Globalisation — Important Questions

Gulf War between Iraq and Kuwait

The immediate cause of India's foreign exchange crisis in 1991 was the Gulf War between Iraq and Kuwait in 1990-91. This war pushed up oil prices significantly, leading to a massive increase in India's oil import bill. Combined with other factors like rising external debt and withdrawal of NRI deposits, this created a severe foreign exchange shortage. India's reserves fell to just two weeks of import coverage. Options A, C, and D, while potentially affecting the economy, were not the primary triggers of the 1991 crisis.

Information Technology (IT)

The Information Technology (IT) sector, along with Business Process Outsourcing (BPO), emerged as a major beneficiary of globalisation in India. These sectors provide outsourcing services to customers in other countries, particularly the USA and Europe. Globalisation created tremendous opportunities for skilled professionals in these fields and helped India become a global IT hub. Agriculture faced mixed results from globalisation. Traditional handicrafts and small-scale industries actually faced increased competition from globalisation rather than benefiting significantly.

Foreign Direct Investment

FDI stands for Foreign Direct Investment, which refers to investment made by foreign companies or individuals in the domestic economy of another country. In the context of globalisation, FDI brings capital, technology, and expertise to the host country. India has actively encouraged FDI since 1991 as part of its globalisation strategy. The other options are incorrect expansions that don't represent the actual meaning of FDI in economic terms.

1995

The World Trade Organisation (WTO) was established on January 1, 1995. It is an international organisation designed to supervise and liberalise international trade. India is a founder member of WTO, which currently has 164 member countries. The WTO replaced the General Agreement on Tariffs and Trade (GATT) and has its headquarters in Geneva, Switzerland. Options A, B, and D represent incorrect years for WTO's establishment.