NCERT Solutions for Class 10 Economics Chapter 4 Globalisation and the Indian Economy

NCERT Solutions for Class 10 Social Science Economics Chapter 4 Globalisation and the Indian Economy help students to score good marks in the exams. These NCERT Solutions are prepared by expert teachers and based on the latest pattern and edition NCERT book. Here we have provided answers to all the questions in a very easy language.

Class 10 Economics Chapter 4 Globalisation and the Indian Economy free PDF

BookNCERT Class 10 Economics
Chapter 4Globalisation and the Indian Economy
CategoryNCERT Solutions


Question 1. What do you understand by globalisation? Explain in your own words.

Answer: Globalisation means integrating the economy of a country with the economies ofother countries under conditions of free flow of trade, capital and movement of persons across borders. Globalisation is the process of interaction and integration between people, companies, and governments worldwide. Globalization has grown due to advances in transportation and communication technology. It includes

  • Increase in foreign trade
  • Export and import of techniques of production.
  • Flow of capital and finance from one country to another
  • Migration of people from one country to another.

Question 2. What were the reasons for putting barriers to foreign trade and foreign investment by the Indian government? Why did it wish to remove these barriers?

Answer: The Indian government had put barriers to foreign trade and foreign investment to protect domestic producers from foreign competition, especially when industries had just begun to come up in the 1950s and 1960s.This was done to protect the producers within the country from foreign competition. At this time, competition from imports would have been a death blow to growing industries. 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 ready to compete with foreign industries. It felt that foreign competition would, in fact, 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.

Question 3. How would flexibility in labour laws help companies?

Answer: Flexibility in labour laws will help companies in being competitive and progressive.By easing up on labour laws, company heads can negotiate wages and terminate employment, depending on market conditions. This will lead to an increase in the company’s competitiveness. The government has also allowed flexibility in labour laws to attract foreign investment. The government has allowed companies to ignore many of the labour laws. Instead of hiring workers on a regular basis, companies hire workers flexibly for short periods when there is intense pressure of work. This helps to reduce the cost of labour for the company.

Question 4. What are the various ways in which MNCs set up, or control, production in other countries?

Answer: Multinational Corporations (MNCs) set up their factories or production units close to markets where they can get the desired type of skilled or unskilled labour at low costs along with other factors of production. After ensuring these conditions MNCs set up production units in the following ways:

  • MNCs are setting up partnerships with local companies.
  • Buy the local companies and then expand their production with the help of modern technology.
  • They place orders for small producers and sell these products under their own brand name to the customers worldwide.
  • MNCs are taking over local companies with their immense money power. Through the above ways, MNC’s are exerting a strong influence on production at distant locations.

Question 5. Why do developed countries want developing countries to liberalise their trade and investment? What do you think should the developing countries demand in return?

Answer: Developed countries want developing countries to liberalise their trade andinvestment because then the MNCs belonging to the developed countries can set up factories in less-expensive developing nations, and thereby increase profits, with lower manufacturing costs and the same sale price. Suppose the Indian government puts a tax on imported goods, then the price of the goods will be higher for the consumer. As a result, the consumer will prefer to buy goods produced locally. Consequently, there will be no demand for imported goods and developed countries will not able to sell their goods in developing countries.

In return for liberalisation of trade laws, the producer in developing countries are demanding ‘fair trade’. The developing countries should demand, in return, for some manner of protection of domestic producers against competition from imports. Also, charges should be levied on MNCs looking to set base in developing nations.MNC’s setting up their bases in developing countries should also be compelled to work for the development of the country.

Question 6. “The impact of globalisation has not been uniform.” Explain this statement.

Answer: The impact of globalisation has not been uniform”. It has only benefited the skilledand professional person in urban not the unskilled persons. The industrial and service sector has much gained in globalisation than in agriculture. Some have gained from successful collaborations with foreign companies. It benefited MNCs on domestic producers and the industrial working class. The consumers, particularly the well-off sections in the urban areas have an advantage in the way that they have a greater choice and now enjoy the improved quality and lower prices for several goods. Small producers of goods such as batteries, capacitors, plastics, toys, tyres, dairy products and vegetable oil have been hit hard by competition from cheaper imports.

Question 7. How has liberalisation of trade and investment policies helped the globalisation process?

Answer: Liberalisation of trade and investment policies has helped the globalisation processby making foreign trade and investment easier. Earlier, several developing countries had placed barriers and restrictions on imports and investments from abroad to protect domestic production. However, to improve the quality of domestic goods, these countries have removed the barriers. Import duties have been reduced, measures are been taken to ease the flow of foreign capital into the country, entry by foreign companies to set up base eased and encouraged and Foreign direct investment and foreign funds encouraged to flow in.

