<–2/”>a >The Indian Government had undertaken Industrial Policy reforms since 1980, but the most radical reforms have occurred since 1991, after the severe economic crisis in fiscal year 1990-91. These reforms mainly aim at enhancing the efficiency and international competitiveness in Industry/”>Indian Industry. India’s industrial policy of 1991 towards liberalisation, deregulation, market orientation has been hailed as ushering in a new era of freedom from government controls, licence raj and red carpetism and one which promises greater prosperity for the Indian people.
Main Objectives of the Industrial Policy of the Government are –
- to maintain a sustained Growth in productivity;
- to enhance gainful EMPLOYMENT;
- to achieve optimal utilisation of human Resources;
- to attain international competitiveness and
- to transform India into a major partner and player in the global arena.
Till 1970’s:-
• The Indian planners emphasized the role of heavy industry in Economic Development and sought to build up as rapidly as possible the Capital Goods sector.
• The plans envisaged a leading role for the public sector in this structural transformation of the economy.
• Major investments in the private sector were to be carried out, not by the test of private profitability, but according to the requirements of the overall national plan.
• The plans emphasized technological self-reliance, and for much of the period, an extreme inward orientation in the sense that if anything could be produced in the country, regardless of the cost, it should not be imported.
India’s industrial policy of 1991 towards liberalisation, deregulation, market orientation has been hailed as ushering in a new era of freedom from government controls, licence raj and red carpetism and one which promises greater prosperity for the Indian people. Industrial licensing was liberalized or abolished. Moreover, the Monopolies and Restricted Trade Practices (MRTP) Act deregulated. The numbers of activities reserved for the public sector enterprises (PSE) were also reduced.
Promotion of Investment/”>Foreign Direct Investment (FDI) forms an integral part of the Industrial Policy. FDI helps in accelerating economic growth by means of infusion of capital, technology and modern management practices. Government has put in place a liberal and transparent foreign investment regime, wherein FDI, upto 100%, is allowed, under the automatic route, in most sectors/activities. The FDI Policy is announced through issue of Consolidated FDI Policy Circulars.
Merits of the New Industrial policy :
1.To raise the level of industrial efficiency, time consuming hurdles of regulations, licenses and restrictions would either be done away with or made industry friendly. Inflow of FDI and foreign technology transfers would be encouraged.
2.Additions to the supply of investible resources and technology would result in increased industrial production and productivity.
3.With the abolition of licensing system in most industries except 5, the wave of Liberalization-2/”>Liberalization would boost the entrepreneurial skills in the economy.
4.Pruning/de reservatioin of Industries for the public sector would boost professionalism in this secotr. Increased autonomy would usher in dynamism for the betterment.
5.NIP-1991 made a special mention about the role and importance of small scale industries. The state would initiate measures to promote and strengthen small, tiny and village industries, which have large potential to deal with the problems like Unemployment, regional disparities, income inequalities and Inflation.
6.As the government of the country is obliged to protect the interest of workers, this policy would lay special emphasis to enhance the welfare and upgrade the economic and social status of the worker. To ensure long-lasting and cordial relations between the workers and the management, they (workers) would participate in the management decisions of the enterprises.
Privatization in generic terms refers to the process of transfer of ownership, can be of both permanent or long term lease in nature, of a once upon a time state-owned or public owned property to individuals or groups that intend to utilize it for private benefits and run the entity with the aim of profit maximization.
ADVANTAGES OF PRIVATIZATION
Privatization indeed is beneficial for the growth and sustainability of the state-owned enterprises.
• State owned enterprises usually are outdone by the private enterprises competitively. When compared the latter show better results in terms of revenues and efficiency and productivity. Hence, privatization can provide the necessary impetus to the underperforming PSUs .
• Privatization brings about radical structural changes providing momentum in the competitive sectors .
• Privatization leads to adoption of the global best practices along with management and motivation of the best human talent to foster sustainable competitive advantage and improvised management of resources.
• Privatization has a positive impact on the financial Health of the sector which was previously state dominated by way of reducing the deficits and debts .
• The net transfer to the State owned Enterprises is lowered through privatization .
• Helps in escalating the performance benchmarks of the industry in general .
• Can initially have an undesirable impact on the employees but gradually in the long term, shall prove beneficial for the growth and prosperity of the employees .
• Privatized enterprises provide better and prompt Services to the customers and help in improving the overall Infrastructure-2/”>INFRASTRUCTURE of the country.
DISADVANTAGES OF PRIVATIZATION
Privatization in spite of the numerous benefits it provides to the state owned enterprises, there is the other side to it as well. Here are the prominent disadvantages of privatization:
• Private sector focuses more on profit maximization and less on social objectives unlike public sector that initiates socially viable adjustments in case of emergencies and criticalities .
• There is lack of transparency in private sector and stakeholders do not get the complete information about the functionality of the enterprise .
