NCERT Solutions for Class 10 Social Science History Chapter 4
Social Science Class 10 Economics
Globalisation and the Indian Economy 4
Important NCERT Questions Based on new NCERT Books for Session 2022-2023
Questions No: 2
What was the reasons for putting barriers to foreign trade and foreign investment by the Indian government? Why did it wish to remove these barriers?
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The Indian government had put barriers to foreign trade and foreign investment to protect the interest of domestic producers from foreign competition, especially when industries had just begun to come up in the 1950s and 1960s.The main at that point was to encourage markets within the country to flourish. Had the government allowed competition from imports, the growing industries would have suffered a blow. Hence, India allowed imports of only essential goods such as machinery, fertilizers, petroleum etc.
In New Economic Policy in 1991, the government wished to remove these barriers because it felt that domestic producers were mature enough to compete with foreign industries. It felt that foreign competition would encourage local producers to improve the quality of goods produced by Indian industries. This decision was also supported by powerful international organisations. Now goods could be imported and exported easily and also foreign companies could set up factories and offices here.
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Reasons for putting barriers to foreign trade and investment:
– Protection: Shielding domestic industries from competition with foreign companies.
– Foreign Exchange Conservation: Managing and conserving foreign exchange reserves.
– Promotion of Self-Reliance: Aiming for self-reliance and reducing dependency on other nations.
– Economic Stability: Controlling the flow of goods and capital for economic stability.
Reasons for wanting to remove these barriers:
– Economic Growth: Opening up to foreign trade and investment for faster economic growth.
– Global Market Access: Accessing international markets for better competition and increased exports.
– Attracting Foreign Investment: Inviting foreign capital, technology, and expertise through foreign direct investment (FDI).
– Job Creation: Creating more job opportunities and fostering economic development within the country.
The shift from protectionism to an open economy aimed to accelerate economic growth, integrate globally, attract foreign investment, and generate more opportunities for development and employment within India.