Liberalization may be defined as the liberalized view of the Government in respect of trade policies, industrial policies, fiscal and monetary policies etc. It wants to minimise state intervention in economic activities.
‘Globalization’ means integration of the domestic economy with the world economy mainly by allowing free flow of goods and services between countries and withdrawing of all types of unnecessary restrictions trade, especially import controls.
Two measures to promote economic development:
1. Development of Social and Economic Infra-structure: Government is responsible for the development of economic infrastructure like roads, railways, dams, electricity, irrigation etc. and also social infra-structure like education, health services, etc.
2. To control Economic Fluctuations: The market forces of demand and supply are not able to control economic fluctuations in the country because the production and prices fluctuates on accounts of changes in demand and supply. Fluctuations in production and prices cause economic unstability which is not conducive to economic development. Therefore, state intervention is required to control economic fluctuations for proper development of the country.
