INTRODUCTION

To combat the economic crises of gos, the gouuenment of wide initialed a slew of economic wfouns, which come to be knowen as new economic policy. The buood compoueuis of NEP (i) the policy of liburalisalion (l) in place of licensing (ii) The policy of pleinealisation. (iii) The policy of globalization in place of peumits.

History
The known Economic history of India begins with the Indus Valley civilisation. The Indus civilisation's economy appears to have depended significantly on trade, which was facilitated by advances in transport. Around 600 BC, the Mahajanapadas minted punch-marked silver coins. The period was marked by intensive trade activity and urban development. By 300 B.C., the Maurya Empire united most of the Indian subcontinent. The political unity and military security allowed for a common economic system and enhanced trade and commerce, with increased agricultural productivity. Economic reforms in India generally mean changes introduced in the development of economy of the country with a view to obtaining maximum benefits for maximum people. Reforms in Indian economy are continuing since Rajeev Gandhi became the Prime Minister of India following the death of Indira Gandhi in 1984. Rajiv Gandhi realized that in a vast underdeveloped country like India with a high growth of population, high rate of inflation and a lopsided industrialization reforms were a necessity. He was largely correct in his assessment. But introduction of reforms was not easy. There were severe political differences and the Left parties opposed the liberalized policies of the government apprehending concentration of wealth in the hands of giant private business group. They even stood in the way of computerization. The economy suffered a temporary set back. Slowly most of the road blocks to the avenues of development were removed and the country moved towards a path of economic rejuvenation. Significant progress was achieved in information technology, road and rail transports, communication and food production. Even key industries like iron and steel benefited from industrial reforms.

Liberal economic policies brought the developed countries closer to India and latest technological know-how was introduced in the industrial sectors. With this India virtually opened its door to globalization .The country signed World Trade Agreement and other United Nation sponsored programs and gained from the benefits of such contracts. The role of private sectors was widened and there was healthy competition between public sector, private sector and the foreign entrepreneurs. Many foreign investment and fund from non-resident Indians followed in to the Indian economy and the economy received a boost.

The economic reforms are still continuing under Prime Minister Monmohan Singh. Efforts are on to introduce newer technologies in railway development, banking and insurance and other sectors to achieve quicker result for expediting economic development of the country.

Needs for economic reform Economic Reforms are not ends in itself. Its success is appraised on the whetstone of whether it has been able to better the quality of life of the people for whom these reforms are meant. While one school of opinion avers that effects of reforms on the overall population of India will be slow and steady, critics say that reforms have made the rich richer and the poor poorer. The reforms were launched at a time when in the words of Mr. Manmohan Singh, "it was recognised that the old economic instrument had become instrument of harassment, delay and corruption and had to be changed." Now fifteen years later we have bounced back. We cant proud of trade reforms, abolition of licensing opening up of industries the private sector and financial reforms. The changes are more perceptible in our urban landscape where owners of two wheelers have switched over to Maruti, Santro, Sumo and Qualis. As sleek cars zip through six lanes and highways a communication revolution has removed the hassles in business and lent more punch in the entertainment world, cellphone, credit cards, internet, email, satellite channels, etc.

REFORMS, such as the welcome economic policy changes announced by Indias government on September 14th, can come in at least two different ways. One allows a steady procession of changes, each announced in turn, discussed, weighed for its merits, perhaps discussed in parliament, eventually accepted and implemented with care and precision. With luck, a political consensus is created around the changes, faults are found and corrected, then new ideas can be addressed. In India, at least for the past three years, and arguably for much longer, such an approach has proved impossible. While the economy grew fast, politiciansboth national and regional preferred to argue about spending revenues rather than promoting growth. Each time Manmohan Singh, the prime minister, or his supporters, tried to raise an economic reform, such as allowing foreign supermarkets on to Indian soil, the political rage grew intolerable from opposition parties and the governments own allies. Mr Singh, timid, elderly and without robust backing from his party chief, Sonia Gandhi, would then back down. Thus Indias way of promoting reforms has had to be different. Getting any political backing for them has instead required a sharply slowing economygrowth is now down to nearer 5% a year, from a peak of 10%investors who refuse to spend, a grim fiscal position and a host of other alarming economic signs. And rather than announce changes piecemeal, the government of Mr Singh has gone for a big bang, a rush of reforms. The political reaction could be severe: but his boldness is both welcome and overdue. On September 13th came an announcement of a small, but politically important.

