1. X, Y and Z are partners sharing profits and losses in the ratio of 5:3:2. They admit A into the
Calculation of New Profit-Sharing Ratio and Sacrificing Ratio
and give him 1/5th share of profits. Find the new profit-sharing ratio.
Ravi and Mukesh are sharing profits in the ratio of 7.3 They admin
15.
Answers
Explanation:
Liberalization, Privatisation and Globalisation
India’s economy in the early nineties faced a major crisis, followed by a foreign exchange crunch that pushed the economy down. The country exhausted its foreign exchange reserves. In order to face the crisis, the government came up with new adjustments in the economy by bringing new reforms.
These reforms were known as 'structural adjustments'. The government announced a New Economic Policy on July 24, 1991. This new model of economic reforms is commonly known as the LPG or Liberalisation, Privatisation and Globalisation model.
The main objective was to put the Indian economy into the arena of “Globalization” and to give it a new thrust on market orientation. The policy was intended to move towards higher economic growth rate and to build sufficient foreign exchange reserves.
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Liberalization
Liberalization removes state control over economic activities. It provides better autonomy to the businesses in decision-making without government interference. It was assumed that the market forces of demand and supply would operate automatically to derive a better efficiency and economic health will recover. Internally, this was enacted by bringing reforms in the real and financial sectors and externally by releasing foreign exchange and trade from state governments grip.
Read more about liberalization here.
Privatization
It means withdrawing the ownership or management of a government enterprise. Government companies are converted into private companies in two ways
(i) Government is shredded from the ownership or management of the public-sector companies.
(ii) by the blatant sale of public sector companies.
Privatization is the transfer of the control and ownership of businesses from the public sector to the private sector. It means a decline in the role of the government as the property rights shaft fro public to private.
The public sector enterprises had been experiencing challenges, since planning, such as low efficiency, low profitability, growing losses, political interference, lack of autonomy, labour issues, etc. Therefore, to address this situation government introduced privatisation in the economy.
Conditions to be Met Before Privatisation-
Liberalisation and deregulation of the economy is a major prerequisite for privatisation to set foot.
Capital markets should be developed to bear the brunt of disinvested public sector shares.
Globalization
Globalization can be defined as the integration of the national economy with the world economy. It enables a free flow of information, technology, goods and services, capital investments and even people across different countries. It brings the trade, investments and markets from various countries under one umbrella. It promotes a more lucid economy. Globalisation is also divided into three types.
The Main Elements of Globalisation are-
To open the domestic markets for the steady flow of foreign manufactured goods, India reduced customs duties on imports.
The amount of foreign capital in a country is a good indicator of growth and globalisation of an economy.
Foreign Exchange Regulation Act (FERA) was liberalized in 1993 and later the Foreign Exchange Management Act (FEMA) 1999 was passed to start transactions in foreign currency.
Positive Impact of LPG in Our Economy
1. Increase in GDP Growth-
The Indian economy has surely become vibrant after the LPG reforms. The overall growth of the economy has trended up as indicated by GDP growth. Post LPG policies, the growth of GDP shot up to as high as 8 per cent per annum.
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2. Stimulant to Industrial Production-
LPG policies have worked as a great stimulant to industrial production in the Indian economy. IT industries in India have reached the global level because of these LPG reforms.
3. Curb on Fiscal Deficit
The ever-increasing fiscal deficit has been a serious danger to the process of investment in the Indian economy. It was 8.5 per cent of GOP prior to 1991. Thanks to the LPG policies, government revenue has increased. As a result, Fiscal deficit deduced to 4% of the GOP( gross operating profit).
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