IMPACT OF LIBERALIZATION,PRIVATISATION AND GLOBALISATION ON INDIAN ECONOMYPRESENTED BY SURABHI SOODAN DEEPAK SETHI PAYAL CHOUDHARY MEHAK CHOUDHARY DIMPLE RAHEJA This period of economic transition has had a tremendous impact on the overall economic development of almost all major sectors of the economy.An Overview Of Liberalization. To be Continued…… . trade as well as financial sector aimed at making the economy more efficient. a new chapter has dawned for India and her billion plus population. popularly known as. Liberalization. The series of reforms undertaken with respect to industrial sector. Besides. and its effects over the last decade can hardly be overlooked. Privatization and Globalization (LPG model) aimed at making the Indian economy as fastest growing economy and globally competitive. With the onset of reforms to liberalize the Indian economy in July of 1991. it also marks the advent of the real integration of the Indian economy into the global economy. The new economic reform. Privatization and Globalization Indian economy had experienced major policy changes in early 1990s. Then PM of India. . The Pre-liberalization Era Introduction of Liberalization in India – Prior to 1991 The Post Liberalization Era -.The Present Era. India Faced a “Balance of Payments Crisis”. P V Narsimha Rao Knew that It was time for Some Bold Decision. It had to Pledge its Gold to Foreign Countries.???? In 1991. Why Did it Start……. It was a deal with The IMF. ” Economic liberalization is a very broad term that usually refers to fewer government regulations and restrictions in the economy in exchange for greater participation of private entities." And also “Reduction of tariffs and/or removal of non-tariff barriers.“Liberalization” and “Economic Liberalization” The term “Liberalization” stands for “the act of making less strict”. Liberalization in Economy stands for “The process of making policies less constraining of economic activity. . The arguments for economic liberalization include greater efficiency and effectiveness that would translate to a "bigger pie" for everybody. the doctrine is associated with neo-liberalism. etc. Most first world countries. in order to remain globally competitive. . lower tax rates for businesses. have achieved rapid economic growth in the past several years or decades after they have "liberalized" their economies to foreign capital. open markets. British Prime Minister Tony Blair wrote that: "Success will go to those companies and countries which are swift to adapt. less restriction on both domestic and foreign capital. slow to complain. The task of modern governments is to ensure that our countries can rise to this challenge. economic liberalization refers more to liberalization or further "opening up" of their respective economies to foreign capital and investments. open and willing to change. have pursued the path of economic liberalization: partial or full privatization of government institutions and assets. greater labor-market flexibility. Brazil. Three of the fastest growing developing economies today. China and India. In developing countries. Pakistan grew by 5%. Only four or five licenses would be given for steel.At the same time. License owners built up huge powerful empires. power and communications.3%. License Raj established the "irresponsible. Thailand by 9%. which stagnated around 3. self-perpetuating bureaucracy that still exists throughout much of the country" and corruption flourished under this system. Infrastructure investment was poor because of the public sector monopoly.Impact Of Liberalization On Indian Economy The low annual growth rate of the economy of India before 1980. South Korea by 10% and in Taiwan by 12%. . A huge public sector emerged. Indonesia by 9%.5% from 1950s to 1980s. while per capital income averaged 1. State-owned enterprises made large losses. . ownership of business from the public sector (government) to the private sector (business).is the incidence or process of transferring Privatization means replacing government monopolies with the competitive pressures of the marketplace to encourage efficiency. Privatization is opening up of an industry that has been reserved for public sector to the private sector. quality and innovation in the delivery of goods and services. Privatization: Privatization . investors can no longer purchase a stake in that company.” . privatization came into vogue in the 1980s.“Privatization” and “Economic Privatization” The term “Privatization” refers to “The transfer of ownership of property or businesses from a government to a privately owned entity.” The transition from a publicly traded and owned company to a company which is privately owned and no longer trades publicly on a stock exchange. along with business deregulation and an overall movement toward greater use of markets. properties.” The process of converting or "selling off" government-owned assets. When a publicly traded company becomes private. or production activities to private ownership. After several decades of increasing government control over productive activities. ” Privatization helps establish a "free market". roads. Privatization is frequently associated with industrial or service- oriented enterprises.” . or even rights to water. which its supporters argue will give the public greater choice at a competitive price. government services such as health. such as land. sanitation. manufacturing or power generation. and education have been particularly targeted for privatization in many countries. but it can also apply to any asset. Conversely. such as mining. socialists view privatization negatively. In recent years. as well as fostering capitalist competition. arguing that entrusting private businesses with control of essential services reduces the public's control over them and leads to excessive cost cutting in order to achieve profit and a resulting poor quality service. Reduce the government's financial and administrative burden. Private concerns tend to be profit oriented and transparent in their functioning as private owners are always oriented towards making profits and get rid of sacred cows and hitches in conventional bureaucratic management. minimized and owners have a free reign and incentive for profit maximization so they tend to get rid of all free loaders and vices that are inherent in government functions. To be continued…… . all underlying corruptions are Gets rid of employment inconsistencies like free loaders. or over employed departments reducing the strain on resources.Impact Of Privatization On Indian Economy It frees the resources for a more productive utilization. Since the system becomes more transparent. Gets rid of employment inconsistencies like free loaders.• • • Effectively minimizes corruption and optimizes output and functions. or over employed departments reducing the strain on resources. Development of the general budget resources and diversifying sources of income. . Private firms are less tolerant towards capitulations and appendages in government departments and hence tend to right size the human resource potential befitting the organization's needs and may cause resistance and disgruntled employees who are accustomed to the benefits as government functionaries • • Permit the private sector to contribute to economic development. . Buying and selling goods and services from/to any countries in the world. Opening and planning to expand business throughout the world.Globalization-: It Means that opening up of the economy for foreign direct investment by liberalizing the rules and regulations and by creating favorable socio-economic and political climate for global business. defense industries (26%) etc. 3. 4. Devaluation: To solve the balance of payment problem Indian currency were devaluated by 18 to 19% 2 . Allowing Foreign Direct Investment (FDI): FDI was allowed in a wide range of sectors such as Insurance (26%). NRI Scheme: The facilities which were available to foreign investors were also given to NRI 's. .Steps Taken to Globalize Indian Economy 1. Disinvestment: To make the LPG model smooth many of the public sectors were sold to the private sector.
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