Liberalisation, Privatisation And Globalisation : An Appraisal

Question 81

What do you know about World Trade Organisation?


The World Trade Organisation was founded in 1995 as the successor organisation to the General Agreement on Tariffs and Trade (GATT). GATT was established in 1948 with 23 countries to provide equal opportunities to all countries in international market for trading purpose. WTO is expected to establish a rule-based trading. The purpose regime to enlarge production and trade of services to ensure optimum utilisation of world's resources and to protect environment. The WTO agreements cover trade in goods as well as services to facilitate international trade through removal of tariff and non-tariff barriers and providing greater market access to all member countries.

As a member of WTO, India has been in the forefront of framing fair global rules, regulations and safeguards and advocating the interest of developing world. India is committed to liberalise its trade regime in accordance with the consensus on other reforms. 

Question 82

What is the performance of Indian economy during reforms period?


India has benefitted from the process of economic reforms and liberalisation. The rate of economic growth is now predicted to be about 8% per year compared to 3-4% in the last decade. India's total foreign exchange reserve is increasing. Now India is a successful exporter in autoparts, engineering goods, information technology, software and textiles.

The table below shows that GDP growth rate is increasing. Agricultural growth rate has gone down : Service sector has developed by 7.8%.

Table 3.2 : Growth of GDP in %

Sector (Ninth Plan)

1980-81 to 1990-91

1992-93 to 2000-01


















Question 83

What is Globalisation? What are its components?


Globalisation : It means the integration of economies worldwide through trade, financial flow, technology and information network. It refers to the growing economic interdependence of countries worldwide through the cross-border transactions in goods and services.

Components of Globalisation:

(i) Free flow of technology.

(ii) Free movement of labour force among different countries of the world.

(iii) Free flow of capital among different countries.

(iv) No restrictions on foreign investment.

(v) Reduction in trade barriers.

Question 84

Why has the industrial sector performed poorly in the reform period?


Industrial sector has performed poorly in the reform period mainly because of following reasons:
1. Because of the New Economic Policy of 1991, and other reforms India was forced to open its economy for Multinational Corporations and other economies. In the web of globalisation, superior quality goods and services started dominating the economy which seriously hampered the growth of local industrial production.

2. Shortage of electricity and other essential raw materials adversely affect the quality of goods produced and also pose hurdles in the timely availability of goods and services.

3. India has lifted all control and quota restrictions on the exports of readymade clothes under "Multifibre Agreement" but USA is not reedy to lift quota restrictions on imports of readymade clothes (textiles) from India and China.

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