Question Paper of MS-03:Economic and Social Environment Dec-2003

Q.1 Examine the changing role of the government in the context of the new economic reforms and programmes.

Question Paper of MS-03:Economic and Social Environment June-2003

Q.1. Identify key element of the economic environment of business and examine their importance.

Question Paper of MS-03:Economic and Social Environment Dec-2002

Q.1 Briefly discuss the forces which prompted the Government of India to usher in economic reforms in 1991. How have these economic reforms affected the nature of Government intervention in the economy? Explain fully with examples.

Q.2 What is business environment? Why is it important for a manager to stay in tune with this environment? Explain the maior components of business environment in India.

Q.3 Identify and critically examine the constraints in the growth of private sector in India.

Q.4 What are the main components of the current account? Explain. What are the main elements of the capital account? Explain. Would you^ recommend capital account convertibility for a developing country like India?

Q.5 Briefly analyse the trends in the growth of foreign capital and technical collaborations in India during the 90s. Explain how India’s foreign investment policy of the 90s is a major departure from the past.

Q.6 Examine the impact of economic reforms on poverty, employment and social security. What strategy of economic reform measures is suitable for achieving development with a ‘human face’?

Q.7 Write short notes on any two of the following:

(a) Social responsibility of business
(b) Industrial sickness
© Debt servicing burden of India

Question Paper of MS-03:Economic and Social Environment June-2002

Q.1 What do you mean by business environment? Explain the various market and non-market environments influencing business in India.

Q.2 What circumstances lead to preferring foreign capital to foreign aid and debt? Critically evaluate the policy measures adopted by the Government of India to encourage inflow of foreign capital.

Q.3 Explain the major objectives of the public sector. Give different criteria to evaluate the performance of public enterprises. Comment on how to resolve the possible conflict between autonomy and public accountability of public enterprises.

Q.4 Discuss the balance of payments crisis in India. Explain critically the emerging trade policy issues.

Q.5 Explain the role of external debt in the economic development of India. Critically evaluate the growing debt-servicing burden of India.

Q.6 Briefly describe the framework of Indian financial systems. Explain the need for financial sector reforms and point out the steps taken by the government in this regard.

Q.7 Distinguish between any two of the following:

(a) Economic growth and Economic development
(b) Balance of trade and Balance of payments
© Monopolistic trade practices and Restrictive trade practices

Question Paper of MS-03:Economic and Social Environment Dec-2001

Q.1 Explain the interaction between economic and non-economic environment of business. Illustrate your answer in the context of India’s economic environment.

Q.2 What do you understand by ’social responsibility’ of business? Explain various dimensions of social responsibility of business.

Q.3 Explain the concepts of (a) monopolistic trade practices, (b) restrictive trade practices and © unfair trade practices under the MRTP Act 1969. Has India succeeded in preventing concentration of economic power through MRTP? Illustrate with suitable examples.

Q.4 Analyse in detail the implications of trade policy reforms implemented by India in the last decade.

Q.5 Describe the overall impact of the Industrial Policy 1991 on Indian industry in general and technology status of Indian industry in particular.

Q.6 “Economic reforms have failed on the front of social security.” Do you agree with the above statement and why? What measures would you suggest to modify the reforms for achieving the goal of growth with social justice?

Q.7 Write short notes on any two of the following:

(a) Industrial sickness
(b) Administered prices
© Foreign investment and collaborations

Question Paper of MS-03:Economic and Social Environment June-2001

Q.1 “The New Industrial Policy (NIP) of July, 1991 has brought about far-reaching changes in the industrial development strategy of the Government of India.” Explain.

Q.2 What do you mean by Industrial Sickness ? What factors are responsible for this ? What has been the Government policy to avoid industrial sickness

Q.3 Analysis the framework of the Indian financial system. What are the main recommendations of the Narasimham Committee on financial sector reforms ?

Q.4 Explain the concept of workers’ participation in management. Why is private sector opposed to any Government move to workers’ participation in management? What conditions are needed for the success of such a scheme?

Q.5 What do you mean by privatization? Why is privatization advocated these days ? Indicate the possible areas of privatization in India.

Q.6 Comment on the following statements using around 100 words for each (attempt any five):

(a) Government involvement in Indian economy is a necessity.
(b) Is monopoly always bad for the society?
© Currently consumers in India are conscious of their rights.
(d) Managers in the public sector are similar to private sector managers; it is the Indian work culture which is the impediment to higher efficiency.
(e) Although business is an economic activity, economic environment of business cannot be considered in isolation. It has to be considered in line with other social, cultural and technological factors.
(f) By keeping her doors wide open to Multinational Corporations (MNCs), India will be able to proceed along the desired path of development.
(g) It has generally been observed that the tertiary sector expands faster with economic growth. Is this necessarily a good thing ?

