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CMA Foundation · Fundamentals of Business Economics and Management · Economic and Business Environment

Which of the following is a direct example of globalisation of the Indian economy after 1991?

Allowing automatic approval of foreign direct investment in many sectors is a direct example of globalisation. It opens the economy to foreign capital and technology, integrating India with global markets, whereas reserving industries for the state or reviving licensing would restrict openness.

  1. ARaising the number of industries reserved for the public sector
  2. BAllowing automatic approval of foreign direct investment in many sectorsCorrect
  3. CReintroducing licences for capacity expansion
  4. DFixing the rupee at a rate decided only by the government for all transactions

Explanation

Globalisation means integrating with the world economy; permitting FDI through the automatic route does this. Reserving industries for the public sector, reviving licences and rigid exchange rate fixing all reduce openness.

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