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Q.Consider the following pairs with respect to Liberalization, privatization and globalization (LPG) reforms introduced in the 8th Five year plan:
 
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. 1 and 2 only

  2. 2 and 3 only

  3. 3 only

  4. 2 only


Solution

The correct option is D
2 only
Explanation:

Pair 1 is incorrectly matched: Raising of investment limit in banks was a part of liberalization. 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: Globalisation involves 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, a company hires regular service from external sources, mostly from other countries.

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