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    OE Notes Contemporary Indian Economy

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    ———e ee Sect LPG Policies, Economic Reforms and Agriculture Recent Issues Aspects Discussed Genesis and Impact of Liberalisation, Privatisation and Globalisation— LPG India's Population Policy Population Demographic) Dividend India's Human Development in Global Perspective pow A. Genesis and Impact of Liberalisation, Privatisation and Globalisation — LPG Introduction Aneffective and appropriate economic policy is sine qua non forany country. Significance ofa consistent economic policy in the task of materializing the dream of welfare state and to make the people secure the fruits of development along with attainment of economic growth is inexplicable. Desire of attainment of economic growth will be easily materialized if economic policy is brought under changes in accordance with the changed circumstances. New economic policy was implemented in India in the year 1991. The basic aim of this policy was to transform the economy from the age old system and ble industrialists goods which are profital is to enal ‘eand to produce & nation of all unnecessary controls and jperalisation denotes freeing the economy from vemon of bringing about extraordin: . wade and commerce. gotors of ind Background Thebasicobjective of liberalisation, spreneurs to ¢: in the business sector were ‘was an arduous task and good ery difficult to secure foreign tries failed to ifan industry was actually 2 free atmosphere to entre] industries Ineficiency and incapal theorder ofthe day. Getting permits couldnot be easly imported as it was v exchange. As aresutof unnecessary controls, indus duce upto the fl nstalled capacity. For exampl led capacity to produce 1000 tons of goods, producing only 600 tons, Since industries had wasteful cap scope for inerease in production was completely lacking. A large number of procedures had o be followed in all spheres like setting had Rees up of industry, securing permit, obtaining foreign exchange, duction and marketing. ‘The goal of liberalisation po this morass. According to automatically accorded forestal (o bring the economy outof is policy, permit or approval is lishment of a new enterprise or for change of business. The controls © sted earlier as regards setting up of the industry have been comp! ely removed. Procedures pertaining to establis hment of new industries have been simp ed. ‘The policy of reviewing every issue at the which used to cause undue delay, has been: ‘given up. Capi is opened up to: enable the private industrialists to: immediately secure capital they are in need of. New ‘companies are allowed to come jnto existence by issuing shares and debentures without permission by the, government. Entrepreneurs need not request the government or foreign exchange authorities for import of machineries and equipments if they are needed for industry as well as for import permits. Instead, the industrialist may buy the foreign exchange at the market rate in the market itself. ‘This has been made, possible by making the rupee convertible in current account transactions as regards export and import of goods and services. Removal of controls acco! to liberalisation policy has enabled the entrepreneurs 0 take smselves. They pro overnment to pursue a ‘es and their promotion businessmen. need on the part of the &' ards setting up of enterpns liberalisation. Onthe whole, eral policy as eg js the sum and substance o| 2, Privatisation isation denotes o! dustry and business. Econ fs to the private nance jortunt fering more OPP’ tivities in conso! omic act aaccount the issues of price and ownership is allowed in .nt, In a large number of withdrawn and private nade for private sector investment. .zhigher priority othe public sector sntheosolhment of enterprises, stimulating investment of capital inte pve sectoranbringingabout reduction in investment by thepublesetorina gradual manner came othe fore in India as far rack asin 1984. Thus, stricter type of socialistic system and dominance ofthe public sector which prevailed for thirty six years since 1948 came tobe gradually relaxed after 1984. The process of privatisation received momentum asa result of various factors, suchas stong feelingin favour of privatisation that was growing, acrosthe world, growing preference towards privatisation in Soviet, ‘and East European countries and the notion that assistance 3.Globalisation Indian Ino wide eg atlenkngssaresutof globalisation. restofthe we svi fi a wi cram Restrictions which ear its bused es and allowance is made to have fa ne ltifhaebee bea tde teed obain imports, High rat if wught downand they are made to be on pari 5 Recent Issues tariffrates prevailing in other countries. For direct investment in lowed upto 51 percent in the total amount of any project javestment and its allowed up to 100 percent in certain specific projects ‘The following are the common arguments in favour of globalisation. ‘Themerit of globalisation lies in enabling the developing countries to utilize the technology developed by economically advanced countries. Asa result, developing countries need not make much investment on research and development. 