THE WAVE OF ECONOMIC REFORM

j The wave of economic reforms was born out of

the crisis in the economy which climaxed in 1991. j The main reasons which leads to economic reforms are : Increasing Fiscal deficit Increase in Adverse balance of payment Overall agricultural and industrial production showed negative growth.

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Foreign Exchange reserves fell Inflation rate increases to 14% Confidence of International financial institutions was badly shaken Due to Gulf war, the prices of oil rises

TYPES OF ECONOMIC REFORMS TYPES OF ECONOMIC REFORMS

PRIVATISATION

LIBERALISATION

GLOBALISATION

LIBERALISATION
j Liberalization of the economy means to free

it from direct or physical controls imposed by the Government. j The various types of controls are as follows:
Industrial licensing system Price control or financial control on goods Import license Foreign exchange control Restrictions on investment by big business houses

MEASURES FOR LIBERALISATION

j Abolition of Industrial Licensing and Registration j Concession from monopolies Act j Freedom for expansion and production to

Industries j Increase in investment limit of SSI j Freedom to import capital goods j Freedom to import technology j Free determination of Interest rate

ADVANTAGES OF LIBERALISATION
j Improvements in Industries & service sector j Free flow of FDI & MNCs j More availability of imported goods at cheaper

rates j Quality education and careers to people j Improvement of technology in the field of SSI & LSI j Improvement in means of communication and Transport.

PRIVATISATION
j Privatization of Industries means opening

the gates of Public Sector to Private sector j Transferring the ownership of public sector to private sector

CAUSES OF PRIVATISATION
j Disintegration of Socialist Economies j Inefficient public sector j Uneconomic pricing policy j Burden on the Government j Inefficient management control

OBJECTIVE OF PRIVATISATION
j To increase the efficiency and competitive power

of the enterprise. j To reduce deficit financing. j To strengthen industrial management j To earn more and more foreign currency j To make optimum use of economic resources j To achieve rapid industrial development

MEASURES FOR PRIVATISATION

j Privatization covers three sets of measures

1. OWNERSHIP MEASURES Total denationalization Joint Venture Liquidation

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2. ORGANISATIONAL MEASURES A holding company structure Leasing Restructuring( Financial, Basic ) 3. OPERATIONAL MEASURES Grant of autonomy to PE s in decision making Provision of incentives to the employees Freedom to acquire certain inputs from the market Development of proper investment criteria

GLOBALISATION
j Globalization is the process by which a firms

activity become worldwide in scope j Doing, or planning to expand , business globally j Giving distinction between the domestic market & foreign market j Locating the production and other physical facilities of global business dynamics j Basing product development and production planning on the global consideration j Global sourcing of factors of production j Global orientation of organizational structure and management culture

FEATURES OF GLOBALISATION
1. NEW MARKETS

Growing global markets in services New financial markets Deregulation of antitrust laws of mergers Global Consumer markets with global brands
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2. NEW ACTORS Multinational corporations The World Trade Organization International Criminal Court System Regional Blocs More policy Coordination groupsG-77,G-7, OPEC, OECD 3. NEW RULES AND NORMS Multilateral agreements in trade new agendas on environment and social conditions
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New multilateral agreements for services property rights and communication Conventions and agreements on the Global environment 4. NEW TOOLS OF COMMUNICATION Internet and electronic communication Cellular phones Fax machines Faster and cheaper transport Computer aided design

FACTORS LEADS TO GLOBALISATION

j Human Resources j Wide Base j Growing Entrepreneurship j Growing Domestic Market j Niche markets j Expanding Markets j Economic Liberalization j Competition

OBSTACLES TO GLOBALISATION
j j j j j j j j j j j j

Government Policy and Procedures High cost of basic inputs Poor Infrastructure Obsolescence Resistance to change Poor Quality Image Supply problems Small Size Lack of Experience Limited R&D and marketing research Growing Competition Trade barriers