Liberalisation -UGC Net Materials

Liberalisation refers to the slackening of government regulations. The economic liberalisation in India denotes the continuing financial reforms which began since July 24, 1991.

liberalisation refers to a relaxation of government restrictions in order to encourage economic development.Liberalization policies include partial or full privatisation of government institutions and assets, greater labour market flexibility, lower tax rates for businesses, less restriction on both domestic and foreign capital, open markets, etc. The primary objective of this l was to make the economy of India the fastest developing economy in the globe with capabilities that help it match up with the biggest economies of the world.
Salient features of the Liberalisation
    Foreign Technology Agreements
    Foreign Investment
    MRTP Act, 1969 (Amended)
    Industrial Licensing
    Deregulation
    Beginning of privatisation
    Opportunities for overseas trade
    Steps to regulate inflation
    Tax reforms
    Abolition of License -Permit Raj

1. Liberalization means :
(1) Reducing number of reserved industries from 17 to 8
(2) Liberating the industry, trade and economy from unwanted restriction
(3) Opening up economy to the world by attaining international competitiveness
(4) Free determination of interest rate

2.Removing barriers or restrictions set by the government is called:
[1] liberalisation
[2] investment
[3] favourable trade
[4] free trade
Answer
1.[3]  2.[1]

Working Capital-Gross Net and Permanent Working Capital

Working capital refers to the circulating capital required to meet the day to day operations
of a business firm. Working capital may be defined by various authors as follows:
1. According to Weston & Brigham - “Working capital refers to a firm’s investment in short term assets, such as cash amounts receivables, inventories etc.
2. Working capital means current assets. —Mead, Baker and Malott
3. “The sum of the current assets is the working capital of the business” —J.S.Mill

CIRCULATION OF WORKING CAPITAL
At one given time both the current assets and current liabilities exist in the business. The current assets and current liabilities are flowing round in a business like an electric current.
However, “The working capital plays the same role in the business as the role of heart in human body. Working capital funds are generated and these funds are circulated in the business. As and when this circulation stops, the business becomes lifeless. It is because of this reason that he working capital is known as the circulating capital as it circulates in the business just like blood in the human body.”

1. Gross Working Capital: It refers to the firm’s investment in total current or circulating assets.
2. Net Working Capital:The term “Net Working Capital” has been defined in two different ways:
i. It is the excess of current assets over current liabilities. This is, as a matter of fact, the
most commonly accepted definition. Some people define it as only the difference
between current assets and current liabilities. The former seems to be a better definition
as compared to the latter.
ii. It is that portion of a firm’s current assets which is financed by long-term funds.
3. Permanent Working Capital: This refers to that minimum amount of investment in all current
assets which is required at all times to carry out minimum level of business activities. In otherwords, it represents the current assets required on a continuing basis over the entire year. Tandon
Committee has referred to this type of working capital as “Core current assets”.


I Current Assets: Amount Amount Amount
Minimum Cash Balance ****
Inventories :
Raw Materials ****
Work-in-progress ****
Finished Goods **** ****
Receivables :
Debtors ****
Bills **** ****
Gross Working Capital (CA) **** ****
II Current Liabilities :
Creditors for Purchases ****
Creditors for Wages ****
Creditors for Overheads **** ****
Total Current Liabilities (CL) **** ****
Excess of CA over CL ****
+ Safety Margin ****
Net Working Capital ****

Current Ratio -Meaning and its Explanation NET Exam

  -
The current ratio is a liquidity ratio that measures a company's ability to pay short-term and long-term obligations.The current ratio is mainly used to give an idea of the company's ability to pay back its liabilities (debt and accounts payable) with its assets (cash, marketable securities, inventory, accounts receivable). As such, current ratio can be used to take a rough measurement of a company’s financial health. The higher the current ratio, the more capable the company is of paying its obligations, as it has a larger proportion of asset value relative to the value of its liabilities.

The current ratio is calculated by dividing current assets by current liabilities. This ratio is stated in numeric format rather than in decimal format. Here is the calculation:

Current Ratio = Current Assets / Current Liabilities

Current Assets
A current asset is cash and any other company asset that will be turning to cash within one year from the date shown in the heading of the company's balance sheet.
Current assets are also referred to as short term assets. Current assets are generally listed first on a company's balance sheet and will be presented in the order of liquidity.
That means they will appear in the following order:
 cash (which includes currency, checking accounts, petty cash),
 temporary investments, accounts receivable, inventory, supplies, and prepaid expenses. (Supplies and prepaid expenses will not literally be converted to cash.]

Current Liabilities
A current liability is an obligation that is 1) due within one year of the date of a company's balance sheet and 2) will require the use of a current asset or will create another current liability. If a company's operating cycle is longer than one year, current liabilities are those obligation's due within the operating cycle.
Current liabilities are usually presented in the following order:

    the principal portion of notes payable that will become due within one year
    accounts payable
    the remaining current liabilities such as payroll taxes payable, income taxes payable, interest payable and other accrued expenses

Industrial Policy of Government of India - Net Exam

 Industrial Policy of Government of India


India had an extremely underdeveloped and unbalanced industrial structure. Industries contributed less than one sixth part of national income.Thus after independence, the government of India had to undertake effective measures to increase the tempo of industrialisation. Correct regional imbalances in industrial development and rectify the distorted industrial structure through rapid development of capital goods industries.

Meaning
Industrial policy is a statement which defines the role of government in industrial development It lays down rules and procedures that would govern the growth and pattern of industrial activity. The industrial policy is neither fixed nor inflexible. It is amended, modified and redrafted according to the changed situations

The industrial policy seeks to provide a framework of rules, regulations and reservation of spheres of activity for the public and the private sectors. This is aimed at reducing the monopolistic tendencies and preventing concentration of economic power in the hands of a few big industrial houses.

The industrial policy was announced by government of India in 1948 and Industries act 1951 was passed to give a material shape to this policy. This policy was changed in 1956 to give a concrete policy. It was further altered to give shape to the mixed economy and ideology of socialist pattern of society. The political party, Janta Dal had modified the policy in 1977 (Pathak, 2007). Due to change in government, policy was again revised in 1980. The national front government brought some changes in its industrial policy in 1990. In the decade of 1990s, the government of India decided to deviate from its previous economic policies and learn towards privatization in order to come out from the economic crisis. In July 1991 when the devaluation of Indian currency took place and the government started announcing its new economic polices one after another (Gupta, 1995).Government launched its new economic policy which has three important features such as Liberalization, Privatization and Globalization.

Main Objectives
1.The new economic policy intended to reduce the rate of inflation and to remove imbalances in payment.
2.It intended to move towards higher economic growth rate and to build sufficient foreign exchange reserves.
3.Increase in Employment.
4.Arrival of New Technology or Development of Technology.
5.Development of Infrastructure.

UGC-NET Exam Question And Answer

1.1.The world's first electronic stock market is:
[A]KOSPI                 [B] Nikke                         [C]  NASDAQ                  [D]  DowJones

2.which is the major stock market index of South Korea
[A]KOSPI                 [B] Nikke                         [C]  NASDAQ                  [D]  DowJones



3.The Human Development Index (HDI) is introduced by:
[A]UNDP     [B]UNICEF    [C]IMF       [D]World Bank:

4.From the following, identify the tools of fiscal policy:
[i]Public expenditure  [ii]Open market operations   [iii]Deficit financing    [iv]Taxation    [v]Reserve requirement
codes
[A] [i]  [iii] [iv]  and [v]
[B][i]  [iii]  [iv]
[C].[i]  [ii]  and  [iv]
[D][ iii] , [iv]  [v]

4.A retring partner continues to be liable for obligations incurred after his retirement
[1]If unpaid amount is transferred to his loan account
[2]If he does not give public notice
[3]If he starts a similar business elsewhere
[4]In all the situations till he survives

5.In what order, the following assets are shown in the balance sheet of a company?
[1]Trade receivables 
[2] Cash 
[3] Furniture and fitting 
[4] Investment in shares and debentures
Codes :
(1)    (ii), (i), (iv), (iii)
(2)    (i), (ii), (iii), (iv)
(3)    (iii), (iv), (i), (ii)
(4)    (iv), (iii), (ii), (i)



Answer
1.[c] 2.[1]  3.[A]  4.[B] 5.[B]