Liberaliastion, Privatisation and Gloabalisation

APRIL 23, 2020


Good morning boys! We will now move to our next topic which is liberalisation, privatisation and globalisation.

LEARNING OUTCOME- At the end of the topic, students will be able to-
a) Explain the terms Liberalisation, Privatisation and Globalisation.
b) Identify the above terms in the given case study.

First, watch the video given below for better understanding of this topic and then take down your notes.

Q.6 Explain the meaning of Liberalisation, Privatisation and Globalisation. (6)
Ans- 1. Liberalisation-
a) It means removal of unnecessary controls and restrictions on business.
b) Features of liberalisation are as follows-
- Abolishing licensing requirement in most of the industries accept a shortlist.
- Freedom in  deciding the scale of business activities i e no restrictions on expansion or contraction of business activities.
-  Removal of restrictions on the movement of goods and services.
- Freedom in fixing the prices of goods and services .
-Reduction in tax rates and lifting of unnecessary controls over the economy.
- Simplifying procedures for imports and exports.
-Making it easier to attract foreign capital and technology to India.
2. Privatisation-
a)It means giving greater role to the private sector in the nation building process and a reduced role to the public sector .
b) To achieve this, the government redefined the role of the public sector in New Industrial Policy of 1991 and adopted the policy of planned disinvestments of the public sector and decided to refer the loss making and sick enterprises to the Board of Industrial and Financial Reconstruction.
The teem disinvestment means transferring the public sector enterprises to the private sector. This will result in dilution of stake of the government in the public enterprise.
3. Globalisation-
a)It means integrating the various economies of the world leading towards the emergence of a cohesive global economy . It involves an increased level of interdependence among the various nations of the global economy.
b)The aim of globalisation is as follows-
- Removal of quantitative as well as tariff restrictions .
-Import liberalization and export promotion through rationalisation of the tariff structure and foreign exchange reforms.
- Free flow of goods and services across nations .
-Free flow of capital across nations .
- Free flow of Information and technology.
- Free movement of people across borders .

CASE STUDY

In an environment of rising petroleum prices and a large middle class population in India, recognised the need for small cars in India.It created a product far superior than their competitors not only in terms of quality but also in terms of overall driving experience. It soon became the leader in the small car market. As the Indian government was encouraging foreign investment, MNC's having a big name in car manufacturing entered the Indian market.
It further expanded its service network and quality creating an entry barrier for the competitors. It depicted its strengths through various brand building activities. As a result, the market share of the company is refusing to go down in spite of all major automakers as its competitors.
A) Identify and explain briefly the economic reforms highlighted in the above case.
B) Quoting the lines, explain any two points of importance of Business Environment being highlighted in the above case. (6)