The role of government in economy has been indeterminate since the very beginning. In India, economic development has been marked mainly in quantitative terms. Over the years, the role of the Indian Government has increased and diversified.
The New Economic Policy which pushed the Indian economy to level of globalisation and liberalisation provided a new economic system, where in the economic was opened for private sector and abolished the licensing system. Under the New Industrial Policy, the entrepreneurial role of government was redefined significantly. The redefined role of government included setting up environment for privatisation, Public Private Partnership (PPP), reduce budgetary burden on public and achieve sustainable growth.
The government has disinvested in areas where privatisation is seen to be more effective. Under the new policy, the government portfolio was changed and government off-loaded its investments from low technology industries (ones which are more labour intensive), areas of low productivity, with negligible social significance, areas where private sector is performing better and has developed expertise, inefficient and low productivity areas, small and non-strategic areas , like small scale industries. The areas restricted forpublic sector included high-end technology, strategic and essential infrastructure (transport and communication).
Sensitive sectors like defence have been also reserved for public sector. The government aimed at increased private participation through Public Private Partnership (PPP) and existing public undertakings were converted into joint ventures with private participation. Further, management of public enterprises were given more autonomy for taking decisions. Public sector management was allowed to raise funds from mutual fund, and other banking and non-banking financial companies to meet their fund requirement. The government also entered into MOU with public sector units to make them accountable, while being autonomous at the same time. Government encouraged business restructuring, technical restructuring, liberalisation, increased privatisation and foreign participation to increase overall efficiency and productivity.
List some functions of Government in promoting business operations.
The Government plays an important role in promoting business operations. The promotional role encompasses government efforts to provide adequate in...See moreAnswered
Explain the Economic System of India with respect to Patterns of ownership and organization.
On basis of organization pattern, economic system can be corporate or non-corporate. Corporate sector. It comprises of business entities formally brou...See moreAnswered
Explain the aspects of labour force about economic development in India.
There are two important aspects of labour quantity and quality, on basis of which one can conclusions about economic development in the country. The q...See moreAnswered
What possible conclusions can you draw on the basis of trends in inequalities of income and other indicators about economic development in India?
Economic development is indicated by multiple variables, including per capita income, poverty, inequalities, per capita consumption, improvement in me...See moreAnswered
Explain the trends in per capital real income and poverty in India since 1951.
Trends in per capita real income: The base year for calculating real income or National Income at Constant Price (NICOP) estimates is...See moreAnswered
Define economic development. How it is different from economic growth?
Economic development has been defined as economic growth plus change by Meier. Economic development is indicated by variables, including per capita in...See moreAnswered
What is economic growth? Explain the trends in rate of economic growth of India economy since 1951.
Economic growth refers to the increase in full employment real output (national income) at constant prices. In practical sense, it refers to the chang...See moreAnswered
What is the difference between money national income and real national income?
Money income refers to the command over goods and services available in the economy. Real income is National Income or National Income at Constant Pri...See moreAnswered