Liberalization is the “Willingness to respect or accept behaviour or opinion different from one’s own; open to new ideas”. Liberalization is the process of liberating the economy from various regulatory mechanisms and elimination of customs and tariffs. Economic liberalization is the policy of relaxation over economic and trade policies.

A. Importance of Liberalization are as follows:

1. Consumer friendly: This leads to lower costs and prices for consumers to get the goods and services according to their wishes. There are many companies which bring a lot of quality products to satisfy consumers’ interests and demands. In a liberalised economy, consumer gets more benefits.

2. Free from Government regulations: Government provides free movement of trade and commerce where any private company can easily carry on their business activities without any restrictions. The companies need not undergo procedural delay imposed by the government.

3. Promotes competitions: Liberalisation extends competition within different company’s trade firms. Basically they keep the standards and cheaper prices for consumers. Competition promotes efficiency and avoids wastage of resources.

4. Promotes world class business: Liberalisation encourages business class to share knowledge and implement latest technologies of international standards. This leads to high quality products and better logistics in sales and supplies.

B. Political implications of liberalization are as follows:

1. Risk of brain drain: In the name of liberalised policy, citizens knock at the door of international opportunities, with their knowledge and skill. The developing nations face a lot of problems from such brain drain.

2. Reduces dependency on labour: As the process itself is capital intensive, it reduces dependency on labour and cuts opportunities for low level or manual jobs.

3. Risk of environmental degradation: The incessant industrial activity at the global level generates a lot of waste by products leading to environmental degradation.

4. Regulates the price of certain commodities: The price of certain commodities like-life saving drugs, fertilizers, etc., are automatically controlled by the world trade forums and associations.

5. Affects common man: It affects the common man in his day-to-day life as he finds its difficult to earn his livelihood.

6. Risk of financial instability: Flexibility (laxity) of monetary and fiscal policies of the Government may lead to financial crisis like recession and depression.