Market versus State

The globalization of the Indian economy has been due to the policy of liberalization that was started in the late 1908s.Liberalization includes a range of policies such as privatization of public sector enterprises, loosening of government regulations on capital,labour and trade; reduction in tariffs and import duties sothat foreign goods can be imported more easily and allowing easier access for foreign companies to set up industries in India. One can use the term marketisation or the use of markets or market based processes to solve social,political or economic problems.These include relaxation or removal of economic of economic controls,privatization of industries and removing government controls over wages and prices.Those who advocate marketization believe that these steps will promote economic growth and prosperity because private industry is more efficient than government owned industry.

The changes that have been made under the liberalization program have stimulated economic growth and opened up Indian markets to foreign companies.Increasing foreign investment is supposed to help economic growth and employment.The privatization of public companies is supposed to increase their efficiency and reduce the government’s burden of running these companies.However the impact of liberalization is mixed.Many people argue that liberalization and globalization have or will have a negative net impact on India that is the costs and disadvantages will be more than the advantages and benefits.Some sectors of Indian industry like software and information technology or agriculture may benefit from access to a global market but other sectors like automobiles,electronics or oilseeds will lose because they cannot compete with foreign producers. Indian farmers are now exposed to competition from farmers in other countries because import of agricultural products is allowed.

Liberalization is against the government interference in form of support prices or subsidies so these are reduced or withdrawn.This means that many farmers are not able to make a decent living from agriculture.Similarly small manufacturers have been exposed to global competition as foreign goods and brands have entered the market and some have not been able to compete.The privatization or closing of public sector industries has led to loss of employment in some sectors and to growth of unorganized sector employment at the expense of the organized sector.This is not good for workers because the organized sector generally offers better paid and more regular or permanent jobs.