2, Globalisation leads to larger amount of foreign direct investment, In other words, developing and underdeveloped countries may have ai foreign capital. Globalisation has enabled developing countries to export their goods to developed countries on a larger scale. they will have a golden opportunity to import -s of better qui at a lesser price from developed countries. ion brings down bebome for communication. R« in international trade fac in easy access to transport costand the cost to eduction in tariffs imposed Impact of Liberatisation, Privatisation ‘and Globalisation on Indian Economy Vet “Thepolicy of liberalisation, privatisation and globalisation pursued ddvantages. On the countrary, there in India since 1991 has many a sueanumberof poinstohighlightits demerits. Thepolicy hasbecome adebatable issue. away 52 petwent between L9KO.8] 32,572 crore n 2018+ foreigners post-1991 period. tus of one of the Polley has its own demerits J Neglect of Agricultura 'ewWeconomic policy B. India’s Population Polley cqinning ear plan period in i SG ial mprmere 1952, Avaresult, India first two five-year plans. Only 147) | during the First five: The result was there was no substantial progress in the: ming front during this period. i Taccnte programme was reformulated inthe year 1963 and sreasures were undertaken to motivate people to adopt fami nbn reganmeresveda very highpriony inthe! ‘ses plan Tol spendingon hs programme in the Plan Tupees,and 5057 new family planning clinics were cent Issues 9 cheaper price, andat certain times free of cos. Incentive inthe Form Steash was offered to people who undergo surgical operations, Jntra-uterine contraceptive device programme was started in 1965 ‘and was continued with much force. rine contraceptive devices were adopted to 55,43,951 women in the period between 1965 and 1975. ‘Asaresult of severe family planning measures undertaken during, the period of Thitd five-year plan, birth rate which was 41 per thousand in 1951, declined forthe first time to 39 in 1961. This was milestone in the history of birth control programme in India. ‘Success gained during the Third five year plan proved to bea strong basis to vociferously continue the programme in the Fourth five year plan period. Expenditure incurred on family planning, programmes in this plan was ofthe order of 276.5 crore rupees. A policy of offering many types of things free of costo motivate the people for surgical operations was followed. Birth rate came down, 035 at the end of the Fourth plan against the target of 32. This factor indicates that birth control did not take place successfully and aspet expectations in spite of better progress under family planning programme. Family planning programme received anew dimension with the declaration of intemal emergency in the country in 1975. About 2.7 surgical operations were carried out in 1975-76 as against 0.9 million surgical operations in 1973-74 and 1.35 million surgical operations in 1974-75. Inthe Fifth five year plan, an amount of 492 crore rupees was spent for implementation of family planning Programmes. Total expenditure incurred for implementation of family planning programmes in the Sixth five year plan was 1450 crore rupees. The ‘most important target set out in the Sixth plan was to bring down birth ratio from 3.3 percent in 1978 to2.1 percent by the year 1985 and to reduce death ratio from 1.4 percent to 0.9 percent in the Contemporary Indian Economy || 2s targeted to rise the percentage of protected 1 the plan period, However, these targets sent iveyearplan, expenditure incurredon family 2s was 4,000 crore rupees. It was targeted in leath rate to one rate 108.7 percent. Another target was ed couples from 32 percent in 2000. Progress achieved in the lan was of the order of 6,500 crore rupees, aves programme was stringently brought into ‘™easutes for improvement in the sand children, nd ofuse of contraceptives fe “ taking China. Estimates, ugest that India's population W! e 969.2 crores by the year 2050. a i Beginning from 2018, working age-group population in In is the number of people in the age ETON of 16 to 64 years has athe size of dependent population. Experts are of the continue till 2055. This phenomenon will hh of the benefits of population dividend ie, been exceed view that this stage will c Jnable India to reap muc during this period. Economies of Japan, China and Kable amount of economic growth in the latter part 1 to population dividend. nited Nations Population Fund, any country ation dividend only ifit dignified employment South Korea attained of the remar} twentieth century: owin} Inthe opinion of U ‘willbe able to secure and make use of Popul provides better health, quality education and toall ofits population. Working age population of 15-25 age-group in India which stood at 175 million in 1995 rose to 190 million in 2000 and 210 hnillion in 2005. That is, population in this age group rose by3.1 rullion every year between 1995 and 2000 and by 5.0 million every ‘earbetween 2000 and 2005. In 2021, average age of an Indian is just27.3 years, This is 35 years in China, 37 years in America, 45 Years in Western Europe and 47 years in Japan. What this connotes js India has marvellous opportunities to secure population dividend for a large number of years from now. On the basis of this phenomenon, Deloitte India institution has been of the opinion in its analysis that India is at present sitting on "demographie gold mine" ‘According to the estimates done in 2021 about 50 percent of ‘otal population in India, i.e, about 70 crore people are below the age of 25 years. umber of Young, population should take part in the vr elni ize nthe capacity ofcreators, innovators, Sane sgesnen, teachers, planners, scholars and so oy jvonyifthey can have access to better health, ~aesiand sil andifthey