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The leading economists of the country differ in their opinion about the socioeconomic and ecological consequences of the policy of liberalisation.Liberalization-2/”>Liberalization has led to several positive and negative effects on Indian economy and Society. Some of the consequences of liberalisation have been briefly described here:
1. Increase in the Direct Foreign Investment: The policy of liberalisation has resulted in a tremendous increase in the direct foreign investment in the industrial and infrastructural sector (roads and electricity).
2. Enhancement in the Growth of GDP: There is a significant growth in the Gross Domestic Product (GDP). Prior to the liberalisation, the growth rate of GDP was around 4 per cent which rose to around 10 per cent in 2006-07.
3. Reduction in Industrial Recession: The Industrial Sector of India was passing through a period of recession prior to the policy of liberalisation. The foreign and private investment has checked the recession trend. This happened because of the massive investment in modernisation, expansion, and setting up of many new projects. Industries like automobiles, auto-components, coal-mining, consumer electronics, chemicals, food-processing, Metal, petrochemicals, Software, sport-goods, and textiles have undergone a growth rate of about 25 per cent. In addition to these, other industries, like crude-oil, construction, fertilisers, and power generation have shown an increase of about 15 per cent.
4. EMPLOYMENT: The heavy investments in industries and Infrastructure-2/”>INFRASTRUCTURE by the Indian and foreign investors have generated great employment opportunities for the professionals, and skilled and unskilled workers.
5. Development of Infrastructure: Prior to the liberalisation, the infrastructure (roads and electricity) were in a bad shape affecting the industrial growth and Economic Development of the country adversely. Heavy investment in infrastructure has improved the efficiency of the industrial sector significantly.
6. Rise in Export: There is a phenomenal increase in export after liberalisation. Simultaneously India is importing raw materials, machinery, and finished products. Despite heavy imports, there has been a tangible improvement in the Balance of Payment.
7-Increase in Regional Disparities:The policy of liberalisation and New Industrial Policy (1991) could not reduce the regional inequalities in economic development. In fact, investments by the Indians and foreign investors have been made in the states of Andhra Pradesh, Gujarat, Haryana, Karnataka, Maharashtra, Rajasthan, Tamil Nadu, and West Bengal. The states like Bihar, Himachal Pradesh, Jammu and Kashmir, Kerala, Meghalaya, Mizoram, Nagaland, Orissa, Tripura, Uttar Pradesh, and Uttarakhand are lagging behind. This has accentuated the regional imbalance and has lead to north south devide. The maximum investment so far has been done in Maharashtra, Gujarat, Andhra Pradesh, West Bengal, and Tamil Nadu. This uneven industrial development has resulted into many socioeconomic and political problems. The Naxal Movement, ULFA, and political turmoil in Jammu and Kashmir may be partly explained as being caused due to the less industrial and economic development of the regions.
8. Damage to Cottage and Small Scale Industries:Liberalisation in a country like India has adversely affected the traditional cottage and small scale industries which are unable to compete with the large-scale industries established by the multinationals. The cottage and small scale industries need protection in the form of subsidies, technology, technical access, funds, and Network to export their products, Indian traditional workers such as silk workers of bihar are threatened by the imported synthetic silk.
9.Sophisticated Technology: The latest technology, being sophisticated, replaces labour and thus results in Unemployment. This may be counter productive and detrimental to our industrial structure.
10. Comparatively Little Direct Investment: The foreign investors are more inclined to portfolio investment rather than direct investment. The former may be withdrawn at will at the slightest of hurdles giving a jolt to the economy of the country and it may create instability to Indian economy.
11. Investment in Selected Industries: Most of the foreign investment comes to white-goods and not to wage-good sector. Hence, it may be fruitful in improving the high priority sector and bringing in the latest technology. This will be counter productive. India is blessed with demographic dividend and the selective investment has failed to harness it.
12. Economic and Political Freedoms are at Stake: The over-enthusiasm of liberalisation to attract more investors and Foreign Exchange might lead to gradual handling over of the whole economy to the multinationals. This will affect adversely our economic and political freedom.
