CBSE 2025, Set 2

Question

(b) (i) Discuss briefly, causes and consequences of the tax reforms initiated during economic reforms in India.

(ii) State one example each of a Maharatna and a Miniratna company in the public sector in India.

Edvaya · Accepted Answer

The correct answer is Subjective. **(i) Tax Reforms (1991):** **Causes:** The causes of the tax reforms initiated during the economic reforms in India were to curb rampant tax evasion, encourage household savings, and promote the voluntary disclosure of income. Additionally, indirect tax reforms were necessitated to facilitate the establishment of a common national market for commodities. **Consequences:** The tax rate rationalisation aimed at yielding larger tax revenue but ironically did not result in an immediate increase in tax revenue. Moreover, huge tax incentives provided to foreign investors further reduced the scope for raising tax revenues, which adversely impacted the government's developmental and social welfare expenditures. **(ii) Examples of PSUs:** * **Maharatna Company:** Indian Oil Corporation Limited (IOCL). * **Miniratna Company:** Bharat Sanchar Nigam Limited (BSNL).

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Economics > Indian Economic Development > Economic Reforms 1991

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