can attain decision making », India’s Human Development in Global Perspective ring economic development, efforts in search of an .grodinthe place of national income (National y dex’, This concept found its existence in the yeat ‘Nation's Human development Report’ for 1990 had. 5 these constitute essential ie a ‘opportunities for extension of human life wil “ an development isa process of extending ‘edralsingthe level of welfare achieved. As Paul eae ‘concept of human development a ¢ centre stage, after many decades Concepts have blurred the fundamental tas brought peop hen sera techy 19 1g general opinion is, opportunities available to expand income will provide scope for accom hment of development. is does not fit in well in all circumstances. There will be scant opportunities fora large number of peopleto expand incomes. Moreover, income might not have been distributed equally among i people in te society. Choices of people with no income or lesser income will be naturally limited in scope. Further, inspite of wealth and income being adequate in the society, all opportunities may not be forthcoming in an adequate way. What is more, wealth is not at I necessary to secure some choices. For example, a country need not be rich to treat women and men onan equal footing. A society need not be affluent to accept democracy. Therefore, instead of economic factors like wealth or income, the more important factors are human dignity, political and economic freedom, appropriate environment for extension of opportunities, and so on. This is advocated in the concept of human development. Human development is another prominent indicator of overall economic development. Human development index involves seven factors. They are: i) Equity ii) Sustainability ii) Productivity iv) Empowerment ¥) Life expectancy vi) Educational attainment, and vil) Standard of living 1. Equity : If development has to expand peoples -y must have equal accessibility for opportunities. The following factors are essential for attainment of }) Redistribution of productive assets through measures like land reforms. choices, temporary Indian Eeonor the rich to the poor through: «= credit system So as to provi toeven the poorer sections, abil 1h enjoying the fruits of present * haveto be saved and developed in order | oe geeratns-Tisis what exactly sustainable: vs sustainable development is not achieved, as will be deprived of enjoying the fruits of] wf + paddy Productivity isthe comerstone of hunna ra pds essentially requires enancement| | {eer met Inter words there should be expansion of | bal olution, tainingand sanitation. Only then reveal his maximum ability. ical democracy wherein people res. Ifemny is ee spowerment is 10 people should enjoy economic freedom and there | } a inment of human development sale cxmetaney of people. Lesser life éBivton of human develo, : aa pment. — Edson atainment willbe 1 There should hare admission of students to schools adn 00 percent achievement in adult Students in primary, secondary and expectancy 21 Issues of oregucation should be 100 percent. THESE are the measures nigh™! 4s ational atainiment a oft standard or Livin: Standard ofliving is measured sous : ‘meome and purchasi power. Ability buy £0 ds capita income iS f living. Contrarily, income is lesseF. prominent factors which aredeseribed hereunder ;__ Real percapita income : Real percapita income is the most important index nnetandard of living. Real percaPitt sane denotes the volume of 20048 and services each vidual can secure. 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The system in general fled to bring down the extent of indebtedness, to sient prices to products, o supply finances to agriculture sand to identify definite reasons for farmers* suicides and ake corrective measures. Sinsation of agriculture : Role of women in agricultural ‘has been going up substantially. In other words, tion of agriculture has been taking place on a rapid scale, ‘Aveording to a study conducted by National Bank for Agriculure and Rural Development (NABARD) the extent of land holdings ed by women has risen from 11.7 percent in 2005-06 to cent in 2016-17. Feminisation of agriculture is a progressive trend and welcome phenomenon from the points of view of participation of women in economic activities, empowerment of women and income caming, However, its another ion needs to be understood. Male farmers who have been "<) of ground water sources : pete rapidly, Ge , ntrusting to women yy of carrying ned from Vand 2015-16, S hectares to 1.08 hectares between 2010 2. Doubling Farmers! Incontes Background : A study conducted by India’s NITT Aayog that Reforms and Agriculture 719 raised, Tt has been fixed in such a way as to secure a imum of 50 percent of profit after deducting the all-India reighted average cost of production. From 2016-17 to 2020-21, minimum support price for pulses tas been hiked by 95.93 percent and for oilseeds and copra by 10.80 percent. 