Which of the following is not an impact of government policy changes on business and industry?
Answer & explanation
Correct answer: option 3
The correct answer is Option (3) → Budgetary Support to the public sector
After 1991, the Government brought in liberalisation, privatisation and globalisation. The impact of these policy changes on business is: increasing competition, more demanding customers, rapidly changing technology, necessity for change, need for developing human resource, market orientation and loss of budgetary support to the public sector. The impact is the loss of budgetary support, not budgetary support itself.
Option (1) Increasing Competition — An impact (Incorrect). New rules of licensing and the entry of foreign firms increased competition for Indian firms.
Option (2) More Demanding Customers — An impact (Incorrect). Customers are well-informed and have a wider choice, so they demand better quality.
Option (3) Budgetary Support to the public sector — Not an impact (Correct). The government’s budgetary support to the public sector has declined over the years. Public sector units now have to be efficient and raise their own resources.
Option (4) Market Orientation — An impact (Incorrect). Firms now study the market first and then produce goods accordingly.
Note: The current NCERT book (2026-27) only lists these impacts in its exercises. Each impact is explained in the pre-rationalised NCERT, from which the last extract below is taken. NCERT (2026-27 Edition): “Short Answer Type: … (a) increasing competition (b) more demanding customers (c) rapidly changing technological environment (d) necessity for change (e) need for developing human resource (f ) market orientation (g) loss of budgetary support to the public sector. …” NCERT (Pre-rationalised Edition): “Impact of Government Policy Changes on Business and Industry … (vii) Loss of budgetary support to the public sector: The central government’s budgetary support for financing the public sector outlays has declined over the years. The public sector undertakings have realised that, in order to survive and grow, they will have to be more efficient and generate their own resources for the purpose.” |