Elements of new economic policy

The New Economic Policy (NEP) was introduced to replace the failed policy

of WarCommunism. The NEP advanced with almost a capitalist approach to economic growth. Wages were paid in cash not kind and surplus staff were dismissed. Under War Communism, Lenin employed the communist belief that everybody had the right to a job and people were employed regardless of whether they were actually needed or not. The NEP brought some form of economic sense back to Russias economy. Trade was to operate on an econ omic and commercial accounting basis. Industry was divided into trusts, which controlled various

enterprises. In the first stages of NEP, theoretical restrictions were placed on a firms freedom to buy and sell but by 1922, these limits were dropped and profit-making became the main aim of those in industry. No industry was obligated to supply the state and, as Lenin had commented, the Communists had to learn how to trade. However, the NEP did not totally solve Russias economic problems. The disaster that had been World War One and the tribulations of the civil war and War Communism had devastated the economy. Any sustained advances in the economy would take centuries. Factories, freed from the shackles of War Communism, did start to produce goods but few had the money to buy them. As workers could be dismissed, unemployment started to grow. Lenin allowed industry bosses to use foreign capital but few countries were brave enough to invest in the fledgling communist state. Therefore, money was earned from exporting produce that could not be sold in Russia. The export of grain and coal helped to kick-start Russias economy and by 1924-25, Russias imports were nine times higher than the 1921-22 level. Though this would seem a major achievement in just three years, the 1921-22 figure was so small that the increase is not as spectacular as would first appear.

The New Economic Policy (NEP) (Russian: , , Novaya Ekonomicheskaya Politika) was an economic policy proposed by Vladimir Ilyich Lenin, who called it state capitalism. It was a new, more capitalism- oriented economic policy necessary after the Civil War to raise the economy of the country, which was almost ruined. Nationalization of industry, established during the period of War Communism, was revoked and replaced by a system of mixed economy which allowed private individuals to own small enterprises,[1] while the state continued to control banks, foreign trade, and large industries.[2] In addition, the NEP abolished forced grain requisition[1] and required instead that farmers give the government a specified amount of raw agricultural product as a tax in kind.[3] Although many members of theBolshevik party were reluctant to issue policies that encouraged private profit by traders, events such as the Kronstadt Rebellion highlighted the need to address the deteriorating economic conditions.[1] The new policy was adopted in the course of the 10th Congress of the All-Russian Communist Party and was promulgated by decree on 21 March 1921, "On the Replacement ofProdrazvyorstka by Prodnalog" (i.e., on the replacement of foodstuffs

requisitions by fixed foodstuffs tax). Further decrees refined the policy. The New Economic Policy was replaced by Stalin's First Five-Year Plan in 1928. Three main elements of NEP LIBERALISATION Prior to 2006, the government of India prohibited FDI in both single-brand and multi-brand retail trading. In February 2006, the Indian government decided to open up Indias retail sector to FDI and, subject to certain conditions, permitted FDI up to 51 percent in single-brand retail trading companies. This policy was made effective by a press note dated February 10, 2006, issued by the Department of Industrial Policy and Promotion (DIPP) of the government of India. Over the years, there have been recommendations to further liberalize the Indian governments policy regarding FDI in retail trading, including to increase the permissible level of FDI in single-brand retail operations and to open up the multi-brand retail sector to FDI. These moves were heralded by several multi-brand retailers (such as Walmart) because the liberalization would present multi-brand retailers with a prime opportunity to enter Indias approximately US$450 billion retail sector. Such moves were, however, resisted by various stakeholders and political parties in India.

