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.
Economic reforms include:
Answer & explanation
Correct answer: option 3
The correct answer is Option (3) → Regulation of trade and finance
Note: The given answer is as per the official NTA Answer Key. However, there seems to be an ambiguity in the question. Economic reforms, as the passage explains, are the steady removal of the rules that regulated trade and finance; no option says this in so many words. Option (3) names the two areas the reforms cover, trade and finance, as explained below.
Option (1) Regulation of trade only — Incorrect. The reforms covered finance as well as trade, so ‘trade only’ leaves half of them out.
Option (2) Regulation of finance only — Incorrect. For the same reason, ‘finance only’ is incomplete; the rules that regulated trade were also removed.
Option (3) Regulation of trade and finance — Correct. Liberalisation meant changing the rules that regulated Indian trade and finance, and these measures are described as economic reforms. The option names both areas in which the reforms worked.
Option (4) No regulation either for finance or trade — Incorrect. The rules were removed step by step; the passage speaks of a steady removal, not of trade and finance being left with no regulation at all.
NCERT (2025-26): “a. The Economic Policy of Liberalisation … Liberalisation of the economy meant the steady removal of the rules that regulated Indian trade and finance regulations. These measures are also described as economic reforms. What are these reforms? Since July 1991, the Indian economy has witnessed a series of reforms in all major sectors of the economy (agriculture, industry, trade, foreign investment and technology, public sector, financial institutions, etc). The basic assumption was that greater integration into the global market would be beneficial to Indian economy.…” |