3, PM-Kisan Scheme : Under PM- Govemment has been transferring Rs. 6,000 to each farmer's tank account. Total payment has amounted to Rs. 1,15,276.77 crore rupees in three equal instalments to 10.74 crore agricultural 7 ain families. atbase year see grow by annual rate 4, Pradhan Mantri Fasal Bima Yojana-PM FBY : About lage many counties reveals farmers have got their names registered to get benefits : S that farmers i ‘under Pradhan Mantri Fasal Bima Yojana. Of this, more than 7.6 crore farmers have received benefits amounting to Rs. 90,927 crore under this scheme. Farmers have paid Rs. 17,150 crore as, their share, But amount of Rs. 90,927 crore is made available to them. Thus, farmers have been able to receive Rs. 520 of their chlaim for every Rs. 100 they had paid in the form of insurance premium. . Increase in supply of Institutional ional finance to agriculture sector was of the order of Rs. 7.3 lakh crore in 2013-14, The target is to extend it to Rs. 16.5 lakh crore in 2021-22. The motive behind this is to bi improvements in economic conditions of farmers by red dependence upon private sources such as money lender and commission agents. 6. Irrigation Funds : National Bank for Agriculture and Development has created irrigation funds. In 2018-19, an of 25,000 crore rupees was set apart to provide finances for irrigation schemes exclusively from NABARD. More over, Kisan scheme, of farmers’ incomes by the ve years between 2017 and 2022. 23 crore income hay and the pher nomenon f agricul enon Rut a Gandhi National rantee Scheme on of the National Advisory Counc thetime ofbringinginto force ‘Scheme on February 2, ent in public enacted anactat ployment Guarantee ueme isto provide employ™ Id create assets, to.at least one person belonging ower middle class far ies of rural and semi-urban svages, for 100 days in a Yea his scheme was adopted in 200 districts of ended to 130 more districts in 2007-08. On veextended toall the remaining districts and was all the 593 districts of the county: sre incurred under this Prost aie twas Rs. 39,100 erores in 20 udget 2021-22anamount 10 crore has been’ earmarked for’ this scheme. chief objectives of Mahatma Gandhi ‘Guarantee Scheme. ‘and to bring about an fhe rural poor. Jusiono! ef beeligl year fora cofeasual ma ‘ofthis scheme are: frural Indiawill 82 Contemporary Indian Ee iked to Rs.275 in 2019, = Pad sorbecomes dbl, ex gratia am : Compensation Ag. Pet Workme Five percent of the wa, Contribution for welfare sche accidentinsurance, materi agheirs, wemes such as persandreconts relat availa relatingto the . le for public seru ‘Scheme 1. Work of the sabh enna ges should be deducted ag ty benefits andbeneispa ; conic Reforms and Agriculture beginning and will beextended throughout the country Jateron. niheareas where thenumber ofapplicants ismore, women Ibe given priority tothe extent of one third oftotal jobs. {fone hundred mandays which are fixed as maximum, could be distributed among themselves, any number of members inthe family can take part in the programme. That is if phames of two persons ina family are included inthe scheme, nd they are selected, each of them could claim 50 days ofemployment. 13, Central government provides 80 percent of the money for the scheme. In case state governments face financial stringency in their task of employment creation, centre provides money to them to supplement the money given earlier. Role of State Governments Forimplementation of this programme, each State government is required to prepare an employment guarantee scheme within six ‘months of enactment of this Act. Major points to be included in the programme areas follows. 1. Only those productive works have to be taken up which are based on economic, social and environmental benefits; which can contribute to social equality and which could create permanent assets. 2. Works should be undertaken in rural areas. Wages should be directly linked with the volume of work. Wages should be paid according tothe schedule prepared by the State goverment. Thisschedule should be prepared in such a way as the wage for seven hours of work for unskilled workers be equalto statutory minimum wage fixed by the State goverment, jovernment’s argu é as been pursuing pert iment as ¥ 81 Reforms and Agriculture 3, Mahatma Gandhi National Rural Employment Guarantee Scheme nthe basis ofthe suggestion ofthe National Advisory Council, ja enacted an actat the time of bringing into force Employment Guarantee Scheme on February 2, seme is to provide employment in pul toat least one person belonging of rural and semi-urban jemmentof Indi 506. The aim of this se works which cou! topaorand lower middle elass families ioe atminimum wages, for 100 daysina year. Inthe beginning, this scheme was a ‘was extended to 130 more districts in 2007-08. On 1008 it cable to all the 593 districts of the country. iture incurred under this programme was Rs.11,000 crore in 2006-07. It was Rs. 39,100 crores in 2009-10 and Rs. 446,000 crores in 2015-16. Inthe annual budget 2021-22 an amount ‘of 73,000 crore has been earmarked for this scheme. Objectives The following are the chief objectives of Mahatma Gandhi National Rural Employment Guarantee Scheme, 1. Extension of employment opportunities. 2. Raising the wage earning capacity and to bring about an impact upon minimum wages, ng financial inclusion of the rural poor. 3. Accomp Main features Major features of this scheme are as follows. 