Economic liberalization of India means the process of opening up of the Indian ecomony to trade and investment with the rest of the world. Till 1991 India had a import protection policy wherein trade with the rest of the world was limited to exports. Foriegn invetment was very difficult to come into India due to a bureaucratic framework. After the start of the economic liberalization, India started getting huge capital inflows and it has emerged as the 2nd fastest growing country in the world. 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; the doctrine is associated with classical liberalism. The arguments for economic liberalization include greater efficiency and effectiveness that would translate to a "bigger pie" for everybody. Thus, liberalisation in short refers to "the removal of controls", to encourage economic development.[1] Most first world countries, in order to remain globally competitive, have pursued the path of economic liberalization: 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. British Prime Minister Tony Blair wrote that: "Success will go to those companies and countries which are swift to adapt, slow to complain, open and willing to change. The task of modern governments is to ensure that our countries can rise to this challenge."[2] In developing countries, economic liberalization refers more to liberalization or further "opening up" of their respective economies to foreign capital and investments. Three of the fastest growing developing economies today; Brazil, China, and India, have achieved rapid economic growth in the past several years or decades after they have "liberalized" their economies to foreign capital.[3] Many countries nowadays, particularly those in the third world, arguably have no choice but to also "liberalize" their economies in order to remain competitive in attracting and retaining both their domestic and foreign investments. This is referred to as the TINOA factor, standing for "there is no alternative". For example, in 1991, India had no choice but to implement economic reforms.[4] Similarly, in thePhilippines, the contentious proposals for Charter Change include amending the economically restrictive provisions of their 1987 constitution.[5] The economic liberalisation in India refers to ongoing economic reforms in India that started on 24 July 1991. After Independence in 1947, India adhered to socialist policies. Attempts were made to liberalise economy in 1966 and 1985. The first attempt was reversed in 1967. Thereafter, a stronger version of socialism was adopted. Second major attempt was in 1985 by prime minister Rajeev Gandhi. The process came to a halt in 1987, though 1966 style reversal did not take place.[1] In 1991, after India faced a balance of payments crisis, it had to pledge 20 tons of gold to Union Bank of Switzerland and 47 ton to Bank of England as part of a bailout

deal with theInternational Monetary Fund (IMF). In addition, the IMF required India to undertake a series of structural economic reforms.[2] As a result of this requirement, the government of P. V. Narasimha Rao and his finance minister Manmohan Singh (currently the Prime Minister of India) started breakthrough reforms, although they did not implement many of the reforms the IMF wanted.[3][4] The new neo-liberal policies included opening for international trade and investment, deregulation, initiation of privatization, tax reforms, and inflation-controlling measures. The overall direction of liberalisation has since remained the same, irrespective of the ruling party, although no party has yet tried to take on powerful lobbies such as the trade unions and farmers, or contentious issues such as reforming labour laws and reducing agricultural subsidies.[5] Thus, unlike the reforms of 1966 and 1985 that were carried out by the majority Congress governments, the reforms of 1991 carried out by a minority government proved sustainable. There exists a lively debate in India as to what made the economic reforms sustainable.[6]

Conclusion:
India has to go through a painful period of adjustment before the liberalization can have its fruitful impact upon the economy. In liberalizing the economy the government must not forget to protect the poor and the needs of human development. The present bout of economic reforms in India-those started in the nineties- marks both continuity and a break with India's post-independence development strategy. India's development strategy after independence was largely influenced by reservation regarding the ability of the market forces to bring about, on their own, an optimum allocation of resources, thus balancing the country's two main "Objectives "growth' and 'equity'. A realization has since dawned on policy-makers, based on India's own experience and the experience of other countries, that: The domestic economy has now reached a threshold where for better utilization of resources the benefits of the market forces can be harnessed, by proper market-friendly macro and micro- economic policies helping both in higher growth and more equity.