13. Inflation: Since the new industrial policy and liberalisations, the rate of inflation is continuously increasing. A section of the society is becoming more rich and adopting the lifestyle of consumerism. As opposed to this, the absolute number below the POVERTY line is also increasing. The gulf between the rich and the poor may be the cause of numerous social problems resulting in social tension.
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Economic growth is the increase in the amount of the goods and Services produced by an economy over time. It is usually measured as the annual Percentage increase in real gross domestic product (GDP), which is the market value of all Final Goods and services produced within a country’s borders in a given year.
Inflation is a general increase in prices and fall in the purchasing value of Money. It is usually measured as the annual percentage change in the consumer price index (CPI), which is a basket of goods and services that is used to track changes in prices over time.
Unemployment is the percentage of the labor force that is unemployed, meaning that they are actively looking for work but have not been able to find a job.
Poverty is the state of being poor, which is defined as having an income or Resources that are insufficient to meet basic needs.
Inequality is the state of being unequal, which can refer to economic inequality, social inequality, or political inequality.
Foreign Direct Investment (FDI) is the investment of money by a company or individual in another country. FDI can take many forms, such as the purchase of assets, the establishment of new businesses, or the acquisition of existing businesses.
Trade is the exchange of goods and services between countries. Trade can take many forms, such as the export and import of goods, the provision of services, or the movement of people.
Competition is the rivalry between businesses to sell goods and services to consumers. Competition can be based on price, quality, or innovation.
Productivity is the amount of output produced per unit of input. Productivity can be measured in terms of output per hour worked, output per unit of capital, or output per unit of land.
Innovation is the introduction of new products, services, or processes. Innovation can lead to economic growth, increased productivity, and improved Quality Of Life.
Technology is the application of scientific knowledge for practical purposes. Technology can be used to improve production, Communication, transportation, and healthcare.
Infrastructure is the basic physical and organizational structures and facilities needed for the operation of a society or enterprise. Infrastructure can include roads, bridges, Airports, power Plants, water and sewer systems, and telecommunications networks.
Environment is the natural world that surrounds us, including the air, water, land, plants, and animals. The environment is essential for our survival, and it is important to protect it from pollution and degradation.
Social welfare is the provision of assistance to people in need, such as the elderly, the unemployed, and the disabled. Social welfare can be provided by the government, private Charities, or religious organizations.
Governance is the process of making and implementing decisions that affect a group of people. Governance can be carried out by a government, a corporation, or a non-governmental organization.
Corruption is the abuse of power for personal gain. Corruption can take many forms, such as bribery, extortion, Nepotism, and cronyism.
Crime is an act that is punishable by law. Crime can be classified as property crime, violent crime, or white-collar crime.
Human Rights are the Fundamental Rights and freedoms that belong to every person, regardless of race, sex, nationality, ethnicity, language, religion, or any other status. Human rights include the right to life, Liberty, and security of person; the right to freedom from torture and other cruel, inhuman, or degrading treatment or punishment; the right to Equality before the law; and the right to freedom of expression and opinion.
Democracy is a form of government in which the people hold power. Democracy can be direct, in which the people vote on laws and policies directly, or representative, in which the people elect representatives to make decisions on their behalf.
Peace is the absence of war or conflict. Peace can be achieved through diplomacy, mediation, or arbitration.
Security is the state of being free from danger or threat. Security can be achieved through military strength, economic stability, and social cohesion.
Health is a state of physical, mental, and social well-being. Health is important for individuals and for societies as a whole.
Education is the process of facilitating Learning, or the acquisition of knowledge, skills, values, beliefs, and habits. Education can take place in formal settings, such as schools and universities, or in informal settings, such as at home or in the workplace.
Gender Equality is the state of being equal in terms of rights, opportunities, and treatment between Women and men. Gender equality is important for individuals and for societies as a whole.
Rural development is the process of improving the quality of life in rural areas. Rural development can include activities such as improving infrastructure, providing education and healthcare, and promoting economic development.
