WHAT IS LPG???

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THE NEW INDUSTRIAL POLICY-1991

LIBERALISATION PRIVATISATION GLOBALISATION

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CONTENTS

Introduction

Reasons for implementing LPG

Liberalization

Privatization

Globalization

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Introduction

July 1991,India has taken a series of measures tostructure the economy and improve theinvestments. The new economic policyintroduced changes in several areas.

The policy have salient feature which are: -

1.Liberlisation (internal and external)

2.Extending Privatization

3.Globalisation of the economy

“LPG”.

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Reasons for implementing LPG

Excess of consumption andexpenditure over revenue resulting inheavy govt. borrowings.

Growing inefficiency on the use ofresources.

Mismanagement of the firm and theeconomy.

Increase in losses for public sectorenterprises.

Low foreign exchange reserves.

Inflation5

Liberalization

Liberalization is a very broad term that usuallyrefers to fewer government regulations andrestrictions in the economy.

Liberalization refers to the relaxation of theprevious government restriction usually in areaof social and economic policies. Whengovernment liberalized trade , it means it hasremoved the tariff ,subsidies and otherrestriction on the flow of goods and servicesbetween the countries.

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Advantages of liberalization

Industrial licensing

Increase the foreign investment.

Increase the foreign exchange reserve.

Increase in consumption and Control overprice.

Check on corruption.

Reduction in dependence on externalcommercial borrowings

Removal of import Restrictions

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Disadvantages of Liberalization

Increase in unemployment.

Loss to domestic units.

Increase dependence on foreign nations

Unbalanced development

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Privatization

Privatization means transfer of ownership and/ormanagement of an enterprise from the publicsector to the private sector .It also means thewithdrawal of the state from an industry orsector partially or fully.

Privatization is opening up of an industry thathas been reserved for public sector, to theprivate sector.

Privatization means replacing governmentmonopolies with the competitive pressures of themarketplace to encourage efficiency, quality andinnovation in the delivery of goods and services.

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Advantages of Privatization

Privatization helps to reduce the burden on Govt.

It will help profit making public sector unit tomodernize and diversify their business.

It will help in making public sector unit morecompetitive.

It will help to improving the quality of decision making,because the decisions are free from any politicalinterference.

Privatization may help in reviving sick units which arethe liability of the public sector.

Industrial growth.

Increase the foreign investment.

Increase in efficiency.

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Disadvantages of Privatization

Industrial sickness.

Lack of welfare.

Class struggle.

Increase in inequality

Opposition by employees.

Problem of financing.

Increase in unemployment.

Ignores the weaker sections.

Ignores the national importance

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Examples of privatization in India

Lagan Jute Machinery Company

Limited (LJMC)

Videsh Sanchar Nigam Limited

(VSNL)

Hindustan Zinc Limited (HZL)

Hotel Corporation Limited of India

(HCL)

Bharat Aluminum Company limited

(BALCO)12

Globalization

Globalization implies integration of theeconomy of the country with the rest of theworld economy and opening up of theeconomy for foreign direct investment byliberalizing the rules and regulations and bycreating favorable socio-economic andpolitical climate for global business.

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Features of Globalization

Opening and planning to expand businessthroughout the world.

Erasing the difference between domesticmarket and foreign market.

Buying and selling goods and servicesfrom/to any countries in the world.

Locating the production and other physicalfacilities on a consideration of the globalbusiness dynamics ,irrespective of nationalconsideration.

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Basing product development and productionplanning on the global market consideration.

Global sourcing of factor of production i.e.raw-material, components , machinery,technology,finance etc. are obtained from thebest source anywhere in the world.

Global orientation of organizational structure.and management culture

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Advantages of GlobalisationGlobalization have several benefits: -

Free flow of capital and increase in the total capital employed.

Free flow of technology.

Increase in industrialization.

Spread of production facilities throughout the globe.

Balanced development of world economies.

Increase in production and consumption.

Commodities at lower price with high quality.

Increase in jobs and income.

Higher Standard of living.

Balanced human development

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Negative effects of Globalization

Loss of domestic industries

Exploits Human resource

Decline in income

Unemployment

Transfer of natural resources

Lead to commercial and political colonism

Widening gap between rich and poor

Dominance of foreign institutions

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CONCLUSION

Economic liberalization has increased the responsibility

and role of the private sector. At the same time, it has

reduced the control of the government on economy

affairs. It is expected that the reforms would

liberalize the Indian economy enough to create a

improving environment for rapid economic

development.

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THANK YOU….

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SUBMITTED BY:

PAVAN KUMAR DONDAPATI

VEDIKA GEDAM

PRESTON

SNEHPRIYA

PAVAN.H

SHRAYA.R

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