Read the passage and answer the following question:
Globalisation involves a stretching of social and economic relationships throughout the world. This becomes possible through the introduction of certain policies. This process is broadly known as liberalisation in India. Liberalisation technically involves steady removal of rules that regulated trade and finance regulations. Once these are done, it constitutes economic reforms. Besides this liberalisation as a process also involves taking loans from international institutions such as International Monetary Fund (IMF). It is important to mention that certain condition are imposed before loans are sanctioned to a country, which thereby leads to introduction of new economic measures. These conditions constitute the Structural Adjustments. These adjustments usually mean cuts in state expenditure on social sector.
Which of the following does not happen under Structural Adjustment?
Answer & explanation
Correct answer: option 4
The correct answer is Option (4) → Increasing state expenditure in social sector
Option (1) Introduction of certain policies — Happens (Incorrect). To get loans from international institutions, the government commits itself to certain kinds of economic measures. Structural adjustment is the introduction of such policies.
Option (2) Economic reforms — Happens (Incorrect). The removal of rules that regulated trade and finance is described as economic reforms, and structural adjustment is carried out through such reforms.
Option (3) Taking loans from IMF — Happens (Incorrect). Structural adjustment begins with loans from the International Monetary Fund (IMF); the loans are given on conditions, and these conditions are the structural adjustments.
Option (4) Increasing state expenditure in social sector — Does not happen (Correct). Structural adjustments usually mean cuts in state expenditure on the social sector, such as health, education and social security. An increase in that spending is the opposite of what they bring.
NCERT (2025-26): “a. The Economic Policy of Liberalisation … The process of liberalisation also involved the taking of loans from international institutions such as the International Monetary Fund (IMF). These loans are given on certain conditions. The government makes commitments to pursue certain kind of economic measures that involve a policy of structural adjustments. These adjustments usually mean cuts in state expenditure on the social sector such as health, education and social security. There is also a greater say by international institutions such as the World Trade Organisation (WTO).…” |