OR

Explain the following concepts: (Attempt all)

(a) Inflation
(b) Market-friendly approach to economic development
© Black economy

Q.7 “Amidst a list of successful exports and foreign investments, the Economic Survey 2000-2001, pointed towards the danger of defaulting on the economy if the present momentum of economic reforms was not sustained.”

“The survey specifically pointed out that while there were a lot of improvements in terms of foreign currency reserves and the general economic environment,it was desirable that a high rate of savings and investment be sustained and the high rate of fiscal deficit - which was one of the major “slippages” of the
Government in the current year - was contained, in order to achieve the goals of economic development.”

“Describing the effective privatization of discretionary expenditure as a key issue, the Survey strongly calls for serious changes in both the expenditure and revenue policies of the Government and stresses the need for a strong control over Government subsidies.”

“While a broadening of the tax base is necessary to contain fiscal deficits,moving towards the ideals of a national Value Added Tax system and an “Advalorem” import duty was also considered essential for putting Indian procedures at par with foreign competitors.”

“With an emphasis on a stable macro-economic environment, the survey document said that in continuing with the process of reforms, “the basic goals of the economy would be to achieve growth, equity, self-reliance and modernization.”

“The fundamental objective was to raise the. standard of living of Indians,specially the poor, in a sustained manner and rapid broadbased growth was the only way this could be achieved.”

“To ensure the quickest alleviation of poverty, growth had to be labour intensive, since labour was the principal and often, the only source the poor have.”

“Thus, at the macro-economic level, the challenge for policy was to stimulate a higher growth, while acting firmly to dampen the build-up of an inflationary potential in the economy.”
Study the above passage carefully and answer all the following questions. Your answer may be based both on your understanding as well as on the inferences drawn from the passage.

Questions

(a) Analyze the positive aspects of economic reform measures mentioned in the Economic Survey.

(b) What line of changes is indicated in the field of fiscal policy?

© Amplify the objectives of economic planning in India which have also been endorsed by reform measures.

(d) What strategy of economic reform measures is suitable for achieving development with a “human face” ?

Question Paper of MS-03:Economic and Social Environment Dec-2000

Q.1 What is ‘Business Environment’? Why is it important for a manager to stay in tune with this environment? Explain the major components of business environment in India.

Q.2 Distinguish between ‘market failure’ and ‘government failure.’ In the light of your answer discuss the view that neither market failure nor government failure justify the exclusive reliance on either .the state or the market in development.

Q.3 “Given the environment in which the public enterprises operate in India, the conflict between commercial profitability and social desirability is bound to be there.” Explain. Do you think privatization of public sector enterprises (pSEs) will be able to remove this conflict?

Q.4 “Small Business has a critical role in the growth of planned industrialization” Explain. Discuss briefly the Government policy for the growth and development of small business in India.

Q.5 Describe the concept of’unfair trade practices’ as used in the MRTP Act, 1969. In this context explain the nature and dimension of Consumer Protection Act, 1986. Is it effective in protecting the interest of the consumer from unfair trade practices?

Q.6 State whether the following statements are true or false and give reasons for your answer in about 50 words each. Attempt any five.
(a) Government involvement in Indian economy is a necessity.
(b) Monopoly is always bad
© Currently consumers in India are conscious of their rights.
(d) Managers in the public sector are similar to private sector managers; it is the Indian work culture, which is the impediment to higher efficiency.
(e) Although business is an economic activity, there cannot be anything exclusive like economic environment of business.
(f) Power generation is one sector of the Indian economy where the actual achievements have always exceeded the planned targets.
(g) It has generally been observed that the tertiary sector expands faster with economic growth.

OR

Explain the following concepts:

(a) Indicative planning
(b) Fiscal deficit and its financing
© Inflation, and
(d) Black economy

Q.7 Study the passage given below and answer the questions following the passage. Your answer should be based on the passage as well “as your understanding of the problem.