Thus, liberalization has led to a further spread of globalisation because now businesses are allowed to make their own decisions on imports and exports. This has led to a deeper integration of national economies into one conglomerate whole. Thus greater foreign investment and greater foreign trade resulted in the mushrooming of MNCs, which in turn resulted in globalisation.

Question 8. How does foreign trade lead to the integration of markets across countries? Explain with an example other than those given here.

Answer: Foreign trade provides opportunities for both producers and buyers to reachbeyond the markets of their own countries. Goods travel from one country to another. Competition prevails among producers of various countries as well as buyers across the world. Therefore foreign trade leads to the integration of markets across countries.

For example during Diwali season buyers in India have the option of choosing between Indian and Chinese decorative lights and bulbs. This provides an opportunity for the sellers to expand their business. With the liberalisation of foreign trade, electronic goods like digital cameras, laptop, smartphones have flooded the Indian market and give good opportunities to the buyer to select the item of their choice.

Question 9. Globalisation will continue in the future. Can you imagine what the world would be like twenty years from now? Give reasons for your answer.

Answer: Twenty years down the line the world would undergo a positive change which willpossess the following features— healthy competition, improved production efficiency, increased volume of output, income, and employment, better living standards, greater availability of information and modern technology. These are the favorable factors for globalisation :

  • Availability of human resources both quantity wise and quality wise will increase.
  • Broad resource and industrial base of major countries.
  • Growing entrepreneurship.
  • Growing domestic market.
  • Expanding internal markets
  • Economic liberalisations.
  • Growing competition.

Question 10. Supposing you find two people arguing: One is saying globalisation has hurt our country’s development. The other is telling, globalisation is helping India develop. How would you respond to these arguments?

Answer: Benefits of globalisation of India are as follows:

  • Increase in the volume of trade in goods and services
  • The inflow of private and foreign capital and export orientation of the economy.
  • Increase the volume of output, income, and employment.
  • More availability of investable funds in the form of FDI.
  • Helps in developing and strengthening the domestic economy of India.
  • Improved productive efficiency and healthy competition.

Negative Impact/Fears of Globalisation on Indian economy:

  • It may not help in achieving sustainable growth.
  • It may lead to the widening of income inequalities among people of the country.
  • It may lead to aggravation of income inequalities within countries.
  • It may lead to greater dependence of the underdeveloped countries on the developed country.

Whatever may be the fears of globalisation, I feel that it has now become a process which is catching the fancy of more and more nations. Therefore we must become ready to accept globalisation with grace and also maximize economic gains from the world market.

Question 11. Fill in the blanks:

Answer: Indian buyers have a greater choice of goods than they did two decades back. This is closely associated with the process of globalisation. Markets in India are selling goods produced in many other countries. This means there is increasing trade with other countries. Moreover, the rising number of brands that we see in the markets might be produced by MNCs in India. MNCs are investing in India because of cheaper production costs. While consumers have more choices in the market, the effect of rising demand and purchasing power has meant greater competition among the producers.

Question 12. Match the following:

i. MNCs buy at cheap rates from small producersa. Automobiles
ii. Quotas and taxes on imports are used to regulate tradeb. Garments, footwear, sports items
iii. Indian companies who have invested abroadc. Call centres
iv. IT has helped in spreading of production of servicesd. Tata Motors, Infosys, Ranbaxy
v. Several MNCs have invested in setting up factories in India for productione. Trade barriers


i. MNCs buy at cheap rates from small producersb. Garments, footwear,      sports items
ii.  Quotas and taxes on imports are used to regulate tradee. Trade barriers
iii. Indian companies who have invested abroadd. Tata Motors, Infosys,      Ranbaxy
iv. IT has helped in spreading of production of servicesc. Call centres
v. Several MNCs have invested in setting up factories in        India for productiona. Automobiles

13. Choose the most appropriate option.   

(i) The past two decades of globalization has seen rapid movements in 
(a) goods, services and people between countries.
(b) goods, services and investments between countries. 
(c) goods, investments and people between countries.   

Answer: (b) goods, services and investments between countries. 

(ii) The most common route for investments by MNCs in countries around the world is to 
(a) set up new factories. 
(b) buy existing local companies. 
(c) form partnerships with local companies.  

Answer: (b) buy existing local companies. 

(iii) Globalization has led to improvement in living conditions 
(a) of all the people 
(b) of people in the developed countries |
(c) of workers in the developing countries 
(d) none of the above  

Answer: (d) none of the above  

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NCERT Solutions for Class 10CBSE Notes for Class 10
CBSE Sample Papers for Class 10Important Questions for Class 10
RS Aggarwal Solutions For Class 10RD Sharma Solutions For Class 10

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