Question

What are components of new economic policy?
(I)Define Liberalisation. What are the measures taken for liberalisation?
(II)Define Privatisation. What are the measures taken for privatisation?
(III)Define Globalisation. What are the measures taken for globalisation?

Answer 1

Liberalization refers to the process of eliminating unnecessary controls and restrictions on the smooth functioning of business enterprise. It includes:

a) Abolishing industrial licensing requirement in most of the industries.

b) Freedom in deciding the scale of business activities.

c) Freedom in fixing prices of goods and services.

d) Reduction in tax rates.

Privatization means transfer of ownership or management of an enterprise from thee public sector to the private sector. It includes:

a) Divestiture, or privatization of ownership, through the sales of equity.

b) Denationalization or re-privatization.

c) Contracting- under which government contracts out services to other organizations that produce and deliver them.

Globalization refers to the process of growing economic interdependence of countries worldwide through increasing the volume and variety of cross-border transactions in goods and services and of international capital flows through the more widespread diffusion of technology. It includes:

a) Growing global market in service- banking, insurance, transport.

b) Setting up of new financial markets.

c)The creation of the WTO to stimulate cross-border trade.