“The country has attracted foreign direct investment (FDI) aggregating $20.19 billions during the post-reforms period from 1991 to end -March 2000. These inflows represent nearly a third of the cumulative FDI approvals worth $60.76 billions given by the Government during this period. The annual FDI Inflows into India have increased substantially from a mere $ 143.6 millions in 1991 to $1,048.5 millions in 1994 and peaking at $4,579.1 millions in 1997, before stabilising around the $ 4 billion-mark thereafter.
Significantly, the proportion of FDI approvals granted by the Government translating into actual inflows has also registered a notable increase over the last couple of years. The proportion of actual inflows to approvals has gone up steadily from 17.4 per cent in 1992 to 23.2 per cent in 1994,28.7 per cent in 1996,43.3 percent in 1998 and 59.5 percent in 1999. Thus, the absolute values of FDI approvals have almost halved from $15.3 billions in 1997 to $6.75 billions in 1999. The other significant aspect of the cumulative FDI inflows of $20.19 billions since 1991 is that it is much higher than the corresponding cumulative inflows of foreign institutional investors (FII) monies, estimated over $ 11 billions.

Considering that FDI inflows are manifested in ‘plant and machinery’ and are therefore, less volatile compared to ‘foot loose’ FII monies (which can be freely withdrawn without notice), the higher FDI component can be seen to have imparted greater stability to the country’s balance of payments.”

Questions

(i) Why is foreign capital so important for India’s economic development/
(ii) Point out important policy changes announced by the Government to attack foreign capital since July, 1991.
(iii) Explain the reasons behind the gap between approvals versus actuals.
(iv) Given the choice between FDI and FIIs investments which one w.ll you prefer? Give reasons.

Question Paper of MS-03:Economic and Social Environment June-2000

Q.1 Explain clearly the role and responsibility of Government as [20]

(a) regulator of business
(b) promoter of business
© entrepreneur, and
(d) planner

Q.2 Explain the trends in the industrial policy in India. What measures have been taken recently to liberate the industry from excessive controls? [20]

Q.3 Examine the arguments being advanced in favour of privatization. What are the areas you would like to recommend for privatization in India? What precautions should be taken while disinvesting PSE’s equity? [20]

Q.4 Why is Foreign Capital essential for India’s economic development? Critically examine the steps taken by the Government to attract Foreign Direct Investment (FDI) in India. [20]

Q.5 Point out the need for providing protection to consumers. What measures have been taken by the Government of India to protect the interests of consumers? [20]

Q.6 Explain the factors necessitating reforms in the financial sector. In this context point out the main recommendations of Narasimham Committee. Examine briefly the steps taken by the Government in implementing these recommendations. [20]

Q.7 State whether the following are True or False and give reasons for your answer in about 50 words each. Attempt any five. [20]

(a) The overall employment scenario in the country has remained more or less unchanged since the reforms began in 1991.
(b) The entire volatility in the inflation rate in India has come from the agricultural sector.
© Globalization necessitates a strengthening of domestic institutions to cope with the strains it places on society.
(d) A public sector monopoly not run by politicians can, in fact, deliver pretty good results. Much of the policy debate should, therefore, depend on how the public sector monopolies are run.
(e) The level of subsidization or cross-subsidization is, in the final analysis, a political problem. Economists can’t solve it. Only politicians can. And they won’t because it doesn’t help them.
(f) The General Agreement on Trade and Tariffs (GATT), WTO, and others are actually accelerating the deculturalization process, without pursuing a more thoughtful strategy to protect the cultural differences that make our world a rich source of diverse experience.

OR

Distinguish between any two of the following: [20]

(a) Portfolio and Direct Investment
(b) Self-sufficiency and Self-reliance as policy objectives
© Planning Commission and Finance Commission

Q.8 Study the passage given below and answer the questions following the passage. Your answers should be based on the passage as well as your understanding of the problem.

India has to attract investments to maintain growth, upgrade infrastructure and technology and create jobs. This is already evident in the recent passage of several financial reform bills through the Parliament. This accelerated pace of reform will affect all segments of Indian society. The business sector will face intense foreign competition. In the aftermath of the breakdown of the World Trade Organisation (WTO) meeting in Seattle, the debate should be over how countries can better cope with the challenges of globalisation and maximise the opportunities it brings, while preserving social cohesion and
national identity.

“The debate over globalisation will surely intensify in the aftermath of Seattle.However, it should not be over whether countries should embrace or turn away from global market integration.” Resisting the forces of globalisation is not a solution and ultimately a futile exercise.Global capital and trade will go where they are welcome and are most productive. Economies, which continue to keep their borders closed to foreign
goods and services will lose oftt and gradually find themselves marginalised.