This has initiated a serious debate in the country on our development strategy for opening up the economy and allowing more market orientation, by removing major Government interventions and regulations.

GLOBALISATION Definition of Globalization

Globalization is the system of interaction among the countries of the world in order to develop the global economy. Globalization refers to the integration of economics and societies all over the world. Globalization involves technological, economic, political, and cultural exchanges made possible largely by advances in communication, transportation, and infrastructure. There are two types of integrationnegative and positive. Negative integration is the breaking down of trade barriers or protective barriers such as tariffs and quotas. In the previous chapter, trade protectionism and its policies were discussed. You must remember that the removal of barriers can be beneficial for a country if it allows for products that are important or essential to the economy. For example, by eliminating barriers, the costs of imported raw materials will go down and the supply will increase, making it cheaper to produce the final products for export (like electronics, car parts, and clothes). Positive integration on the other hand aims at standardizing international economic laws and policies. For example, a country which has its own policies on taxation trades with a country with its own set of policies on tariffs. Likewise, these countries have their own policies on tariffs. With positive integration (and the continuing growth of the influence of globalization), these countries will work on having similar or identical policies on tariffs.

Effects of Globalization
According to economists, there are a lot of global events connected with globalization and integration. It is easy to identify the changes brought by globalization.

1. Improvement of International Trade. Because of globalization, the number of countries where products can be sold or purchased has increased dramatically. 2. Technological Progress. Because of the need to compete and be competitive globally, governments have upgraded their level of technology. 3. Increasing Influence of Multinational Companies. A company that has subsidiaries in various countries is called a multinational. Often, the head office is found in the country where the company was established.

Uses of globalization he term globalization is derived from the word globalize, which refers to the emergence of an international network of social and economic systems.[12] One of the earliest known usages of the term as the noun was in 1930 in a publication entitled Towards New Education where it denoted a holistic view of human experience in education.[13] A related term, corporate giants, was coined byCharles Taze Russell in 1897[14] to refer to the largely national trusts and other large enterprises of the time. By the 1960s, both terms began to be used as synonyms by economists and other social scientists. It then reached the mainstream press in the later half of the 1980s. Since its inception, the concept of globalization has inspired competing definitions and interpretations, with antecedents dating back to the great movements of trade and empire across Asia and the Indian Ocean from the 15th century onwards.[15] Due to the complexity of the concept, research projects, articles, and discussions often remain focused on a single aspect of globalization.[2] Roland Robertson, professor of sociology at University of Aberdeen, an early writer in the field, defined globalization as "the compression of the world and the intensification of the consciousness of the world as a whole."[16] Economic globalization refers to the intensification and stretching of economic interrelations around the globe.[24] It encompasses such things as the emergence of a new global economic order, the internationalization of trade and finance, the changing power of transnational corporations, and the enhanced role of international economic institutions.

Political globalization refers to the intensification and expansion of political interrelations around the globe.[25] Aspects of political globalization include the modern-nation state system and its changing place in todays world, the role of global governance, and the direction of our global political systems. Cultural globalization refers to the intensification and expansion of cultural flows across the globe.[26] Culture is a very broad concept and has many facets, but in the discussion on globalization, Steger means it to refer to the symbolic construction, articulation, and dissemination of meaning. Topics under this heading include discussion about the development of a global culture, or lack thereof, the role of the media in shaping our identities and desires, and the globalization of languages.

PRIVATISATION
Definition of 'Privatization' 1. The transfer of ownership of property or businesses from a government to a privately owned entity.

