Sections of Indian industry (like software and information technology) have tremendously done well at the global level. Which factor has contributed for its development?
Answer & explanation
Correct answer: option 2
The correct answer is Option (2) → Liberalisation
Option (1) Commodification — Incorrect. Commodification occurs when things that were earlier not traded in the market become commodities, as when labour or skills are bought and sold. It describes the spread of markets into new spheres of life, not a policy that opened Indian industry to the world.
Option (2) Liberalisation — Correct. The liberalisation programme opened up Indian markets by relaxing or removing economic controls and allowing foreign investment. Some sectors of Indian industry, like software and information technology, benefit from this access to a global market, while others, like automobiles or electronics, may lose to foreign producers.
Option (3) Capitalisation — Incorrect. Capitalisation is a financial term: the raising of capital for a business, or the total value of a company’s shares. It is not the policy change that gave the software industry its access to world markets.
Option (4) Status symbol — Incorrect. Max Weber coined the term status symbol for goods that mark a person’s status, such as the brand of cell phone or the model of car one owns. It is about consumption and status, not about why an industry grows.
Note: The concept in Option (3), ‘capitalisation’, is not in NCERT (2025-26); explained here for the benefit of the students.
NCERT (2025-26): “Debate on Liberalisation – Market Versus State … The globalisation of the Indian economy has been due primarily to the policy of liberalisation that was started in the late 1980s. Liberalisation includes a range of policies such as the privatisation of public sector enterprises (selling government-owned companies to private companies); loosening of government regulations on capital, labour, and trade; a reduction in tariffs and import duties so that foreign goods can be imported more easily; and allowing easier access for foreign companies to set up industries in India. Another word for such changes is marketisation, or the use of markets or market-based processes (rather than government regulations or policies) to solve social, political, or economic problems. These include relaxation or removal of economic controls (deregulation), privatisation of industries, and removing government controls over wages and prices. Those who advocate marketisation believe that these steps will promote economic growth and prosperity because private industry is more efficient than government-owned industry. The changes that have been made under the liberalisation programme have stimulated economic growth and opened up Indian markets to foreign companies. For example, many foreign branded goods are now sold, which were not previously available. Increasing foreign investment is supposed to help economic growth and employment. The privatisation of public companies is supposed to increase their efficiency and reduce the government’s burden of running these companies. However, the impact of liberalisation has been mixed. Many people argue that liberalisation and globalisation have had, or will have, a negative net impact on India – that is, the costs and disadvantages will be more than the advantages and benefits. Some sectors of Indian industry (like software and information technology) or agriculture (like fish or fruit) may benefit from access to a global market, but other sectors (like automobiles, electronics or oilseeds) will lose because they cannot compete with foreign producers.” “4.2 Understanding Capitalism as a Social System … Commodification occurs when things that were earlier not traded in the market become commodities. For instance, labour or skills become things that can be bought and sold.…” “4.2 Understanding Capitalism as a Social System … One of sociology’s founders, Max Weber, was among the first to point out that the goods that people buy and use are closely related to their status in society. He coined the term status symbol to describe this relationship. For example, among the middle class in India today, the brand of cell phone or the model of car that one owns are important markers of socio-economic…” |