No economy is strong enough to stop the tide of globalisation and neither is there a viable alternative. “As such, what governments must do is to embrace globalisation and strengthen domestic institutions to cope with the strains it places upon the society. Through emphasis on education and training, we must equip our citizens with the necessary skills to cope with the new environment. This is the best safety net,”

While globalisation is a powerful vehicle for economic growth, but for many it is also a process that threatens economic and social stability, challenges national sovereignty and erodes local culture and tradition. Globalisation is bringing about a new generation of disputes which go beyond pure economics. They will typically be about domestic regulations that have impact beyond national borders. Classical trade issues, particularly those concerning goods, will no longer hold the key to future trade liberalization. Instead new issues like trade and environment, labour and human rights, are likely to dominate.

Trade battles will increasingly be fought on how far countries should accept “foreign” standards on domestic policy in sensitive areas such as investment, labour, food safety or environmental protection, supposedly in the name of free or fair trade. Unless WTO member-countries redouble efforts to address the failure of Seattle, the survival of the multilateral trading system could also be threatened.

Questions

(i) Highlight the importance of’infrastructure’ in economic development.
(ii) Why is foreign investment so essential in infrastructure sector?
(iii) What do you mean by globalization of Indian economy?
(iv) What kind of new disputes is globalization bringing? Point out the reasons for failure of WTO’s Conference at Seattle in November, 1999.

Question Paper of MS-03:Eeconomic and Social Environment Dec-1999

Q.1 Examine the interaction between Economic Environment and Business Management. Illustrate your answer in the context of India’s Economic Environment.

Q.2 What do you understand by Social Responsibilities of Business? Point out the various elements involved in this.

Q.3 “Government’s role is very crucial and pervasive in today’s economy.” In this context explain the role of Government in business?

Q.4 Explain the nature of socio-economic problems of Indian economy. What steps have been taken by the Government for poverty eradication in the country?

Q.5 Critically examine the rationale behind establishing Public Sector Enterprises (PSEs) in India. What are the reasons for unsatisfactory performance of these enterprises? What should be the future policy towards PSEs?

Q.6 Explain the structure of credit delivery system in India. Analyse the role and responsibilities of Industrial Development Bank of India (IDBI).

Q.7 State whether the following are true or false and give reasons for your answer in about 50 words each. Attempt any five.

(a) The nature of foreign capital inflows is an important factor in assessing the impact on domestic economy.

(b) With the liberalization of the Indian economy, it will be necessary to ensure a greater degree of discipline in macro-economic policies.

© An Exit Policy is more complicated to work out than an Entry Policy.
(d) Political Environment in the country is conducive to growth of business.
(e) State monopoly is better than Private monopoly in many fields.
(f) To deal with fiscal deficit effectively, Government should altogether abolish subsidies.

OR

Distinguish between any two of the following :

(a) Monopolistic trade practices and Restrictive trade practices
(b) Monetary policy and Fiscal policy
© Economic growth and Economic development

Q.8 Study the passage given below and answer the questions following the passage. Your answers shouk} be based on the passage as well as your understanding of the problem.

The Prime Minister while speaking at the National Export Award function hit out at the emergence of protectionism in developed countries and said the denial of market access by them to the developing world were volatile of World Trade Organisation (WTO) norms posing “a new threat to the multilateral trading system".

“While we are wily committed to the fulfillment of all international obligations under the multilateral trading system, we would insist that our trading partners also, in turn, will fulfil their obligations in letter and in spirit, especially in the matter of market access.” Stating that promotion of exports remains a national priority as exports meet several national needs, he stressed that India must aim to become one of the top exporting nations in the world. Referring to the poor state of infrastructure which was reducing India’s competitiveness, the Government had given the highest priority to the infrastructure development and various initiatives in this regard would start bearing fruit very soon. Emphasizing the crucial role being played by exporters, he said that a successful exporter promoted not just the wares of his companies but was also promoting India and the Indian brand. He urged the exporters to continue the good work so that any product labelled “Made in India” could become the first choice of buyers across the global. The Exam Policy of the Government had introduced several innovative features to make matters easy for the exporters, but there was still scope for further simplification and improvement. “I would like every individual in the export chain - right from officers in Delhi to the employees at our ports - to remember the importance and value of time.

Delays play havoc with the plans of exporters. There is absolutely no place for unnecessary procedures. We must unshackle our exporters so that they put up the best performance.”

