Liberalization and Privatization world wide seem to be associated with rising income inequality. The following points support the above statement.
A. Due to disinvestment people have lost their jobs
B. More and more companies reducing the number of permanent employees
C. Outsourcing and contracting is followed in all sectors
D. Job security is at threat due to increase in contractual work
E. Conspicuous consumption is on the rise due to improvement in spending power
Choose the correct answer from the options given below:
Answer & explanation
Correct answer: option 1
The correct answer is Option (1) → A, B, C, D only
A. Due to disinvestment people have lost their jobs Correct. When the government sells its share in public sector companies (disinvestment), workers lose jobs: in Modern Foods, the first company to be privatised, 60% of the workers were forced to retire in the first five years.
B. More and more companies reducing the number of permanent employees Correct. Companies are reducing permanent employees and outsourcing their work to smaller companies or even to homes, where pay and security are lower.
C. Outsourcing and contracting is followed in all sectors Correct. Almost all companies, even government ones, now practise some form of outsourcing and contracting, most visibly in the private sector.
D. Job security is at threat due to increase in contractual work Correct. Very few people have secure jobs, and even those in regular salaried employment are becoming more insecure due to the rise in contract labour.
E. Conspicuous consumption is on the rise due to improvement in spending power Incorrect. Conspicuous consumption means buying goods to display one’s wealth and status. A rise in it because people can spend more speaks of growing spending power, not of the loss of jobs and security that makes incomes more unequal.
Note: The concept in Statement E, ‘Conspicuous consumption’, is not in NCERT (2025-26); explained here for the benefit of the students.
NCERT (2025-26): “Globalisation, Liberalisation and Changes in Indian Industry … The government is trying to sell its share in several public sector companies, a process which is known as disinvestment. Many government workers are scared that after disinvestment, they will lose their jobs. In ‘Modern Foods’, which was set up by the government to make healthy bread available at cheap prices, and which was the first company to be privatised, 60% of the workers were forced to retire in the first five years.…” “…More and more companies are reducing the number of permanent employees and outsourcing their work to smaller companies or even to homes. For multinational companies, this outsourcing is done across the globe, with developing countries like India providing cheap labour. Because small companies have to compete for orders from the big companies, they keep wages low, and working conditions are often poor. It is more difficult for trade unions to organise in smaller firms. Almost all companies, even government ones, now practice some form of outsourcing and contracting.…” “…But we also see that very few people in India have access to secure jobs, with even the small number in regular salaried employment becoming more insecure due to the rise in contract labour. So far, employment by the government was a major avenue for increasing the well-being of the population, but now even that is coming down. Some economists debate this, but liberalisation and privatisation worldwide appear to be associated with rising income inequality.…” |