This document is an assignment for a 6th semester BBA program on economic reforms in India. It contains 6 questions asking students to explain concepts like privatization through disinvestment, reforms in the banking sector from 1992-2001, the impact of current account and capital account convertibility, VAT, MODVAT, and service tax. It also asks students to discuss whether policies of inclusive growth can reduce poverty and if FDI flows have helped India. The assignment provides evaluation criteria for each question and asks students to answer all questions, with responses for 10-mark questions being approximately 400 words.

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ASSIGNMENT
DRIVE SUMMER 2016
PROGRAM BBA
SUBJECT CODE & NAME BB0029 - ECONOMIC REFORMS PROCESS IN INDIA
SEMESTER 6
BK ID B0188
CREDITS 4
MARKS 60
Note: Answer all questions. Kindly note that answers for 10 marks questions should be
approximately of 400 words. Each question is followed by evaluation scheme.
Q. 1 Explain privatization through disinvestment in India.
Ans : Disinvestment Definition:-
Disinvestment involves the sale of equity and bond capital invested by the government in PSUs
through securitization. Disinvestment can also be defined as the action of an organisation (or
government) selling or liquidating an asset or subsidiary. It is also referred to as ‘divestment’ or
‘divestiture.’Securitizationisastructuredfinancial process which involves pooling and repackaging
of cash flowproducing assetsintosecuritiesthatare thensoldto investors.The governmentandnot
the PSU’s receive money from disinvestment. The
Q. 2 Briefly discuss the reforms in the banking sector during 1992-2001
Ans : Various reforms are:-
1.Reduced CRR and SLR :
The Cash Reserve Ratio (CRR) and Statutory Liquidity Ratio (SLR) are gradually reduced during the
economic reforms period in India. By Law in India the CRR remains between 3-15% of the Net
Demandand Time Liabilities.Itisreducedfromthe earlierhighlevel of 15% plus incremental CRR of
10% to current 4% level. Similarly, the SLR Is also reduced from early 38.5% to current minimum of
25% level.Thishasleftmore loanable fundswith commercial banks, solving the liquidity problem.

2. Q.3 Discuss the impact of convertibility both in current account and capital account.
Ans : Explanation of impact of convertibility in current account:-
currentaccount convertibilitymeansthatanycompanythatwantsto conduct businesswith outside
companies(likeTCS,Infyetc.) canconvertthe dollarpaymentintoRupee paymentorpayintermsof
dollaritself.Thisisfullyallowedin India provided that initial permission is taken from RBI. There is
no need to take again and again permission from RBI permission for every transaction. Current
account includes all transactions, which give rise to or use of
Q. 4 Write notes on VAT, MODVAT and Service Tax.
Ans : Explanation of Vat:-
The basic principles of VAT are contained in this document. It indicates how VAT works and with
whom the responsibility for payment lies.
VAT is a tax on consumer spending. It is collected by VAT-registered traders on their supplies of
goodsand serviceseffectedwithinthe State, for consideration, to their customers. Generally, each
such trader in the chain of supply from manufacturer through to retailer charges VAT on his or her
sales and is entitled to deduct from this amount the VAT paid on his or her purchases.
The effect of offsetting VAT on purchases against VAT on
Q. 5 Do you think poverty can be reduced through policies of inclusive growth? Justify
Ans : Yes poverty can be reduced through inclusive growth.
Justification:-
By definition, inclusive growth entails the equitable allocation of resources in order to generate
benefits that can be incurred by all sectors of the society, thus alleviating poverty and inequality.
Inclusive growthentailsthe equitable allocation of resources in order to generate benefits that can
be incurredby all sectorsof the society,thusalleviatingpovertyandinequality.However,isinclusive
growthnecessarily pro-poor? And does it ensure reducing the troubles of the most disadvantaged
while benefitingeveryone?There isyetnoclearcoherentmeasure tocombine all the dimensions of
inclusive growth that involves how the elements of
Q. 6 Has the FDI flows in the current times helped India? Elaborate
Ans : Yes FDI flows in current times helped India
Explanation:-
FDI inflowstoIndiawitnessed significant moderation in 2010-11 while other EMEs in Asia and Latin
America received large inflows. This had raised concerns in the wake of widening current account
deficitinIndiabeyondthe perceivedsustainablelevelof 3.0 per cent of GDP during April-December

3. 2010. Thisalsoassumes significance as FDI is generally known to be the most stable component of
capital flows needed to finance the current account
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