Explain any five impacts of government policy changes on business and industry in india
Answers
1. New Economic Policy, 1991 For achieving the objectives of development plans, the government resorted to an inward looking trade policy. Due to this, in 1991, the economy faced a serious foreign exchange crisis, high government deficit and rising trend of prices. As a result, the government decided to announce the New Industrial Policy, aiming at liberalisation, privatisation and globalisation of the Indian economy.
2. Privatisation It means giving greater role to the private sector in the national building process and at the same time drastically reducing the role of public sector. To achieve this, as per the New Industrial Policy, 1991, it adopted ‘disinvestment’, which means transfer of public sector enterprises to the private sector by way of dilution of government stake in public sector beyond 51%.
3. Liberalisation It refers to an end of licence, quota and many more restrictions and controls which were put on industries before 1991. The reforms aimed at deregulations and reduction of government controls, greater autonomy of private investment and less dependence on public sector.
4. Globalisation It refers to integrating our economy with the world’s economy. It is the system of interaction among countries of the world in order to develop the global economy. Physical geographical gap or political boundaries no longer remain barriers for a business enterprise to serve in a distant geographical market.