(a) Is State participation in business essential? Discuss the objectives of liberalization, privatization and globalization. (10…

(a) State participation and the objectives of LPG

State participation is defended to correct market failures, prevent private monopoly in strategic sectors, build long-gestation infrastructure and pursue the goals of Art 39(b)-(c). Public enterprises built heavy industry and spread development regionally. Critics point to soft budgets, political interference, low returns and crowding out of private investment. Today the state is seen as essential mainly in strategic and public-good sectors, and as a regulator elsewhere.

Objectives of the 1991 reforms:

• Liberalisation: end the licence-permit-quota regime, abolish most industrial licensing, relax MRTP limits and simplify clearances.
• Privatisation: cut the fiscal burden, raise efficiency through market discipline and unlock public assets through disinvestment and strategic sales.
• Globalisation: integrate with world markets through lower tariffs, FDI, current account convertibility and WTO-consistent trade rules.

(b) HUL and sustainability

For: HUL has built sustainability into strategy through the Unilever Sustainable Living Plan and later the Unilever Compass. Project Shakti made about two lakh rural women micro-entrepreneurs, widening distribution. Water conservation, sustainable sourcing and plastic collection commitments build trust, cut resource costs and attract ESG investors.

Against: HUL’s lead rests mainly on its reach to about nine million outlets, sachet pricing, localisation and heavy advertising. Price-sensitive consumers weigh value over green claims, and multilayer sachets keep plastic waste and greenwashing concerns alive.

Judgement: sustainability strengthens reputation and long-term resilience, but scale, distribution and price-value remain the core drivers.

(c) Export-import policy and Asian trade

Initiatives: the Foreign Trade Policy 2023 (from 1 April 2023) moved from subsidies to facilitation, with RoDTEP replacing MEIS, EPCG, SEZs, Districts as Export Hubs, support for e-commerce exports and rupee trade settlement. PLI schemes and trade agreements such as the ASEAN FTA, CEPAs with Japan and South Korea, the UAE CEPA (2022) and the Australia ECTA (2022) support them.

Critical view:

• Agreements with ASEAN, Japan and Korea widened India’s deficits, since partners used tariff cuts better while Indian exporters met non-tariff barriers and strict rules of origin.
• The deficit with China reached about $99 billion in 2024-25, reflecting dependence on APIs, solar modules and electronics despite PLI.
• Fear of a surge of Chinese goods led India to stay out of RCEP in 2019.
• Newer agreements with the UAE and Australia show better market access and are being reviewed for results.

(d) Free entry and exit of MNCs

Benefits: non-debt capital, technology, management practices, links to global value chains and consumer choice. Easy exit, supported by the IBC (2016), lowers risk premiums and improves the investment climate.

Risks: pressure on MSMEs from pricing power, sudden job and capital outflows on exit, and profit shifting through transfer pricing.

MNC strategies in India: glocalisation of products and prices (automobile and fast-food firms), joint ventures to manage regulation and distribution, local sourcing and PLI-linked manufacturing, and engagement with regulators and industry bodies. Free entry and exit are healthy if backed by competition law, tax enforcement and support for domestic suppliers.

(e) Strategic plan for a public sector enterprise: NTPC

NTPC, a Maharatna, shows the contents of a workable plan:

• Vision and mission: reframed from thermal generation to reliable, affordable and clean energy.
• Environmental scan and SWOT: emission targets and carbon costs against strong cash flows and engineering skills, weighed against a high carbon footprint.
• Objectives: measurable targets such as 60 GW of renewable capacity by 2032.
• Strategy and structure: a separate subsidiary, NTPC Green Energy, bidding for solar and wind projects and investing in green hydrogen and biomass co-firing.
• Management control: the annual Memorandum of Understanding with the Department of Public Enterprises sets KPIs on plant load factor, heat rate, renewable investment and governance.
• Operational control: quarterly reviews, balanced scorecards, budgets and audits, including CAG oversight, keep managers accountable while preserving autonomy.