D ebate on L iberalisation – M arket V ersus S tate The globalisation of the Indian economy has been due primarily to the policy of liberalisation that was started in the late 1980s. Liberalisation includes a range of policies such as the privatisation of public sector enterprises (selling government-owned companies to private companies); loosening of government regulations on capital, labour, and trade; a reduction in tariffs and import duties so that foreign goods can be imported more easily; and allowing easier access for foreign companies to set up industries in India. Another word for such changes is marketisation, or the use of markets or market-based processes (rather than government regulations or policies) to solve social, political, or economic problems. These include relaxation or removal of economic controls (deregulation), privatisation of industries, and removing government controls over wages and prices.
Those who advocate marketisation 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 liberalisation programme have stimulated economic growth and opened up Indian markets to foreign companies. For example, many foreign branded goods are now sold, which were not previously available. Increasing foreign investment is supposed to help economic growth and employment.
The privatisation of public companies is supposed to increase their efficiency and reduce the government’s burden of running these companies. However, the impact of liberalisation has been mixed. Many people argue that liberalisation and globalisation have had, 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 (like fish or fruit) 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.
For example, Indian farmers are now exposed to competition from farmers in other countries because import of agricultural products is allowed. Earlier, Indian agriculture was protected from the world market by support prices