• Privatization has provided the unnecessary support to the Corruption and illegitimate ways of accomplishments of licenses and business deals
ADVANTAGES AND DISADVANTAGES OF PRIVATISATION IN INDIA
- Privatization loses the mission with which the enterprise was established and profit maximization agenda encourages malpractices like production of lower quality products, elevating the hidden indirect costs, price escalation etc..
• Privatization results in high employee turnover and a lot of investment is required to train the lesser-qualified staff and even making the existing manpower of PSU abreast with the latest business practices .
• There can be a conflict of interest amongst stakeholders and the management of the buyer private company and initial resistance to change can hamper the performance of the enterprise .
• Privatization escalates price inflation in general as privatized enterprises do not enjoy government subsidies after the deal and the burden of this inflation effects common man
Definition of Globalization/”>Globalization-3/”>Globalization :- Its a process(not an outcome) characterized by increasing global Interconnections by gradual removal of barriers to trade and investment between nation and higher economic efficiency through competitiveness.
Various economic, political, social and cultural effects of globalization are as follows:-
Economic:-
- Breaking down of national economic barriers
- International spread of Trade, Financial and productive activities
- Growing power of transnational cooperation and International financial Institutions(WTO, IMF)Through the process of:-
1- Liberalization- relaxation of restrictions, reduction in role of state in economic activities,decline in role of govt in key industries, social and infrastructural sector.
2- Privatization- Public offering of Shares and private sale of shares, entry of private sector in public sector and sale of govt enterprises.
3- FDI
4- International regulatory bodies(WTO,IMF)
5- MNC’s
6- Infrastructural development
7- Expansion of Communication-technology/”>Information and communication technology and birth of information age.
8- Outsourcing of services- ie BPO and Call Centres.
9- Trade related Intellectual Property Rights(TRIPS)- product based patent rather than process based.
Social effects:-
- Withdrawal of National govt from social sectors ie declining share of govt in public spending, reducing social benefits for worker(social dumping,pension cuts,subsidies reduction)
- Labor reforms and deteriorating Labor welfare:-
- Labour Market deregulation:-
- Minimum wage fixing
- Employment security
- Modifying tax regulation
- Relaxed standards of security
- Increased Mechanization demands skilled labour and thus loss of job for unskilled labour
- Loss of jobs for traditional workers for example bihar silk workers due to imported Chinese- Korean silk
- Labour Market deregulation:-
- Feminism of Labour ie increased Women participation specially in soft industries
- Trickle down theory of POVERTY reduction has limited success and in agricultural nations poverty has infect increased.
- Unsustainable development practices such as:- excessive use of Fertilizers, Irrigation, fish trawling by mnc’s(Protein flight ),Exploitation of Natural Resources by MNC’s.
- Migration and Urbanization have lead to problem of slums
- Commercialization of indigenous knowledge:- patenting
- Rising inequality in wealth concentration
Cultural:-
- Increased pace of cultural penetration
- Globalization of culture
- Development of hybrid culture
- Resurgence of cultural nationalism ie shivsena opposing valentine day
Political:-
- Globalization of National Policies- Influenced by International agencies
- Reducing economic role of govt
- Political lobbying
Positive effects of Globalization
- Increased competition
- Employment generation
- Investment and capital flow
- Foreign Trade
- Spread of technical know how
- Spread of Education
- Legal and ethical effects
- Improved status of women in the Society
- Urbanization
- agriculture:- greater efficiency,productivity, use of HYV seeds, Future contracts and Cooperative Farming
- Higher standard of living
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Liberalization, privatization, and globalization are three of the most important economic and political trends of the past few decades. These trends have had a profound impact on the world economy, and they continue to shape the global landscape.
Liberalization is the process of removing government restrictions on the economy. This can include deregulation, which is the removal of government regulations on businesses, and trade liberalization, which is the removal of government restrictions on trade. Liberalization is often seen as a way to promote economic growth by allowing businesses to operate more freely and efficiently.
Privatization is the process of transferring ownership of state-owned enterprises to private individuals or companies. This can include the sale of government-owned assets, such as factories or utilities, or the granting of concessions to private companies to operate public services. Privatization is often seen as a way to improve efficiency and reduce government spending.
Globalization is the process of increasing economic, political, and cultural integration between countries. This can include the growth of international trade, the spread of multinational corporations, and the increasing flow of information and ideas across borders. Globalization is often seen as a way to promote economic growth and development by increasing the size of the global market and the flow of capital and technology.
These three trends have had a profound impact on the world economy. Liberalization has led to increased competition and efficiency in the global marketplace. Privatization has led to increased efficiency and innovation in the public sector. Globalization has led to increased trade and investment, which has boosted economic growth in many countries.
However, these trends have also had some negative consequences. Liberalization has led to job losses in some industries, as businesses have moved their operations to countries with lower labor costs. Privatization has led to the loss of jobs in the public sector, and it has also led to concerns about the accountability of private companies. Globalization has led to increased inequality, as the benefits of economic growth have not been shared equally.
Despite these negative consequences, liberalization, privatization, and globalization are likely to continue to shape the global economy in the years to come. These trends are driven by powerful economic and political forces, and they are likely to be difficult to reverse.
The effects of liberalization, privatization, and globalization on the economy, Polity, and social structure are complex and multifaceted. There is no single answer to the question of whether these trends are beneficial or harmful. The answer depends on a variety of factors, including the specific policies that are implemented, the country or region in question, and the time period under consideration.
In general, however, it is clear that these trends have had a significant impact on the world economy and on the lives of people around the globe. They have created new opportunities for some, but they have also created new challenges for others. It is important to understand these trends and their implications in order to make informed decisions about the future.
Liberalization
- What is liberalization?
Liberalization is the process of removing restrictions on economic activity. This can include deregulation, privatization, and trade liberalization.
- What are the benefits of liberalization?
Liberalization can lead to increased economic growth, efficiency, and innovation. It can also lead to lower prices and more choices for consumers.
- What are the risks of liberalization?
Liberalization can lead to job losses, inequality, and environmental damage. It can also make it more difficult for governments to regulate the economy.
Privatization
- What is privatization?
Privatization is the process of transferring ownership of state-owned assets to private individuals or companies.
- What are the benefits of privatization?
Privatization can lead to increased efficiency, innovation, and investment. It can also lead to lower prices and more choices for consumers.
- What are the risks of privatization?
Privatization can lead to job losses, inequality, and environmental damage. It can also make it more difficult for governments to regulate the economy.
Globalization
- What is globalization?
Globalization is the process of increasing interconnectedness between countries and people around the world. This can include trade, investment, migration, and culture.
- What are the benefits of globalization?
Globalization can lead to increased economic growth, efficiency, and innovation. It can also lead to lower prices and more choices for consumers.
- What are the risks of globalization?
Globalization can lead to job losses, inequality, and environmental damage. It can also make it more difficult for governments to regulate the economy.
Effects of liberalization, privatization, and globalization on economy, polity, and social structure
- Economy
Liberalization, privatization, and globalization can have a significant impact on the economy. They can lead to increased economic growth, efficiency, and innovation. They can also lead to lower prices and more choices for consumers. However, they can also lead to job losses, inequality, and environmental damage.
- Polity
Liberalization, privatization, and globalization can also have a significant impact on the polity. They can lead to increased Democracy and accountability. They can also lead to increased corruption and cronyism.
- Social structure
Liberalization, privatization, and globalization can also have a significant impact on social structure. They can lead to increased social mobility and Equality. They can also lead to increased inequality and social unrest.
Liberalization is the process of removing government restrictions on the economy. This can include things like deregulation, privatization, and trade liberalization.
Privatization is the process of transferring ownership of government-owned assets to private individuals or companies.
Globalization is the process of increasing economic, political, and cultural interconnectedness between countries.
Effects of liberalization, privatization, and globalization on the economy
- Increased competition. Liberalization and privatization can lead to increased competition in the marketplace. This can be good for consumers, as it can lead to lower prices and better quality goods and services. However, it can also be bad for businesses, as they may have to lower their prices or improve their products in order to compete.
- Increased efficiency. Liberalization and privatization can lead to increased efficiency in the economy. This is because businesses are now free to make their own decisions about how to run their businesses. They are also free to invest in new technologies and equipment, which can lead to increased productivity.
- Increased investment. Liberalization and privatization can lead to increased investment in the economy. This is because businesses are now more confident about the future of the economy, and they are more likely to invest in new projects.
- Increased growth. Liberalization and privatization can lead to increased economic growth. This is because of the increased competition, efficiency, and investment that these policies can bring about.
Effects of liberalization, privatization, and globalization on polity
- Increased democracy. Liberalization and privatization can lead to increased democracy. This is because these policies can lead to a more open and transparent economy, which can make it easier for people to participate in the political process.
- Increased accountability. Liberalization and privatization can lead to increased accountability of governments. This is because governments are now more accountable to businesses and investors, who are more likely to withdraw their support if the government is not acting in their interests.
- Increased transparency. Liberalization and privatization can lead to increased transparency in government. This is because these policies can lead to a more open and accountable government, which is more likely to release information about its activities.
Effects of liberalization, privatization, and globalization on social structure
- Increased inequality. Liberalization and privatization can lead to increased inequality. This is because these policies can benefit the wealthy and powerful at the expense of the poor and marginalized.
- Increased social unrest. Liberalization and privatization can lead to increased social unrest. This is because these policies can lead to job losses, poverty, and social exclusion, which can make people more likely to protest and riot.
- Increased cultural change. Liberalization and privatization can lead to increased cultural change. This is because these policies can lead to the introduction of new ideas and values from other countries, which can challenge traditional values and beliefs.