Que. Examine the impact of liberalization on companies owned by Indians. Are they competing with the MNCs satisfactorily? Discuss. (200 words, 10 marks)

UPSC CSE : 2013

Answer: 

Approach:

Introduction

  • Define economic liberalization

Body

  • Mention the impact of liberalization on Indian companies
  • Analyze if they are competing with MNCs on an equal footing

Conclusion

  • Mention that India is attempting to strike its own balance of the ‘state-market mix’

Introduction:

Economic liberalization is generally described as the relaxing of government regulations in a country to allow for private sector companies to operate business transactions with fewer restrictions.

Body:

Impact of Liberalization on Indian companies

  • Impact on MSMEs: With liberalization, the list of items reserved for small-scale sectors was substantially curtailed and many new sectors were thrown open to big players. This reduced the certainty for MSMEs and exposed them to international competition.
    • But, the MSME sector has managed to survive and still remains one of the major contributors to GDP, exports and private sector employment.
    • Value addition, product innovation and technology adoption remain dismal and they exist only on the back of government support.
  • Impact on Services Sector: Due to the IT revolution and much cheaper and skilled human resources, numerous jobs shifted from developed countries to India resulting as seen in the rise of BPOs, LPO, software development, etc. Liberalization eased it much further.
  • Telecom Sector: After reforms, private companies entered the telecom sector which was monopolized by the public sector till then and was full of inefficiencies. Entry of modern Direct to Home services saw improvements in quality of Television services on one hand and loss of livelihood for numerous local cable operators.
  • Education and Health Sector: Post liberalization there has been a rapid increase in the proportion of private schools, colleges and hospitals. Free markets provide goods and services to people who can afford to pay for them, not to those who deserve and need these.

Conclusion:

In the Indian case, the term liberalization is used to show the direction of the economic reforms i.e., decreasing influence of the state and increasing influence of free-market. India is attempting to strike its own balance of the ‘state-market mix’ i.e., even if the economic reforms have the direction towards market economy it can never be branded a blind-run to capitalism.

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Quick Revise Now !
UDAAN PRELIMS WALLAH
Comprehensive coverage with a concise format
Integration of PYQ within the booklet
Designed as per recent trends of Prelims questions
हिंदी में भी उपलब्ध

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