Question

Which of the following statement highlights a negative impact of the New Economic Policy on the domestic producers in India?

• A. Domestic producers had to take licences for their businesses.
• B. Domestic producers had to share government benefits with foreign producers.
• C. Domestic producers did not have modern technologies to produce better quality products.
• D. Cheaper imports decreased the demand for domestic goods, pushing the domestic producers out of business.

Answer 1

The correct option is D Cheaper imports decreased the demand for domestic goods, pushing the domestic producers out of business.

Due to liberalisation, trade barriers were removed. Foreign companies got access to the Indian market. Thus, cheaper goods made their way into the market to compete with goods produced by the Indians. It pushed the demand for domestic goods downward. Eventually, the market competition drove out small producers from the market.