3. What economic benefits have accrued in the last three decades with the progressive liberalisation of different sectors? Illustrate.
पिछले तीन दशकों में विभिन्न क्षेत्रों के प्रगतिशील उदारीकरण के क्या आर्थिक लाभ हुए हैं? उदाहरण देकर स्पष्ट करें?
progressive liberalisation of different sectors? Illustrate.
Demand of the question – Illustrating the evolution of liberalisation of different sectors over a period of three decades, its economic benefits are to be enumerated in the answer while also giving a brief view about its shortcomings.
Economic liberalization refers to a country “opening up” to the rest of the world with regards to trade, regulations, taxation and other areas that generally affect business in the country. There has been a revolutionary change in Indian Economy since the espousal of the New Economic Strategy in 1991. When a nation becomes liberalised, the economic effects can be intense for the country.
In this regard, the economic benefits of liberalisation in the last 3 decades can be seen as given below:
- Major goals of economic liberalization are the free flow of capital between countries and the effectual allocation of resources and competitive advantages. This is generally done by decreasing protectionist strategies such as tariffs, trade laws and other trade barriers.
- In general, when a country becomes liberalized, stock market values also rise. Fund managers and investors are always on the lookout for new opportunities for profit. The situation is similar in nature to the anticipation and flow of money into an initial public offering (IPO).
- Liberalization reduces the political risk. These are areas that support and foster a willingness to do business in the country, such as a strong legal foundation to settle disputes, fair and enforceable contract laws, property laws, and others that allow businesses and investors to operate with confidence.
- Impact on Agriculture: In the area of agriculture, the cropping patterns has undergone a huge modification, but the impact of liberalisation cannot be properly measured.
- Banking: In banking sector, liberal policies have great impact in Indian economy. Since improvements, there have been three rounds of License Grants for private banks. Private Banks such as ICICI, HDFC, Yes Bank and also foreign banks, raised standards of Indian Banking Industry.
- Telecom Sector: Usually, Telecom sector was a government owned domination and therefore service was not very efficient. But after reforming polices, private telecom sector reached zenith of success. Indian telecom companies are progressing at global scale.
- Small scale industry exists and still remains strength of Indian Economy. It contributes to major portion of exports and private sector employment. But overall value addition, product innovation and technology adoption remains miserable and they exist only on back of government support. Their products are challenged by cheaper imports from China.
- Industrial Growth Rate: Barring few years, industrial growth rate has not been so much inspiring. Share of Industry still remains stagnantly low at 25%. It is discouraging that India has transitioned to be a service led economy, directly from an agrarian one.
- Impact on Services Sector: Due to historic economic inequality between two groups, human resources have been much cheaper in developing economies. This was further aided by information technology revolution and this all culminated in migration of numerous jobs from developed countries to developing countries.
Economic reform is a continuing process and not a one-time action. The present dispensation– which recently opened the defence and aviation sector for 100 percent foreign investment – is carrying forward the legacy of the 1991 reforms.
Economic liberalization is generally thought of as a beneficial and desirable process for emerging and developing countries. The underlying goal is to have unrestricted capital flowing into and out of the country to boost growth and efficiencies within the home country.