1... Every family of rural India will be eligible to havean assured employment for 100 days ina year for at least one adult ‘member. Jobs provided in the form of casual manual labour i te. Wages are paid within work has been rendered . cy 85 ays (AES ofindustries, dd by the government government's stand _Andustry, Business and Fiscal Pg val Fees y industrial licensing. pital, and soon Need for Industrial Policy tral policy playsa vital rolein adeveloping country like . procedures to be pursue Iabour policy, Indus! - India Aspects Discussed ; 1. Encouragement fn indusritsaton A planned regine \. New Industrial Poli jsrequited to encourage justrial development in acco ce wi B. Public Sector Re ‘olicy and Changes sie ericson. An ee cforms pertaining 1 establishment of industries needed for the nation, ation and Disinvestment Posument of capital production Techniques etc, is very much revert Theneed forindustral policy arses insuch acontext. © thyall the care and seriousness designand adopt wi tof industialisation. sibility of publicand aia are inthe grip of deficiency of vent of development. Such D. Competition Policy couniry needs 10 apolcy foratainment 3, Flucidation of rexpo Developing countries such. © many resources needed fr attains rreies naturally Gnd itvery difficult10 establish and develop Gmierprises and find other avenues of production required for ccomplishment ofecoriomic growth keeping in view availabilty resources and the ability to mobilise esources from various sourcesinatime span, the government Me ‘venture into establishing sertain basic and large industees, vind may entrust the responsibility restablishingand developing other instries to the private sector igo come out with a scheme oF developing lic and private sectors t sector, where pul sector, Industral policy aims privatesecto! y rel pertain tion concer ming industrialization y ‘iio obelmplenestd in tobe encouraged by oe “oF gedby the government oe Mth enna et Government may industries in the join allaborate, andalsoin thecooperativ® atelucidation of these facts. 3, Regulation of Private: ment of welfare state, is the point of View of which has aimed at ‘pring private sector celfare of the people. sector: India, establish equired t0 under regulation frot Contemporary Indian 87 has the motive of expan engage in activities whi policy nourishes the aims of employment \equalities, poverty -Thenew industrial eradication Prominent aspects this down the number of industries req iri * foreign investment in India, automatic approval for ving foreign technology, reformsin the public sector 2errendment o Monopolies and Restrictive Trade Practices Act. ‘The government has ‘retained its control on many major sectors ary to the domestic cay evenasit provides opportunity tothe private enterprise. In other ment ofthe country, Indust 7 cide this policy is very much in accordance with the industrial harmony between extemal and dom policy resolution of 1956. Freedom isaccorded to development of " 4 Farge sale industries. Similarly, reservation of goods forproduction jn the small scale sector will: continue, and remains in the same way asit was earlier. Labour class has been considered to be equal partner in industri .ew industrial policy lays stress on protection ae he intrests of labour, their welfare and upgradation of their skill inthe changing technological environment. ‘Onthe whole, change with continuity has been the central theme ofthe industrial policy of 1991. The following are the important aspects ofthis policy. ‘Comprehensive measures to free the Indian industrial sector from several ‘administrative and statutory controls. 2, Noneed for obtaining licences for other industries except cighteen industries including coal, sugar, motor cars, petroleum, cigarette, dangerous chemicals, drugs anda few luxury goods. ag 5, §.Encouragement to small enterprise cottageindusties play a crucial rok Policy Resolution of 1991 Goverment of Indi: . iacame the 24thof ly 1991. Ampouneens hits new industrial poli a 1 89 sihmore powers the Monopolies and Restrictive fo Pra ission which has been newly ted to conduct enquiry unilaterally as soon as tain against monopoly, restrictiveand unfair or customers comp! trade practices. ‘Adoption of new’ ‘management. iementation of social security measures for protection to promote labour participation in no restriction for establi 7. iesin the private sector. 18. Impl ofinterests of labour in public sector undertakings. Evaluation usr units inthe public sector ithasbeen argued thatthe industrial policy resolution of 1991 ‘0 Financial and Indu hasboth merits and demerits. Merits This policy is ofimmense assistance in a number of ways for industalization. 1. Faster industrial growth : As hisindustrial policy lays much emphasis on liberalization, industrial sector would be freed from regulation and controls. This factor paves way for rapid industialization, 2, Rise in industrial production : The new industrial policy willbe of great assistance for rise in industrial output. In the opinion of economist Sandesar, this policy leads to increase in the efficiency production by bringing down project cost and and by attracting foreign capital, technology and managerial 3. Increase in efficiency of public sector : The task of restructuring the public sector has been emphasized inthis policy. Since only a few industries are in the domain of the public sector, it can perform with added efficiency as aresult of restructuring and reorganisatic 2 Dominance of foreign ca {ie dtcetinvesment upto 5 Psteen even in export orient 91 Policy que. Conraily these corporations make ing echn al saving 6M opposed to this and may cause rise in the technology a rn ofenrsing loss makingas wel as sick industries ‘0 Desir cosing tem dow also leads tose inthe extent ates OF ats warranted is adoption of suficent social es while handing over or closing down these units. cy has neglected this aspect. atte investment mit inthe industries comingunder the purview a pnapoties and Restrictive Trade Practices Act, danger of " Fonopolstic tendencies as wellas concentration of wealth ‘on. There is serious concer of growth of unfair business and trade B. Public Sector Reforms ‘Alarge numberof reform measures pertaining to public sector taveboen introduced in India after the onset of the age of economic reforms nd after implementation of new industrial policy in 1991. ‘The most prominent of these measures are discussed here. 1. Concentration of Efforts in Strategic and Essential public sector has to be engaged are as Fallows, Essential basic goods and services. ‘Investigation and excavation of oil and mineral resources. i) Manufacturing of defence equipments: ‘and strategic goods. 