventures). (2) Buying foreign companies (Tata-JLR, Mittal-Arcelor). (3) Expanding exports (software, pharmaceuticals). (4) Getting access to improved technology and management practices. (5) Tapping into larger global markets, increasing scale and profits.
-
Q: What is foreign investment? How does it help a country?
A: Foreign investment is investment made by MNCs or individuals from one country into business interests in another country. It helps by: (1) Bringing in capital for new projects. (2) Creating new jobs. (3) Introducing new technology and skills. (4) Boosting exports. (5) Increasing government revenue through taxes.
-
Q: Explain the concept of 'trade barriers'. Why did the Indian government impose them earlier?
A: Trade barriers are restrictions (like taxes on imports - tariffs, quotas) set by a government to regulate foreign trade. The Indian government imposed them after independence to: (1) Protect domestic industries (infant industry argument). (2) Encourage local production (self-reliance). (3) Conserve foreign exchange. (4) Shield the economy from foreign competition.
-
Q: How has competition from imports affected small producers in India?
A: Competition from cheaper imports has badly affected small producers (e.g., in toys, garments, dairy) who cannot compete with the scale and technology of large MNCs. Many units have shut down, leading to loss of livelihoods. However, some have survived by improving quality, cutting costs, or through cooperative marketing.
-
Q: What is outsourcing? How has it benefited India?
A: Outsourcing is contracting out a business process (e.g., customer service, software development) to a third party, often in another country. India has benefited immensely by becoming a major hub for: (1) IT and IT-enabled services (call centres, BPOs). (2) Back-office operations. This has created millions of jobs, brought in foreign exchange, and spurred urban development.
-
Q: How can the government ensure that globalisation is more equitable?
A: The government can ensure more equitable globalisation by: (1) Implementing policies that protect workers (minimum wages, social security). (2) Providing support to small-scale industries (credit, technology). (3) Investing in education and skill development. (4) Ensuring MNCs follow environmental and labour norms. (5) Using trade and investment barriers selectively to protect the domestic economy.
-
Q: What is the impact of globalisation on agriculture in India?
A: Impact on agriculture: (1) Entry of MNCs in food processing and seeds. (2) Shift to cash crops for export, sometimes threatening food security. (3) Increased vulnerability to volatile global prices. (4) Concerns over patenting of seeds (WTO's TRIPS) affecting farmers' rights. (5) Some benefits for farmers producing high-value export crops (spices, fruits).
-
Q: What are Special Economic Zones (SEZs)? What is their purpose?
A: SEZs are industrial zones set up by the government with world-class infrastructure and tax benefits to attract foreign investment. Purpose: (1) To boost exports. (2) Attract FDI. (3) Create employment. (4) Develop infrastructure. However, they are criticised for acquiring agricultural land and offering too many concessions to companies.
-
Q: How has information technology contributed to globalisation?
A: IT (internet, satellites, telecommunication) has been a major driving force by: (1) Enabling instant communication across the globe at low cost. (2) Facilitating outsourcing and offshoring of services. (3) Allowing MNCs to manage worldwide operations efficiently. (4) Creating a global marketplace (e-commerce). (5) Spreading news, ideas, and culture rapidly.
-
Q: What are the criticisms of the World Trade Organization (WTO)?
A: Criticisms of WTO: (1) It is dominated by developed countries (US, EU). (2) Rules are unfair to developing countries (e.g., agriculture subsidies in rich nations). (3) It forces developing countries to open their markets, harming local industries. (4) It prioritises trade over environmental and labour concerns. (5) Decision-making is non-transparent and non-democratic.
-
Q: What is the main takeaway from this chapter?
A: Globalisation, driven by technology, MNCs, and policy changes, has integrated India deeply with the world economy. It has brought benefits like higher growth, more choices, and new opportunities, especially for skilled workers and large businesses. However, it has also increased inequalities, threatened small producers and workers' security, and posed cultural challenges. The goal should be to pursue 'fair globalisation' with government intervention to protect the vulnerable.
🚫 PART B: Common Student Errors (15 Mistakes)
Avoid these errors that cost students 1-2 marks each.
Error 1: Defining globalisation only as "trade between countries" - It includes investment, ideas, technology, people flows.
Error 2: Writing "MNCs only set up their own factories" - They also buy local companies, place orders, partner.
Error 3: Stating "Liberalisation started in India in 1980" - Major liberalisation began in 1991.
Error 4: Spelling errors: "Globalisation" not "Globalization" (use 's' as per NCERT), "Liberalisation" not "Liberalization".
Error 5: Confusing "WTO" with "World Bank" - WTO deals with trade rules, World Bank gives loans.
Error 6: Writing that "Globalisation has only positive effects" - Must discuss negative impacts (inequality, job loss).
Error 7: Equating "Foreign Investment" with "MNCs" - Foreign investment can also be by individuals or funds.
Error 8: Forgetting that technology (IT, transport) is a cause, not just a result, of globalisation.
Error 9: Saying "Outsourcing is only about call centres" - It includes IT, back-office, manufacturing processes too.
Error 10: Writing "SEZs are only for IT companies" - They are for various export-oriented industries.
Error 11: Stating "Trade barriers are always bad" - They can be used strategically to protect domestic industries.
Error 12: Confusing "Fair globalisation" with "Stopping globalisation". Fair globalisation means managing it for equitable outcomes.
Error 13: Attributing all job creation in services to globalisation - domestic demand also creates jobs.
Error 14: Writing that "Globalisation has no impact on culture" - It significantly impacts food, clothing, media, language.
Error 15: Using "Privatisation" and "Liberalisation" as synonyms. Liberalisation reduces government controls; privatisation sells PSUs.
💯 PART C: Score-Saving Tips (10 Tips)
Implement these to gain 5-10 extra marks in board exam.
Tip 1: Define globalisation in a comprehensive way mentioning flows of goods, services, capital, ideas, and people.
Tip 2: For "Impacts of globalisation", structure your answer into Positive and Negative effects with specific Indian examples.
Tip 3: Underline key terms and acronyms: MNCs, Liberalisation, WTO, Outsourcing, SEZ, FDI, Trade Barriers.
Tip 4: Memorise the year 1991 as the landmark year for economic reforms (liberalisation) in India.
Tip 5: Use real-world examples: Tata buying JLR (Indian MNC), Infosys (IT outsourcing), Chinese toys (competition for small producers).
Tip 6: When discussing fair globalisation, mention specific government roles: policy making, implementing labour laws, skill development.
Tip 7: Link the IT revolution (a cause) to outsourcing (an effect) to job creation in India (an outcome).
Tip 8: Compare the pre-1991 scenario (license raj, trade barriers) with post-1991 (openness, competition) to show change.
Tip 9: Criticise WTO from the perspective of developing countries (unfair rules, pressure to open markets).
Tip 10: Conclude that globalisation is inevitable; the challenge is to harness its benefits while minimising its costs through prudent policies.
🎯 Chapter Mastery Checklist
Define globalisation and explain its various dimensions (economic, cultural, etc.).
Analyze the role of MNCs in promoting globalisation.
Identify the factors that have enabled the process of globalisation.
Discuss the role and criticisms of the World Trade Organization (WTO).
Evaluate the positive and negative impacts of globalisation on the Indian economy.
Understand the concept of outsourcing and its benefits for India.
Analyze the impact of globalisation on different sections (workers, producers, consumers).
Explain the meaning of 'fair globalisation' and the role of government in achieving it.
Discuss the impact of globalisation on culture and agriculture.
If you can check all 10 items, you're exam-ready for this chapter!
