Essay on India in the Age of Privatization, Liberalization and Globalization for Class 10, 12, Mains Exam (UPSC, PSC, SSC)
Privatization, liberalization and globalization commonly known as “LPG” is the new model of economic reform in India. The main objective of this model is to make India economically self-sufficient and the fastest growing economy in the world. The LPG concept is closely related to one another and it was introduced in the Indian economy in 1990 when the Indian economy was facing challenges. The government then decided to introduce a New Industrial Policy to liberalize the Indian economy. The economic reforms that took place with regard to the manufacturing, business uplifted the Indian economy to a much prominent level. The reforms brought significant changes in the economic growth of the country.
Liberalization of Indian economy:
Liberalization means eradication of state control over the economic activities. It began in July in India in 1991. It provided greater freedom to the business enterprises in decision making without any interference from the government. It implied that the market forces of demand and supply would function automatically to recover the economy of India. This should be done by initiating reforms in the internal sectors of the economy and by relaxing government control on foreign trade and investments. It increased the flow of capital into the country due to which the companies can secure capital from the investors at a low rate. The stock market value rises as the government relaxes the taxes, laws, etc. Through liberalization of economy, the government can attract foreign investment, thereby reducing the political risks to the investors. The agricultural patterns of India have modified due to liberalization. On the other hand, liberalization forced some small scaler industries to close their business and the government’s share in the bank and insurance firms has reduced.
Privatization of Indian economy:
Privatization refers to the transfer of ownership from the public sector (government) to the private sector and the participation of private forms in businesses and services. In other words, it is the control of economic resources and ownership by the private sector. The public sector is facing certain shortcomings since the time of its planning such as losses, political interferences, labour problems, time management and autonomy. To curb this, National Investment Policy was introduced in the year 1991. Selling of the equity of the public sector undertaking to the private sector is called disinvestment. The main purpose of this is to improve the economic growth and facilitate modernization. Private companies are more efficient as they have profit incentive e.g.: British Airways. Private owned organizations employ efficient employees as they are not motivated by political pressures. A government is unwilling to invest in the infrastructural improvements unlike the private enterprises. A private firm has pressure from the stakeholders to perform efficiently. Privatization increases the competitiveness in the market as more firms enter to compete.
Globalization of Indian economy:
The integration of national economy with the world economy is called globalization. It leads to a free flow of communication, information, goods and services, capital and even ideas. It strengthens the connectivity by investments and trade. It has increased the growing economic interdependence between India with other countries.The job availability has increased with the emergence of the Special Economic Zones.The western companies outsource many employees from India. The standard of living of the Indians have improved who are working in foreign companies. Any Indian companies can extend their business to other countries. Integration with the world markets reduce production costs, improves time management and quality.
Conclusion:
Indian economy has improved and undergone significant changes due to the initiation of privatization, liberalization and globalization. Though there are certain setbacks, the LPG has the potentiality of supporting developments by providing opportunities for higher income and improved standard of living.
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