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Q. Consider the following pairs concerning Liberalization, privatization and globalization (LPG) reforms introduced by New Economic Policy 1991:
 Policy Associated Measures
1. Liberalization A domestic company hiring regular service from a foreign company
2. Privatization Outright sale of public sector companies
3. Globalization Raising of investment limit in banks
Which of the above pairs is/are correctly matched?

  1. 3 only

  2. 2 only

  3. 1 and 2 only

  4. 2 and 3 only


Solution

The correct option is B
2 only

Explanation:

Pair 1 is incorrectly matched: A company hires regular service from external sources, mostly from other countries, as a part of Globalisation.

Liberalisation was introduced to put an end to these restrictions and open various sectors of the economy. Other reforms under liberalization include the abolition of  Industrial licensing for almost all but product categories — alcohol, cigarettes, hazardous chemicals, industrial explosives, electronics, aerospace and drugs and pharmaceuticals, de-reserving many goods produced by small-scale industries.

Pair 2 is correctly matched: It implies shedding of the ownership or management of a government-owned enterprise. Government companies are converted into private companies in two ways (i) by the withdrawal of the government from ownership and management of public sector companies and or (ii) by the outright sale of public sector companies.  

Pair 3 is incorrectly matched: Raising of investment limit in banks was a part of liberalization. Globalisation involves the creation of networks and activities transcending economic, social and geographical boundaries. Globalisation attempts to establish links in such a way that the happenings in India can be influenced by events happening miles away. It is turning the world into one whole or creating a borderless world. Outsourcing is one of the important outcomes of the globalisation process. In outsourcing, 

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