2. 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. When a publicly traded company becomes private, investors can no longer purchase a stake in that company. 1. The repurchasing of all of a company's outstanding stock by employees or a private investor. As a result of such an initiative, the company stops being publicly traded. Sometimes, the company might have to take on want feel that

significant debt to finance the change in ownership structure.Companies might to go private in order to restructure their businesses (when they

the process might affect their stock prices poorly in the short run). They might also want

2. to go private to avoid the expense and regulations associated with remaining listed on a stock exchange. also called going private. opposite of going public. 2. The process of moving from a government-controlled system to a privately run, for-profit system.

The Meaning of Privatization Paul Starr

Privatization is a fuzzy concept that evokes sharp political reactions. It covers a great range of ideas and policies, varying from the eminently reasonable to the wildly impractical. Yet however varied and at times unclear in its meaning, privatization has unambiguous political origins and objectives. It emerges from the countermovement against the growth of government in the West and represents the most serious conservative effort of our time to formulate a positive alternative. Privatization proposals do not aim merely to return services to their original location in the private sphere. Some proposals seek to create new kinds of market relations and promise results comparable or superior to conventional public programs. Hence it is a mistake to define and dismiss the movement as simply a replay of traditional opposition to state intervention and expenditure. The current wave of privatization initiatives opens a new chapter in the conflict over the public-private balance. This Article attempts to clarify the meaning of privatization as an idea, as theory and rhetoric, and as a political practice. In the process I hope to explain why I generally oppose privatization, even though I favor some specific proposals that privatization covers. But apart from this political judgment, I take privatization seriously as a policy movement and as a process that show every sign of reconstituting major institutional domains of contemporary society.

A. The Economic Theory of Privatization

Even within the economic theory of privatization, there are some subtle but important differences between two approaches: the radical view of privatization as a reassignment of property rights and the more moderate, conventional view of privatization as an instrument for fine-tuning a three-sector economy.

1. Economic Model 1: Privatization as a Reassignment of Property Rights.

Private ownership and competitive markets are normally thought to go hand in hand, but the two issues of ownership and market structure are often separate. For the economist devoted to both, the question then arises as to which object of affection is more beloved: private ownership or competition. Here a difference of opinion appears among economists that corresponds to a preference for either privatization or liberalization. Those who believe that efficient performance depends on private ownership per se favor privatization, even in cases generally regarded as natural monopolies. Conversely, those who see competition as the critical spur to efficiency are more skeptical about the benefits of privatizing monopolies and often put more emphasis on other policies, such as deregulation. In the case of a government telecommunications monopoly, for example, those who stress ownership may be willing to privatize the monopoly intact, whereas those who stress competition may prefer to break it up before sale or even to keep it in public ownership while allowing private firms to compete with it on equal terms.

GROWTH OF PRIVATIZATION
"Privatization may be a popular buzzword today, but the concept has been around since the first municipality hired Joe and his wagon to pick up the trash instead of getting city employee Frank to do it," remarked Public Works. "The difference today is that privatization is encroaching into all areas of public administration. And governments are expecting public agencies to compete dollar for dollarwith private operators or surrender management of services. For years, our country has supported the idea that a public workforce was the best provider of essential services. Public employees would reliably and efficiently protect the public safety and deliver water and power; maintain roads and bridges; collect refuse and treat sewage. In return, public employees enjoyed a certain job stability and a wide range of desirable benefits." But proliferating responsibilities, fiscal belt-tightening, sometimes lackluster performance by workers, andin the cases of larger cities, especiallyfestering problems with infrastructure led increasing numbers of city planners and public policy makers to look to privatization.

ADVANTAGES AND DISADVANTAGES OF PRIVATIZATION

The merits and drawbacks of privatization have been subjects of considerable debate among business-people, city leaders, and public employees alike. Indeed, each element of privatizationfrom its apparent cost-saving properties to its possible negative impact on minority workersprovokes strong reaction. About the only thing that everyone can agree on is that the trend has been enormously beneficial to owners of small- and mid-sized businesses. Following are some privatization issues that communities, public providers, and private providers all need to consider: