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Socialism in the most general sense refers to some work, meet, process etc done collectively by a group of people wherein everyone benefits either physically or mentally. Socialism always focuses on group and collectivity rather than individuality and self. Socialism is also known as Communalism as everything is performed as/by a community/state rather than individually/privately.

Liberalisation in the most general sense refers to freedom from various barriers in/of/to/for some work, process, borders, etc. Liberalisation focuses on removal of barriers and liberation of self, work, political borders, etc. 

Has Liberalisation ended socialism?

The answer to this question in my view is, yes, liberalisation has put an end to traditional socialism by :

  1. Removal of trade barriers and political boundaries.
  2. Increased Exposure
  3. Multinational Co-operations 
  4. Globalisation

All the above mentioned factors are essential for development of economies of a nation and development and welfare of its citizens which is the main aim of socialism. Thus liberalisation in a unique sense, is socialism but without political and economical barriers.

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Joined: 6 months ago my point of view.. So, yes the concept of socialism became irrelevant in the era of liberalisation because the origin of financial crisis can be traced from the inefficient management of Indian economy in 1980's the revenue were very low the govt. had to overshoot it's revenue to meet problems like unemployment, poverty,population explosion. The government was not able to generate sufficiently from internal sources such as taxation. The income from public sector undertaking was also not very high. 

So, as we all know that if we wanna grasp something, firstly we have to expand ourself. That's what dr. Manmohan singh ji had done at that time.The new economic policy introduced that is LPG (liberalisation, privatisation, globalisation) before liberalisation there is no trading between countries but after that our economic condition grows up. 

Socialism is an ideology that support public ownership of property and natural resources. But in the era of liberalisation and globalisation the concept of socialism become irrelevant because as the word denote Liberal means free.

1)abolishing licensing 

2)freedom in activities 

3)freedom in fixing price of goods and services 

4)simplification of export and import policy nd reduction in tax rates. 

As in case of globalisation, the most important thing is adaptation of new technologies.

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India became independent from the exploitative hands of British and decided to follow a mixed economic model for the country. But initially government was tilted towards the socialist policies to ensure the welfare of people. It is also clearly mentioned in the preamble of our constitution. 

To discuss the impacts of effects of socialism and liberalism ,it is very important to know its difference. Socialism gives very much much importance to the role of the government to reduce or fill the gap between the have's and have nots. On the other hand the liberalist policies give importance to the laissez faire or the invisible hand theory of classical economists. Hence the government following the liberalist policies  believed in a free economy where the market forces had major role and the Socialist nations like early soviet unions believed in the role of government to control the fluctuations in the economy.

        Our prime minister Jawaharlal Nehru was a firm believer of socialist economy . For a newly independent nation in 1947 it was very important for India to ensure welfare of its citizen and to eradicate poverty. The constitution makers also included DPSP in Indian constitution to ensure the creation of a welfare state. The socialist policies of DPSP was to reduce the difference between rich and poor. Example : article 38, 39,39 A,41,42,43,43A ,47 etc. Some of the very important socialist policies adopted in India are as follows:

  •     land ceiling
  • land redistribution
  • nationalization of banks in India 
  • licensing of Indian industries etc. 

Results of this policies also ensure the pros and cons of socialist in India. It is very true that socialist principles to an extent reduced the gap between rich and poor, but economic growth also began to reduce. Followed by this, many changes happened in world  like disintegration of soviet union( which proved to be failure of socialism),1991 economic crisis, and most importantly, Indian economy got a global face. Indian was no more a newly developed nation, many world economy saw India as a land to invest their capital.

The Narasimha Rao government adopted the LPG policies on 21st June 1991. These policies officially made Indian economy a liberal one. This attracted more and more foreign investment and increased the role of private sectors. This also played an important role in increasing the number of our national income. But the worst fact is that Top 10 % of the India's population holds the 77 % of the total wealth. Even the poverty and economic inequality pops up during the time of disasters and pandemics like what's happening now. The negative effects of liberalism will be visible among the lower level of income group and the positive effect will be visible through the giants capitalist owners. So the effect of liberalism can be checked upon the what the motive of government is: to increase GDP numbers or to Increase income inequality?

   The socialism has been shadowed up by the liberalism.  The concept is still relevant through existing of various socialist government in various states of the Country, but its importance is lost in between the struggle of India among all the world nations. The policies adopted by the communist china is different, it is not possible in a democratic country like India. In china the government intervene like a dictator, but according to Karl Marx," Democracy is the road to socialism".   So, Politically, socialism still lives in India through various political parties. But is almost vanished in the economic system.



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Socialism: It is a socio-economic and political idea that emphasis on fact that all persons are to be equally treated by dividing wealth and property equally and reduce the gap between the have and have nots.

Liberalization: It is the concept of withdrawing the restriction imposed by government in economic activities.

Idea of liberalization privatization and globalization(LPG) granted,

  • Business enterprisers complete freedom in their activities.
  • Enhanced India to be competent in global space.
  • New economic reforms were formed in terms of taxation.
  • De-licensing and diluted import and export policy.

All these lead to the economic development of the country, but;

  • Large scale enterprises were benefitted, no upliftment in small scale businessman and workers.
  • It led to accumulation of wealth on smaller section thereby increasing gap between rich and poor.
  • Although the overall GDP for nation was increased per capita income had no equality making socialism irrelevant.
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For a country like India socialism and liberalisation are both needed for a balanced growth thus India follows mixed economy.
*Socialism* - means the factor of production are controlled by the central government where government will provide subsidies and policies for the development of small and cottage industries and provide them employment and also it protects people from international competition.
*Liberalisation* - refers to the economy where the factors of production under the control of private organisations and companies where the compete with international companies and are no restrictions of government within it it provides for the development of nation and also increases economic growth.
but the main disadvantage of liberalisation policy is that it increases economic gap between poor and rich thus for a country like India, socialism and liberalisation should go hand in hand and there should be powers with government to interfere when there is requirement by using modified price mechanism as for the development of society as well as economy.
Thus the concept of socialism is not irrelevant in the era of liberalisation.
*"we are a mixed economy we will remain a mixed economy the public and private sector will play the important roles the private sector in our country has very ample scope and I am confident that India's entrepreneur or have the capacity and the will to rise to the occasion."* said by Mr Manmohan Singh.


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