Questions

(i) Why should exports be a national priority?
(ii) Explain the kind of’protectionism’ being adopted by developed countries which is violative of World Trade Organisation (WTO) norms and restricts India’s efforts to promote exports.
(iii) What hurdles are faced by exporters due to rules and regulations of the
Government?
(iv) Suggest measure for promotion of exports.

Q.9 “The term ‘environment’ refers to the totality of all the factors which are external to and beyond the control of individual business enterprises and their managements. Environment furnishes the macro-context, the business firm is the micro-unit.” Explain this statement and examine the factors within which firms and their managements must operate.

Q.10 What do you mean by “social responsibility” of business? Explain various dimensions of social responsibility of business.

Q.11 Explain the industrial policy of July, 1991. In what respect does it differ from earlier policies?

Q.12 “Shortcomings of the public sector enterprises (PSEs) arise from a variety of factors, both internal and external.” Explain the statement. State and critically examine the case for privatization of PSEs in India.

Q.13 In what way will trade policy reforms contribute to enhancing India’s competitiveness in the International market? Elucidate.

Q.14 Explain the nature and dimension of economic reform measures adopted in India since July, 1991. Do you think these measures have helped in achieving social justice?

Question Paper of MS-03:Economic and Social Environment June-1999

Q.1 Define ‘environment’ and explain various critical elements of macro-economic environment. Also examine the interaction between economic and non-economic environment.

Q.2 Examine the role of the government in regulating economic and industrial activity in India. What have been the major policy instruments available to the government for achieving this objective?

Q.3 Business should be re-engirieered to imbibe “a social responsibility with an economic mission". Explain this statement and state how business be socially responsible.

Q.4 Explain the trends in industrial policy in India. What measures have been taken recently to liberate the industry from excessive controls?

Q.5 Review the performance of public sector enterprises in India. Do you think it proper to hand over inefficient public sector units to the private enterprise? Give reasons.

Q.6 Discuss the problem of poverty in India. What measures has the Government taken for the removal of poverty in India?

Q.7 Explain whether the following statements are true or false. Provide precise reasons for the same. Attempt any five.

(a) Unless India accelerates its reforms and removes regulatory controls in
vital infrastructure sectors it will be unable to attract foreign capital.
(b) Looking ahead it is clear that social policy concerns need to be at the centre-stage alone with fiscal and monetary priorities when devising the right response to economic crises.
© Competition denied industry the option of hiking output prices and at the same time competition has raised selling costs.
(d) Business and investment would grow “irrespective of political vagaries".
(e) The political parties are unlikely to take any major economic decision on merit.
(f) Investors’ interest in India is high on account of the market size, but market size alone is not enough.
(g) The inflationary element cannot be withdrawn when the culprit is the Government.

OR

Comment upon any two of the following:

(i) “One of the adverse effects of globalisation of the Indian economy would be the elimination of smalt sector in the Indian Economy.”
(ii) “A developing economy cannot escape from inflation.”
(iii) Mixed economy and its changing “mix” in India.

Q.8 Study the passage given below and answer the questions following the passage. Your answers should be based on the passage as well as your -understanding of the problem.

“We need to recognise the much repeated adage that there can be no better anti-poverty programme than the control of inflation. The deprived and the dispossessed have no defences against inflation and it is our moral duty to protect the under-privileged segments of society. Inflation always distributes income from the lower strata to the higher strata and this is the real scourge of inflation. Thus, a meaningful commitment by the government to the indigent poor would be that it would take all steps necessary to excoriate inflation from the system. It must be stressed that what is required is not a mere statistical illusion of a decline in the inflation rate when viewed by the year-on-year inflation rate based on the wholesale price index, but a significant and enduring reduction in inflation on both, on a year-on-year basis as well as an average basis, and this should be reflected in both the wholesale and consumer price indices.”

“The inflation concentration in essential commodities reflects the major supply bottlenecks which need to be addressed. What is needed, therefore, is supply and not demand management. Those who seek to control inflation through the control of money supply should realise that their obsession with money supply is misplaced.”

“There are specific areas in which the government policy should target the indigent poor:

(a) Coarse grains which are not only more nutritious but consumed by the indigent poor; it is unfortunate that coarse grains production, particularly, Jowar and ragi have stagnated and prices of these commodities have risen faster than other cereal prices.

(b) An extremely sad and devastating development of the past 30 years has been the neglect production of pulses which has just not kept up with the needs of a growing population, With sluggish growth in production, prices of pulses have risen sharply which has put pulses totally out of the reach of the indigent poor.

