General awareness: Economics Notes # 2

(Source: XI NCERT Economics Chapter 3)

CHAPTER 3 : LIBERALISATION, PRIVATISATION AND GLOBALISATION :: AN APPRAISAL

·         -Liberalisation and privatization are policies and globalization is the outcome of these policies.

·         LIBERALISATION

a)      Deregulation of Industrial Sector:

Industrial licensing was abolished except for alcohol, cigarettes, hazardous chemicals, industrial explosives, electronics, aerospace and drugs.

Industries reserved for the public sector are defence equipments, atomic energy generation and railway transport.

b)      Financial Sector Reforms:

·         Establishment of Private Banks

c)       Tax Reforms

·         Reforms is governments taxation and public expenditure policies which are collectively called fiscal policy.

d)      Foreign Exchange Reforms.

·         Devaluation of rupee against foreign currencies

e)      Trade and Investment policy reforms

·         Dismantling of quantitative restrictions on imports and exports

·         Reduction of tariff rates

·         Import licensing was abolished

PRIVATISATION:

o   Privatisation of the public sector undertakings by selling off part of the equity of PSUs to the public is known as disinvestment.

o   Government envisaged that privatization could provide strong impetus to the inflow of FDI.

GLOBALISATION:

o   It is a complex phenomenon

o   It is an outcome of the set of various policies that are aimed at transforming the world towards greater interdependence and integration.

o   It involves creation of networks and activities transcending economics, social and geographical boundaries.

o   Outsourcing in one of the important outcomes of the globalization.