LIBERALISATION,

PRIVATISATION,
GLOBALISATION
Once bitten twice shy
 India was once bitten by east India company
and so was very cautious, to indulge with any
foreign country especially for trade.
And so was the close door policy adopted .
 SORRY
YOU
ARE
NOT
WELCOME
TO
TRADE
NO country is blessed with all the
resources and the same was with
India, as we had adopted close door
policy which restricted foreign trade
so we had to pay very heavy duty
and the price for all the goods and
help which we received from out side
world.
RESULTED
 The restrictions in the past, India’s performance in the
global market has been very dismal.
 we have never reached even the 1 percent mark in the
global market.
 we were listed among the poor countries in the world.
 Acute decline of foreign exchange reserve
 Mounting foreign debts
 High debt service cost
 Low level of technological base
 Grave internal economic situation
 TRADE DEFICIT
 Increasing trade deficit has been an abounding characteristic
of the Indian economy ever since its political independence.
 India’s trade balance in 1990-91
was negative (-3 percent of GDP) which became more
negative in later years.

 The trade balance in 1995-96 stood -3.2% of GDP.

 In 1999-2000 country’s trade balance was -0.4% of GDP

(Negative 4% of GDP): It was -2.1% and -2.5% respectively in
02-03 and 03-04.
IMF and world bank Force

 Due to increasing debts. and deficit

balance of trade conditions after
some years, even IMF and world bank
STOPPED ! giving any further
monetary help and asked india to
open the doors for international
trade if we wanted to survive
w

WELLCOME
TO
TRADE
THE CHANGE & BIRTH OF LPG
 THE CHANGE IN THE INDIAN
ECOMOMY TOOK PLACE WITH THE
HELP,OF The Government under Former
Prime Minister Narasimha Roa, and former
Finance Minister Dr.Manmohan Singh
WHICH GAVE BIRTH TO Lpg
(LIBERLISATION, PRIVATISATION,
GLOBALISATION) In June 1991.
Liberalisation

 Liberlisation refers to relaxation of

previous government restrictions usually in
areas of social and economic policies.
Thus, when government liberalizes trade it
means it has removed the tariff , subsidies
and other restrictions on the flow of goods
and services between countries.
 Privatisation

 It refers to the transfer of assets or service

functions from public to private ownership or
control and the opening of the hitherto closed
areas to private sector entry. Privatisation can
be achieved in many ways franchising, leasing
and contracting.
Conditions of privatizations

 Liberalizations and deregulation of the

economy is an essential pre-requisite if
privatization is to take off and help realize
higher productivity and profits
 Capital markets should be sufficiently
developed to be able to absorb the
disinvested public sector shares
Arguments in favour of privatisation

 Privatisation will help reducing the burden of

govts.
 It will help the profit making public sector units to
modernize and diversify the business
 It will help in making public sector units more
competitive
 It will help in improving the quality of decision
making of managers because their decisions
will be made without any poltical interference
Example of privatisation in india
 Lagan jute machinery company limited
( LJMC)
 Modern food insutries limited ( MFIL )
 Bharat aluminium company limited ( BALCO)
 Hotel corporation of india limited ( HCL)
 Hindustan zinc limited ( HZL)
Globalisation
 Globalization means integrating the domestic
economy with the world economy. It is a process
which draws countries out of their insulation and
makes them join rest of the world in its march
towards a new world economic order
 It involve increasing interaction among national
economic system , more integrated financial
markets, economics of trade , free flow of
technology, and spread of knowledge throught
the world
 Measures towards globalisation
 Convertibility of rupee: to make the currency fully
convertible i.e. allow it to determine its own exchange rate
in the international market with out any official intervention.

 Import liberalization : as per recommendation of the world

bank, free trade of all items except negative list of imports
and exports has been allowed.

 Opening the economy to foreign capital: the government

has taken a number of measures to encourage foreign
capital in India. Many facilities and incentives have been
offered to the foreign investors and non resident Indians in
the new economic policy.
Effects of globalisation in indian economy

 Devaluation: The first step towards globalization was

taken with the announcement of the devaluation of
Indian currency by 18-19 percent against major
currencies in the international foreign exchange
market. In fact, this measure was taken in order to
resolve the BOP crisis

 Disinvestment-In order to make the process of

globalization smooth, privatization and liberalization
policies are moving along as well. Under the
privatization scheme, most of the public sector
undertakings have been/ are being sold to private
sector
Effects of LPG model
 Changes in social and cultural life.
 Job Sector,Banking sector,Tax reforms.
 Some common indicators of change:
 Now most of the households have more than one color TV sets
 Number of people travelling by air or AC class in trains have
increased tremendously
 There are 42 million internet users in India compared to 1.4 m users
 The number of mobile phone users has grown to 246 million from
1.0 million
 There has been a great increase in sales of passenger cars. The sale
has increased by 96% in the last ten years
 International confidence in india has been restored.

 Consumer are benefited through large variety of

consumer goods,improved quality of goods and in
some cases and reduced price of consumer durable.

 Programmes of quality management and research

and development are systematically conducted by
corporate sector.
Conclusion

 Success of the economic reforms

depends upon the commitment of all
concerned people,poitical parties
bureaucracy and government to the
socio economic progress of the
country.