Question 6: What are the essential features of:
a. Liberalisation,
b. Privatization and
c. Globalisation?
Answer:
a) Liberalization
Liberalization means to liberate industry from the shackles of the licensing system. The economic reforms that were introduced were aimed at liberalizing the Indian business and industry from all unnecessary controls and restrictions. Liberalization signalled the end of the license permit quota and other restrictions that were put on the industries before 1991.
The essential features of liberalization are:
1. It stresses freedom of business and industry from unnecessary controls and restrictions of the government.
2. Emphasis was laid on simplifying export and import procedures.
3. Restrictions on the movement of goods and services were removed. 4) Public sector enterprises were dereserved.
b) Privatization
Privatization means to drastically reduce the role of the public sector. It refers to transfer of ownership, management and control of the public sector to the private sector. And to achieve this government adopted disinvestment of the public sector and referred the loss making and sick enterprises to the Board of industrial and Financial Reconstruction.
The essential features of privatization are:
1. It stresses the induction of private ownership, management and control in the public sector.
2. There was a significant reduction in the role of public sector enterprises for economic growth.
3. BIFR (Board on Industrial and Financial Reconstruction) was established for revival of loss making and sick enterprises.
4. Disinvestment of the public sector took place at a significant rate. Disinvestment means the process of sale of public sector enterprises to the private sector.
c) Globalization
Globalization means to encourage foreign private participation in India’s industrial development. It refers to integration of the various economies of the world leading towards the emerging of a cohesive or interconnected global economy. It also implies reducing the restrictions on the import and export such as licensing and tariffs.
The essential features of Globalization are:
1. It stresses the integration of domestic economies into a cohesive or interconnected global economy.
2. Licensing was abolished for imports.
3. The share of foreign equity participation was increased.
4. Foreign Investment Promotion Board (FIPB) was set up to promote foreign investments in India.
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