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Liberalization, Privatization & Globalization

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Global Integration & Business Environment

The

economic environment of business in India has been changing at a fast rate mainly due to the changes in the economic policies of the government and also due to global integration. the time of independence, the Indian economy was basically agrarian with a weak industrial base. To speed up the industrial growth and solve various economic problems, the government took several steps like state ownership on certain categories of industries, economic planning, reduced role of private sector, etc. Government adopted several control measures on the functioning of private sector enterprises.

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At

The

Liberalisation

Liberalisation refers to the process of eliminating unnecessary controls and restrictions on the smooth functioning of business enterprises. It includes:
Abolishing

industrial licensing requirement in most of the industries in deciding the scale of business activities in fixing prices of goods and services the procedure for imports and exports

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Freedom

Freedom

Simplifying

Privatisation
Privatization,

which has become a universal trend, means transfer of ownership and/or management of an enterprise from the public sector to the private sector.

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It

also means the withdrawal of the state from an industry or sector, partially or fully. Another dimension of privatization is opening up of an industry that has been reserved for the public sector to the private sector. The objects are: improve the performance of PSUs so as to lessen the financial burden on taxpayers

To

Benefits of Privatisation
It

reduces the fiscal burden of the state by relieving it of the losses funds enables the government to mop up

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Privatization

Privatization

helps the state to trim the size of the administrative machinery enables the government to concentrate more on the essential state

It

The functions of privatization are as follows

Accelerate

the pace of economic developments as it

Globalisation
Indias

economic integration with the rest of the world was very limited because of the restrictive economic policies followed until 1991. has in fact become a buzzword with Indian firms now and many are expanding their overseas business by different strategies. may be considered at two levels viz. at the macro level (i.e., globalization of the world economy) and at the micro level (i.e., globalization of the business and the firm). of the world economy is achieved,

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Globalization

Globalization

Globalization

Reasons for Globalisation

Faster

communication, speedier transportation, growing financial flows and rapid technological changes. set up overseas production facilities. find political stability. get technology and managerial know-how.

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To

To

To

Companies

often set up overseas plants to reduce high transportation costs. Some companies set up plants overseas so as to be close to their raw materials supply and to the markets for their

New Markets
Growing

global markets in services banking, insurance, transport.

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New

financial markets - deregulated, globally linked, working around the clock, with action at a distance in real time, with new instruments such as derivatives. of anti - trust laws and proliferation of mergers and acquisitions. consumer markets with global brands

Deregulation

Global