Question

Explain the following terms:

(a) Liberalisation

(b) Privatization

(c) Globalisation

Answer 1

(a) Liberalisation: Liberalisation refers to the removal of unnecessary controls and restrictions of the government in the form of licenses, permits and quotas. India initiated liberalisation of industries in 1991. Liberalisation of industries in India took the following form.

1. License required for the establishment of industries were abolished.
2. Enterprises became free in deciding the scale and size of production and the price of the products
3. Restrictions were removed on the movement of goods and services
4. Procedures regarding exports and imports were relaxed

(b) Privatisation: Privatisation implies according greater role to the private sector and reducing the involvement of public sector. Privatisation was followed in India in the following manner.

1. Disinvestment of the public sector enterprises
2. Establishing Board of Industrial and Financial Reconstruction for the revival of the sick and loss making enterprises.
3. Diluting the stake of government in the public sector enterprises.

(c) Globalisation: Globalisation refers to the process of integration of various economies of the world. It implies reducing the restrictions on the import and export such as licensing and tariffs. In India the following policies were followed with regard to globalisation.

1. Removal on restriction on imports
2. Abolishing the export duty
3. Reducing import duty