Answer:
MEANING:- Liberalization refers to giving freedom to business from excessive government control. As private business can takes their own decisions, consumption , lending , price etc according to their need.
ADVANTAGES OF LIBERALIZATION
1.Di-licencing of industries
2.Increase in foreign direct investment
3.liberalization of foreign technology
4.Industrial location
5.Faster growth and poverty reduction
6.Increase in employment
1. Di -licensing of industries :- Di -licensing of industries means government removed the license in some industries . Removed in the lengthy process of obtaining license it helps people to open business easily , further this help economy to increase competition and nation’s performance.
2. Increase in FDI :- Removing of this act , helps Indian business to take investment from foreign investors which helps to expand business.
People of foreign country can invest without any permission or request from government . In current, situation foreign investors can invest up-to 49% as company’s ownership should remained with hands on Indian.
3. Increasing in foreign technology :- This results effects to increase in import of foreign technology to use advance level of technology so business can run effectively as well as efficiently.
4. Industrial location :- As removing in unwanted rules , now the company can set up industrial location where the business can run effectively . As before it takes huge time to take permission from government to set up industry in different location.
5. Faster growth and poverty reduction :- Due to rise in export and import it also help to grow economy to grow fast and it also helps to reduction in poverty.
Disadvantage of liberalization
1.Increase Dependence
2.Loss in domestic unit
3.Unbalanced economy
1.Increase Dependency :- As results in increase in foreign trade , nation goes dependence in technology , Material etc . If any breakdown happened it can cause loss to the industry or business.
2. Loss in domestic unit :- As results in increase in foreign trade , nation goes dependence of material as it is very cheap from foreign countries like china etc. It causes loss to domestic unit as nobody wants to buy domestic products
3. Unbalanced Economy :- Liberalization makes economy to unbalanced economy as it makes dependent on other countries if any fluctuation happens in foreign economy it also makes fluctuation in economy .