Urbanization is the process of people moving from rural areas to cities. Urbanization can have a number of positive and negative effects, such as increased economic growth and social diversity,
What is liberalisation?
Liberalisation is the process of reducing government control over the economy. This can be done by deregulating industries, privatizing state-owned enterprises, and lowering trade barriers.
What are the benefits of liberalisation?
Liberalisation can lead to a number of benefits, including:
- Increased competition: When businesses are free to enter and exit markets, it leads to increased competition. This can drive down prices and improve quality.
- Increased efficiency: When businesses are free to make their own decisions, they are more likely to be efficient. This can lead to lower costs and higher profits.
- Increased innovation: When businesses are free to experiment, they are more likely to innovate. This can lead to new products and services, which can benefit consumers.
- Increased economic growth: Liberalisation can lead to increased economic growth by encouraging investment and trade.
What are the risks of liberalisation?
Liberalisation can also lead to a number of risks, including:
- Increased inequality: When businesses are free to compete, it can lead to winners and losers. The winners may become very wealthy, while the losers may be left behind.
- Increased unemployment: When businesses are free to move their operations to other countries, it can lead to job losses in the country where they are located.
- Increased environmental damage: When businesses are free to operate without government regulation, they may be more likely to pollute the environment.
- Increased social unrest: When people are faced with economic hardship, they may be more likely to protest or riot.
What is the impact of liberalisation on the economy?
The impact of liberalisation on the economy is complex and varies depending on the country and the specific policies that are implemented. However, in general, liberalisation can lead to both positive and negative effects.
On the positive side, liberalisation can lead to increased competition, efficiency, innovation, and economic growth. This can benefit consumers by leading to lower prices, higher quality goods and services, and a wider range of choices.
On the negative side, liberalisation can lead to increased inequality, unemployment, environmental damage, and social unrest. These negative effects can be particularly severe in countries that are not well-prepared for liberalisation.
Overall, the impact of liberalisation on the economy is mixed. It is important to carefully consider the potential benefits and risks before implementing liberalisation policies.
What is the impact of liberalisation on society?
The impact of liberalisation on society is also complex and varies depending on the country and the specific policies that are implemented. However, in general, liberalisation can lead to both positive and negative effects.
On the positive side, liberalisation can lead to increased economic growth, which can create jobs and raise living standards. It can also lead to increased individual freedom and choice.
On the negative side, liberalisation can lead to increased inequality, as the benefits of economic growth are not always shared equally. It can also lead to social unrest, as people adjust to the changes brought about by liberalisation.
Overall, the impact of liberalisation on society is mixed. It is important to carefully consider the potential benefits and risks before implementing liberalisation policies.
Sure, here are some MCQs on the topics of Globalization/”>Globalization-3/”>Globalization, trade, and investment:
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Globalization is the process of:
(a) increasing economic integration between countries
(b) reducing trade barriers between countries
(c) increasing the flow of capital between countries
(d) all of the above -
The main benefits of globalization include:
(a) increased efficiency and productivity
(b) lower prices for consumers
(c) greater choice for consumers
(d) all of the above -
The main challenges of globalization include:
(a) job losses in some countries
(b) increased inequality
(c) environmental damage
(d) all of the above -
Trade is the exchange of goods and services between countries.
(a) True
(b) False -
Free trade is the absence of government restrictions on international trade.
(a) True
(b) False -
The main benefits of free trade include:
(a) increased efficiency and productivity
(b) lower prices for consumers
(c) greater choice for consumers
(d) all of the above -
The main challenges of free trade include:
(a) job losses in some countries
(b) increased inequality
(c) environmental damage
(d) all of the above -
Foreign direct investment (FDI) is the investment of a company in another country.
(a) True
(b) False -
The main benefits of FDI include:
(a) increased efficiency and productivity
(b) lower prices for consumers
(c) greater choice for consumers
(d) all of the above -
The main challenges of FDI include:
(a) job losses in some countries
(b) increased inequality
(c) environmental damage
(d) all of the above
I hope these MCQs were helpful!