© Another area in which the indigent poor need to be provided help is in family planning. There can be no more noble cause than family planning.

(d) If we are sincere about our commitment to reduce the extremes of poverty and we wish to truly honour
Prof. Amartya Sen, the government should try and make the life indigent poor a little lees horrid.

Questions

(i) What do you mean inflation? ;
(ii) How does inflation affect the poor adversely?
(iii) Explain the importance of specific areas for helping the poor.
(iv) Comment on the statement that’the degree of success of Prof. Amartya Sen’s welfare economics will depend upon the degree of success in controlling the population.

Q.9 What do you mean by “business environment"? Explain the various market and non-market environments influencing business in India.

Q.10 Can be growth process be initiated entirely by market forces in a less development economy like India? How does planning supplement market mechanism in this regard?

Q.11 “The new industrial policy (NIP) of July 1991 has brought about far-reaching changes in the industrial development strategy of the Government of India. “Explain.

Q.12 What do you mean by privatization? Why is privatization advocateds these days? Indicate the possible areas of privatization in India.

Q.13 “Fore e.g. Direct Investment (FDI) is increasingly important in econommic development because of its close links in trade, financial flows and technology transfer.” Explain the above statement and examine the policy of the government regarding promoting foreign capital in India.

Q.14 What have been the major changes in export import policy since July 1991 ? How have they affected the current account deficits? What changes trade policy are needed to impart greater viability to balance of payments’

Question Paper of MS-03:Economic and Social Environment Dec-1998

Q.1 What do you mean by Business Environment? Explain the various market and non-market environment influencing business in India.

Q.2 “While public sector might have served a useful social purpose in India, economic performance of some of the public sector units has been far from satisfactory.” Comment. What do you think should be the future policies on public sector?

Q.3 “The policies followed for the development of the small scale sector seem to have begun conflict with the objective of creating an efficient industrial sector.” Evaluate the policies on SSIs in the light of the above statement.

Q.4 Explain the concept of (a) monopolistic trade practices; (b) restrictive trade practices and © unfair trade practices as used in the MRTP Act, 1969. Is it correct to say that MRTP Act has only stifled economic and industrial growth in India?

Q.5 What circumstances lead to preferring foreign capital to foreign aid and debt? What advantages are expected to arise by allowing Multinational Corporations (MNCs) to operate in India?

Q.6 Explain any two of the following:

(a) “Trying to make every policy to meet all objectives leads to inefficiency all over”
(b) Why is infrastructure sector the most regulated?
1994-95 to 1996-97 However, for 1997-98, the estimates range between 5 - 5-5 per cent. Moreover, investments as a percentage of GDP has also been reasonably steady in the period at around 26 per cent of an average. There has also been a sustainable current account deficit and a restricted reliance
on short-term external debt.

© What are the reasons for people talking against ‘Quota permit license-raj ?

OR

Distinguish between any two of the following:

(a) Economic growth and Economic development
(b) Finance Commission and Planning Commission
© Balance of trade and Balance of payments

Q.7 Study the passage given below and answer the questions following the passage. Your answers should be based on the passage as well as you: understanding of the problem.

“The Indian economy has weathered the immediate impact of the crises in the South-East Asian countries and is not any longer vulnerable to the development in these countries.

There is reasons to believe that our situation does not attract the serious concerns that recent development in Asia seem to warrant. Indian has been spared from the contagion. The fact that we have successfully weathered the storm of the Asian crisis can be evidenced form the performance of a number of macro-variables. Apart form the GDP growth of 5 per cent an containment of inflation at 5 per cent during 1997-98, the performance in the external sector was also satisfactory. In the medium-term also, on the fn broad areas of concern, the Indian economy, external sector management regulation of the financial sector, the system. One can express satisfaction < the macro-economic indicators, with the annual rate of gross domestic product (GDP) having been in the range of 7-7.5 per cent during 1994-95 to 1996-' However, for 1997-98, the estimates range between 5-5.5 per cent. Moreover investment as percentage of GDP has also become reasonably steady in t period at around 26 per cent of an average. There has also been sustainable current account deficit and a restricted reliance on short-term external debt The sharp devaluation in the Asian currencies may not hurt our exports any significant decree since the share of affected countries in our export only 7 per cent. However, in certain specific sectors such as gems and jewellery and textiles, the exports from these countries could displace Indians exports Moreover, in the domestic market, in certain select goods, the Indian indigenous industry could face competition from cheaper imports from Asia."

Question to be answered: