(i) "Import substitution policy, if not applied carefully, can be a double-edged sword for any economy." Do you agree with the given statement ? Justify your answer with valid arguments. (ii) State how multilateral trade is different from bilateral trade. (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.

Question

Accepted Answer

(i) **I agree that import substitution can be a double-edged sword.** Justification:

**Positive Aspects:**
- Protects domestic industries from foreign competition
- Promotes employment generation
- Builds indigenous industrial capacity

**Negative Aspects:**
- Reduces competition leading to inefficiency
- Limits consumer choice
- Technology remains outdated
- Higher prices for consumers

(ii) **GST:**
- Goods and Services Tax implemented in 2017
- Simplified multiplicity of taxes
- Created unified indirect tax system
- Input tax credit eliminated cascading
- One nation, one tax, one market
- Reduced tax evasion through digital compliance