93 ‘Mutual funds, financi institutions, the public and e dustries are given ‘opportunity to invest in the share cl of publ sector undertakings toa certain extent. This measure vista sector to secure finances ona very largescale, nalism : Measures are pursued to n of Professio : : alismamong governing council members of public vies. Members ofthe governing council are enabled to take and to discharge functions in decisions with added responsib : sch a way as to make the enterprise earn higher profits. More srronomyis granted in the management ofthese industries. 6. Acquisition and Mergers the aim of business expansion much emphasis had been n mergers of industrial units. Allowance is made for amalgamation of alarge numberof industrial concems. Large enterprises are endowed ‘with the ability to provide the best services at lesser cost. Similarly, vestment po! 1. The goals setare to bring down: and tomodemise| eam more amount of profits. Many banks in the public sector have been brought under the process of acquisition and merger. 7. More Scope for Adoption of Foreign Technology : Use of foreign technology rises output by way of providing scope to. obtain higher level of skill in production. tn this background, import of foreign technology has been given a prime of place. At this end, the policy pursued is to grant automatic approval for foreign technology agreements of the amount upto one crore rupees in very high priority industries, lcasures to attract Foreign Investment : Measures are ted to attract foreign investment in public sector ywance is made for foreign investment up to 51 westment priority industries. construction of Industries : Reconstruction of public sector industries has been on high priority through measures such as, 95 policy public to employ share capital by way of sale v wing the if) Allowing sficates ofthe industry 10 them ofshare cert : » public auctioning of enterprises. yy Sale ofassets to the private sector. : ) Entrustment t0 private persons through direct consultations. vi jectives of Privatisation : cog Ss Se the main objectives of privatisation. ‘The following are ject _ Tobring: aboutefficiency in industrial management. iAtainment ofrapid industrial growth the economy. To reduce the power of central authorities. * robring about optimum utilization of resource : * oattempt to spread property ownership more widely in society. 6, Toinerease exports and to earn huge amount of foreign cxchange by way of production of goods of better quality. ‘Advantages Major advantages of privatisation are described as follows. 1. Increase in efficiency: Private enterprise is known for ee Bvatesector to develo efficiency. Redtapism is almost absent in performance of jobs inthe to be private sector. Management of enterprises, production, sales and other processes take place ata rapid pace. 2. Reduction of economic burden : Burden on the public sector in matters like mobilization of resources, undertaking production activity, handling oflabour problems, etc, willbe reduced. 3, Freedom from bureaucratic control: Anenterprise in public ‘ownership will be under strict control of the bureaucracy. Privatisation overcomes this problem and facilitates production activity. 4,Encouragement to inventions : Privatisation provides ample scope for inventions, discovery and innovations. This naturally leads toexpansion of business and incase in output. wonesneaud jounsare se eae SP caedooyy soma 2 Speen ted ontounss per gieanjomnecee ee NOHPSHEAU + sayodouow yo WMon +5 “Ad1Dos aw s DSSEID OM 1 B8ee5 Pouadreys or speoi stay “sda 99 Industrial Policy governmenthas to undertake industrial development and expansion. ; cis 2, It results in risk in production by way of increasing competition in industrial sector. : 3. Disinvestment assists in removal of losses in public sector "and thereby makes the industry grow stronger. See Disadvantages of Disinvestment 20percent of share capital in select ; ing are the major disadvantages of disinvestment stent was taken back in 31 companies be The following are the maj measure. |. There is danger of increase in foreign control owing to dominance of private business, 2. Private industry may forget: and neglect public interest. Private business may fail to pay attention to interests of workers. Insuch a ase there will be tendency for increase inindustrial disputes, Differences between Privatisation and Disinvestment ‘The following are the differences between Privatisation and disinvestment. |. Inprivatisation, govemment sells more than fifty percent of shareholding to private Persons. But in disinvestment, Sovemment withdraws less than 50 percent. of investment inany industry. n measure, concemed enterprise will belong to private Ownership and control, Further, 'o develop the industry which was © Sector till this day. Instead, in vest Ownership and control of business Femain with the government itself. deficiency o ** skills, amelioration of inflati sive growth to sits of developm Contemporary Indian Begn 101 arial Policy idbe made