Chapter – Liberalisation, Privatisation and Globalisation

Extra Questions

Ques 1. Those public sector undertakings which are making profits should be
privatised. Do you agree? Why?
Ans. No, the profit making public sector enterprises should not be privatised for
the following reasons:
a. These PSUs are revenue generators for the government.
b. The assets of the profit making industries, if undervalued, might lead to a
substantial loss to the government.
c. Some of the PSUs like water, railways etc. enhance the welfare of the
nation and serve the general public at a nominal cost. Thus, strategic
industries should be retained by the government to avoid emergence of
monopolies.
d. Privatisation may cause exploitation of workers in these units and may
have socially undesirable effects such as concentration of economic
power thereby leading to reduced welfare.

Ques 2. Differentiate between:

(i) Strategic and Minority sale
Strategic sale Minority sale
It refers to PSUs stock selling It refers to PSUs stock selling
of 51% or more than it to the of 49% or less than it to the
private sector. private sector (retaining at least
51% of the shares along with
full management control by the
government.)
Ownership of the public sector Ownership of the public sector
unit is transferred to the private unit remains with the
sector. government.
It is a process of competitive It is a process of sale through
auctioning and followed by sale public offers.
to the highest bidder.

(ii) Bilateral and Multi-lateral trade

Bilateral trade
It refers to a trade agreement
between two countries.
This is an agreement that gives
equal trade opportunity to both
Multi-lateral trade
It refers to a trade agreement
among more than two countries.
This is an agreement that ensures
that all the member countries
member countries. have equitable access to the
world market.
Individual negotiation is Group negotiations with all the
necessitated with each country. countries at one go to save time.
It promotes economic It promotes globalised
cooperation between two integration among countries.
countries.

(iii) Tariff and Non-tariff barriers

Tariff barriers Non-tariff barriers
These are taxes imposed on the
These are generally quantity
import of goods by a country restrictions imposed on the
to protect domestically
import of goods by a country to
produced goods. protect domestically produced
goods.
They are imposed at They are completely abolished
reasonable prices by member (import quotas and voluntary
countries of the World Trade export restraints) by the World
Organization. Trade Organization.

Ques 3. Do you think outsourcing is good for India? Why are developed
countries opposing it?
Ans: Outsourcing is beneficial to India. Outsourcing appears to be beneficial to
India, as evidenced by the following points.
1. Employment: For a growing country like India, job creation is a critical goal,
and outsourcing has shown to be a godsend in this regard. It results in the
creation of new, higher-paying jobs.
2. Technical know-how transfer: Outsourcing allows for the transfer of
complex and advanced technology ideas and technical know-how from
developed to developing countries.
3. International credibility: Outsourcing to India improves India's
international credibility. This raises the amount of money coming into India.
4. Encourages other sectors: Outsourcing benefits not just the service industry,
but also other associated sectors such as the industrial and agricultural sectors,
due to different backward and forward connections.
5. Assists in the growth and formation of human capital: Outsourcing aids in
the development and formation of human capital by training and imparting
advanced skills to employees, hence enhancing their future scope and
appropriateness for high-ranking positions.
6. Eradication of poverty: Outsourcing enhances the level of living and the
eradication of poverty in developing countries by producing more and better-
paying jobs. It also aids in the reduction of poverty.
7. Increased infrastructure investment: Outsourcing to India necessitates the
development of higher-quality infrastructure. This leads to the economy's
modernisation and the government's increased investment in developing high-
quality infrastructure and human resources.
However, while outsourcing to India is beneficial, developed countries oppose it
since outsourcing causes a movement of income and investments from rich
countries to developing countries. MNCs also contribute more to the host
country's development than they do to their own. Outsourcing also reduces the
number of jobs created in wealthy countries because the same jobs can be done
for less money in developing countries. Furthermore, this results in job
insecurity in rich countries, as jobs might be outsourced to poor countries at any
time.