Assertion (A): Liberalization means corporatisation of departmental undertakings and public undertakings.
Reasoning (R) : Freedom to public sector undertakings to access capital market.
Analyzing Assertion (A): Corporatisation and Liberalization
Assertion (A) states that liberalization involves the corporatisation of departmental undertakings and public undertakings. Corporatisation refers to the process of converting government departments or state-owned enterprises into corporate entities, often preparing them for potential privatization or more market-oriented operations. Liberalization policies typically include measures aimed at reducing government intervention and promoting market efficiency, which often involves restructuring or transforming public sector undertakings (PSUs). Therefore, Assertion (A) is considered true in the context of economic reforms associated with liberalization.
Examining Reasoning (R): PSU Access to Capital Market
Reasoning (R) suggests that liberalization grants freedom to public sector undertakings (PSUs) to access the capital market. This means PSUs are allowed to raise funds by issuing shares or bonds in the open market, rather than relying solely on government budgets. This increased financial autonomy is a common feature of liberalization, enabling PSUs to fund expansion, modernization, and operations more independently.
Thus, Reasoning (R) is also considered true.
Linking Assertion (A) and Reasoning (R)
Liberalization aims to make the economy more efficient and market-driven. Allowing PSUs access to the capital market (R) serves this goal by:
- Providing alternative sources of funding, reducing the burden on the government.
- Encouraging PSUs to operate more efficiently and profitably to attract investors.
- Facilitating greater autonomy and flexibility, aligning with the goals of corporatisation mentioned in (A).
Therefore, the freedom granted to PSUs to access the capital market is a key component and consequence of liberalization that supports and explains the process of corporatisation and operational changes in public sector undertakings.
Conclusion: Both Assertion (A) and Reasoning (R) are true, and (R) correctly explains (A).
Important Questions from Business Environment
- The Micro-Economic environment deals with the operations of the firm in __________.
- Which of the following are "work-family conflict" faced by women?
a. Time based conflict
b. work conflict
c. Inter personal conflict
d. Behaviour based conflictChoose the correct answer from the options : - Assertion (A) : Buyers, for several industries, are potential competitors-they may integrate backwards.
Reasoning (R) : They have different degrees of bargaining power.
Code : Match List - I with List - II relating to the roles played by government in an economy and indicate the correct code of their matching.
List - I (Roles) List - II (Examples) (a) Regulatory role (i) Deciding timing and usage of resources (b) Promotional role (ii) Capital intensive projects of public sector (c) Entrepreneurial role (iii) Imposing of high import duty (d) Planning role (iv) Measures to control and cover risk in priority sectors - From the following statements of Assertion (A) and Reasoning (R), indicate the correct code :
Assertion (A) : Industrial liberalisation became an imperative condition for the growth of forces of competition leading to high efficiency and productivity in Indian industries.
Reasoning (R) : Industrial development and curbing of poverty is only possible through government intervention.