to exist), and’ it shonld be yurtred rae ae ‘stem, Towards this end, market restrictions have to| ee hhave tobe taken to make the producers down and measures n ; ccure markets, capital, technology, infrastructural services, hhout deficiency. To attain this, competition should grow in conduct ofevery economic activity, and wealth and economic power should not get concentrated with only a few people. Meaning of Competition Policy |Aset of many measures, policies, laws, rules and regulations pursuedby the goverament with the aim of promotion of competition in market structure and in the behaviour of different economic units isconsidered to be competition policy. Such a policy should consist ofastrong law. Thus, competition law isa part of competition policy. Initsreport published in the year 2000, the high level committee Pertaining to competition policy and law made recommendation to bring competition policy into force in the place of Monopolies and Restrictive Trade Practices Act, 1969. In the opinion of the Committee, ‘Competition law should emerge from national competition policy, that law has to be evolved in such a way as it shouldbe of help in attaining basic objectives of economic reforms ‘hrough building up ofa competitive market economy’, As defined by World Trade Organisation, "Competition policy Consists of a large number of very comprehensive measures that ‘may be used to promote competitive market structures and behaviours. talso contains a comprehensive competition law which au eketeise control over anti-competition practices and businesses loo." Objectives of Competition Policy Competition policy guides governmental institutions by: Snalyzing policies, laws and regulations which may ‘market activity, Competition isan inevitable factor . way of influence any forallocation or 103 icy ost needed from the point of view of attainment of restate movement of goods and services will be such markets, Such a market is most: essential for oil, and industrial sectors. efficient Utilization of Resources : Central ‘and State governments spend considerable amount of for purchase of goods and services. Competition policy comes ‘stance to conduct production by way of ‘efficient utilization of sand ata lesser cost. 8. Efficient Provision of Services : When competition prevails, sufficient scope will /be there for provision of welfare services suchas health services, education and public distribution of essential commodities at lesser cost and with more efficiency. Thus, promotion ofefficiency in supply of these services is another aim of competition policy: Cost Principles of Competition Policy Principles of competition policy at the end towards development of healthy competition culture may be described as follows. ive Prevention of Anti-competitive Market : yn Act 2002 bans anti-competition contracts and combinations which will have deleterious effects on competition. Similarly, itrestricts misuse of law by any business by utilizing its dominant position, 2. Fair Market Process : Market regulatory processes of £0vemnmental authorities and of institutions prescribing regulations ‘hould adhere tonules, should be transparent, Justificable and non- «iscriminatory, Public interest test should be conducted to measure ‘hedesiability of policies and regulations. 3. Competitive Neutrality : In the context where private sector ‘ses and govemment businesses have to compete with one *, implementation of policies which may give rise to ‘level ating setting up of in-house cells atall ministries and to measure the impact of different p oriented reforms keeping in view the principles of national ‘competition policy. |, Small and Medium ional Corporations in 107 the initiatives brought ars with the purpose vironment ness has been one of _ordoing busin pase of donne fa in recent Ye business en! jnease of doing business was ata very low level in ‘other countries. Reforms w ‘vith the purpose of correcting it. Thi Jy in sectors pertaining to starting a business or for construction works, registration of payment of taxes, bringing contracts ent of loan. wy sectors jmplemented main st cateprise, getting permits ronan. supply of electricity, force and settlement of cases pertaining fo repay 1s (Measures) Prominent measures or initiatives introduced by the Central emmentand State governments may be enumerated as follows. ts to be provided for export man po The number of document purposes has been brought down. Measures and practices required for granting clearance in certain activities have been reduced to the minimum by state governments. Clearances pertaining to environment and forests may be obtained through online. Payment of fees for registration of companies having than 15 lakh rupees of authorized capital i a Ip capital is done away For registration of companies, Permanent Acc: ount Ni (PAN), Tax Deduction and Collection Account Number (TAN) and Director Identification Number (DIN) ha ve been added to one single form. The number of days for granting of permissions aft ler less tos Is, 16. temporary Fan Keung Contemporary lain Keane, 1 construction works has alison factions for construct aed om 1285 6ayst098 days it Mumbai and ry 157 $daysto113.5daysin Delhi Central Bod of Excise and Customs has brought" Indian ‘Customs Single Window Project into force. As.aresul, importers and exporters are allowed to submit tage ‘clearance record electronically at single point, “The mumber documents to be compulsorily submitted fo, customs purposes in import and export trade has besa reduced