B.Com Ist Year Privatisation Long Short Question Answer Notes
Table of Contents
Short Answer Questions
Q.1. What do you understand by Globalisation ? Gives armuments in favour of Globalisation. (Meerut, 2013)
Ans. MEANING OF GLOBALISATION
The term ‘globalisation’ refers to integrate the Indian economy in the world economy. Globalisation has the following four parameters:
(a) Reduction of trade barriers so as to permit free flow of goods and services across national frontiers.
(b) Creation of an environment permitting free flow of
technology among nation-states.
(c) Creation of an environment in which free flow of capital can take place; and
(d) Creation of an environment in which free movement of labour can take place in different countries of the world.
According to Thomas Mathew, “Globalisation is a process of change resulting from a combination of increasing cross-boarder activity and spread of information technology, facilitating real time communication world wide.”
According to N. Vaghul, “Globalisation refers to the rapid and world wide expansion of market.”
ADVANTAGES OF GLOBALISATION STUDY NOTES
(1) Expansion of Market : National boundries becomes meaningless for the multinational companies as they get estricted power to exploit resources of the whole world. This pis in expansion of market for trade and business.
(2) Technical Development: Process of globalization helps development of technical research, discoveries and new iniques of industrial production.
(3) Free Flow of Resources : Globalization also helps in the flow of resources like labour, goods, capital ung different countries of world..
(4) Expansion of Capital Market : Globalisation policy provides wider capital market to the business institutions. It will increase direct foreign investment and indigenous companies will get a chance to issue share capital in international capital market.
(5) Efficient Services : Due to process of globalisation, facilities of telecommunication, transport, bank, insurance etc. also improved in the country.
Q.2. What is meant by Liberalisation ? Why was liberalisation needed in India ?(Meerut, 2013)
Ans. Liberalisation refers to the removal of unnecessary controls and restrictions on trade, industry and banking system of the country. It liberalise the economy from bureaucratic controls. The main purpose of liberalisation is to increase efficiency and bring competitiveness by promoting market system of resource allocation. In other words, it is a new economic policy which indudes abolition or loosening of those economic policies, rules, regulations, administrative procedures and control for rapid economie development.
NEED/OBJECTIVES OF LIBERALISATION NOTES
The following arguments are given in favour of the policy of liberalisation in India:
(1) Encouragement to Foreign Investment : Policy of liberalisation motivate the foreigners to invest more in India. It provide enough financial resources to the country for the development of large modern industries.
(2)Availability of Cheap and Superior Goods: This policy helps to provide cheap and superior goods to the consumers. Due to fear of competition, producers will motivate to reduce cost of production and to provide better quality goods.
(3) Check on Inflation : Policy of liberalisation is also favoured to control the price rise in the country. This policy helps to increase in output of consumer goods as well as capital goods. It will prove helpful to check the rapid increase in prices.
(4) Competitive Industrial Environment : Policy liberalisation remove restrictions on entry of the foreign firms. will help in creating competitive industrial environmentas domes industries have to compete with the foreign companies.
(5) Increase in Employment: Liberalisation policy mocy establishment of new industries and foreign investment increase employment opportunities in the country.
(6) Rapid Industrial Development : Liberalisation initiate private entrepreneurs to work in a free environment. It remove all unnecessary controls and thus prove helpful in rapid industrial development.
(7) Optimum Utilisation of Resources : Indian industries do not work at full capacity due to lack of capital and technique. This led to wastage of resources. But policy of liberalisation provide capital and new technique to these industries and put a check on wastage of resources.
– DISADVANTAGES OF LIBERALISATION NOTES
(1) Effect on National Sovereignty : With effect of liberalisation, many multinational companies has entered in our economy. They invest huge capital and try to capture the whole market. They also starts making interference in the political sphere also. This can adversely affect national sovereignty.
(2) Cut-throat Competition: Liberalisation gives birth to cut throat competition. This hinders the development of small and cottage industries.
(3) Centralisation of Economic Power : Liberalisation policy also increase the inequalities of income and wealth in the country. It increase the tendency of take over of small institutions by large institutions which results in spontaneous arisal of monopoly.
(4) Opposition by Labour Unions : Liberalisation policy give emphasis on the privatisation, which is duly opposed by the labour unions. This increase industrial unrest in the country.
(5) Unbalanced Growth : Liberalisation policy motivate
private sector instead of public sector. But private investors invest money in those regions which possessed facilities for manufacturing and trading activities. Therefore, most of the industries established in the developed areas and this increase the regional imbalance in the country.
Q.3. What do you understand by disinvestment of capital in the public sector.
Ans. See Point No.(3) on Page 114.
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