Q.liberalisation and globalisation policy has had negative effect on the Indian economy. explain ?
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Answers
Answer:
Destabilization of the economy:
Tremendous redistribution of economic power and political power leads to Destabilizing effects on the entire Indian economy.
Impact of FDI in Banking sector:
Foreign direct investment allowed in the banking and insurance sectors resulted in decline of government’s stake in banks and insurance firms.
Threat from Multinational:
Prior to 1991 MNC’s did not play much role in the Indian economy. In the pre-reform period, there was domination of public enterprises in the economy. On account of liberalisation, competition has increased for the Indian firms. Multinationals are quite big and operate in several countries which has turned out a threat to local Indian Firms.
Technological Impact:
Rapid increase in technology forces many enterprises and small scale industries in India to either adapt to changes or close their businesses.
Mergers and Acquisitions: Acquisitions and mergers are increasing day-by-day. In cases where small companies are being merged by big companies, the employees of the small companies may require exhaustive re-skilling. Re-skilling duration will lead to non-productivity and would cast a burden on the capital of the company.