BUSINESS ENVIROMENT — OCM STD 12 Commerce — Question
Gujarat BoardEnglish MediumSTD 12 CommerceOCMBUSINESS ENVIROMENT5 Marks
Question
Explain the meaning of liberalization and discuss its effects in brief?
✓
Answer
Introduction:
Development of industries in India depend on industrial policy of government.
Higher the regulation on industries slower is its progress.
It is but natural.
Period from $1947$ to $1991$ the environment for trade and commerce and industry in India has been that of control and restraint on economy till the end of July $1991.$ Which were gradually lifted.
Meaning of liberalization :
Liberalization means an attempt to progress leaving the path of controlled economy for trade and commerce and towards the path of liberalism.
Effects of liberalization:
Investment barriers were lifted :
There were some barriers in India industries for foreign capital investment which are lifted.
Moreover ceiling for investment in India industries for foreign businessmen is increased.
Many relaxation and economic and non economic incentives are given to attracts investors and foreign business men.
Transparency of share market sector :
Share purchase – sale transaction has been made transparent do that foreign investors can enter India share market.
Physical shares have been converted into ‘Demat’ form purchase – sale of securities, delivery, and mode of payment are made according to international norms.
Transparency in tax structure :
Government has started making tax structure transparent Sales tax and excise procedure is being made simple.
Certain regulations have been relaxed in tax structure.
Recently Government of India has undertaken the procedure of applying goods and service tax $(GST).$
This is an important step in simplification and transparency of tax structure.
New symbol of Indian currency :
For certification of India rupee new sign is given `, Indian rupee is made free subject to conditions.
Abolition of License :
Prior to liberalization most of the industries were license based.
But after $1991$ as a part of liberalization, Indian government has adopted the concept of abolition of license. Now its level is very low.
Export incentives :
Indian government has undertaken many attempts for export promotion.
Various incentives has been provided to India business for export.
Besides rates of import – export is reduced.
Restrictions of foreign exchange are lifted :
Old Foreign Exchange Regulation Act $FERA$ has been cancelled and Foreign Exchange Management Act $FEMA$ is implemented.
Under this act management is to be done in such way as the flow of foreign exchange is diverted towards the development of trade and commerce of our country.
Change in monopolies and restrictive trade practices act $(MRTP$ Act $) :$
Number of relaxations have been made in the act .
Regulation provision is continued related to undesirable trade practices.
Freedom to reserve bank to determine the rate of interest :
Reserve Bank of India has given freedom to various banks to decide the deposit and lending rate of interest subject to certain conditions.
Easy to import guides and service :
Import of goods and services have become easier.
Payment of foreign exchanges has become simple. For the purpose of foreign tours, foreign education of children, for the purchase of property in foreign country, availability of foreign exchanges is made easier.
Conclusion :
Due to the policy of liberalization rate of development has increased.
Not only in India but also in villages many facilities are availed.
Productivity is increased in agriculture and industrial sector.
Employment opportunities have remarkably increased and incentives has been given to new business entrepreneurs.
Need a full question paper?
Generate a complete, print-ready paper with questions like this in minutes — across 16+ boards, with answer keys.