three Ananlincapplcaionsystemcalled'e-Sanchit has provid! ‘opportunity to traders for electronic submission ofall documents Computerised Risk Management System has been introduced to avoid repetition in inspection pertiningto imposition ofeustoms duty Eeticity connections piven in seven days and withina nmaximumoffiteendays (Compitersation and digital system have been developed in Sub Registrars’offices. In places such as Mumbai and Delhi, concemed records have been brought into co- ‘ottination with land records. The number of documents to be submitted to secure cleetricity connection has been reduced to two. And Bhysical documents eceived ‘Themumberofteports tobe submited in goods and servios ‘axretumshasboen reduced from the earlier three tt {nian tx payers arcallowed to submit tax returns oie Since many ofthe companies in the bankrupt state hav? ‘een showing inclination for reorganisation instead of pasiness liquidation, fast-track corporate iso process is pursued ona larger scale 17, Central Public Works Deptment as inno 49 novel and emerging technologies withthe purpve transparency and efficiency in granting constuction works. Outcomes Better resultshave coms inthe Indian economy after easingof doing business strategy has been adopted. 1, Indiahas emerged as an attractive destination not only for investment ofcaptalbutalso fordoingbusines. 2, Inthe World Bank ase of dong business ank,Indiawhich was at 142 nd place in 2019 had jumped to G3edplace in 2020, ic, jump of 79 places, 3. Inlincence granting index for construction works Inia has ‘moved to 27th place in 2019 from 84th place in 2014 This achievement hasbeen posible owing lessening of procedures followed to rant iceneesaswellas eduction ‘of numberof days taken tit, 4. India'splaeinobiainingeleetricity comnctionhasimproved from 137th place in 2014 to 22nd place in 2019 5. Indias place in providing protection torminoriy community investorshas been 13thamong 190 counties ofimproving licences for 6. India's place is 25th among 190 cconomiesasfras supply of eeditis concerned, Conclusion Inspite ofthis, there is a strong argument that ease of doin business isnotan effective inde. Existence of ariousrosties and ‘thos in different countries as regards different maters ad $ocesses makes tan ineffective ne fr inteational comes 0 Contemporary Indian Economy Arguments abound which suggest that India has not risen to bette positon ineaseof doing business. Undue delay isthe hallmary ina large numberof sectors and work procedures and there prevails uterly dsgustflstuation Performance of Micro, Small and Medium Enterprises ‘Small-scale industries occupy a special place in the Indian cconomy. Unitshaving capital investment not exceeding RS. 6D akis inplantand machinery and ancillary nits having capita investment not exceeding Rs. 75 lakhs have been considered to be small industries. These industries areno less important as they have significant contribution to economic development through industialization, Sal enterprises ae mare wseful in certain respects ascompared with big industries. Importance Factors in favour ofsmal scale industries areas follows. 1, More employment opportunities : Since small-sale industries ae basically labour-intensive industries and they are capable of providing employment opportunities toa large number ofpeople. They playa great roe in solving unemploymentproblem. ‘Tris isamajo fectorina populous county like Inia. The number of people empoyed in these industries in 2020-21 was about 24 nillion. Small-scale enterprises have more employment potentiality than argescaleindusties, 2.Lesser capital: Small-scale industries require lesser amoust of capital fortheirestablishmentand operations. ln underdeveloped aswellas developing counties suffering ftom deficiency of capita development of these industries is the most appropriate method 19 ‘ecomplish industrial development and to reap the advantages of indusaisation, —EE Business mn 3. lization fate esoure Salmi testtiedtoefetvelyuiizelocalrwmatiasundee thepeorleandraw materials availble nraalpansgowaseitng aseinany manner, Esablshmentofsmall enerpses vides testopportunity to tlize these resoures productively, 4. Industrial decentralisation: Largescaeindusties re ssullycalizedin urban areas leading lrng imbalances been ‘nso centres and rural areas, and inequalities in income and ‘ownership of wealth, Development of small-scale industies undoubtedly provides the best remedy to this problem Since these industries can be established in almost all prtsoftheeconcmy, they bring about industrial decentralizationandtalancedgrewshof Aiferentrepions. Establishment and growthof small eterprsesin ceverynook and comer ofthe county leads grand succes the reaucofindustializaion 5 Equality: The common propostionalvancedis income senerated in small enterprises is istrbuted amonga large uber ofpeope. Inthe case of big industries, income sconcenvatdonly with afew people resulting in inequality and conceniaton of économie power. Small enterprises sist nmenselyinproviting income to more number of peopleasalsinbingingskeuteqity inincomes. 6 Better industrial relations :Smallindustia wits seveas aneffectve platform to develop harmony ad ret reltonship between workers and employers since lesser numberof people ae employed in these industries. Industrial disputes are remote ossbiles in smal scale industries and this willbe cist fector for unhindered process of production. 7. More Production : Small enterprises pov

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