Its about Liberalization privatization and globalization.

1. N . N A V E E N K U M A R
LPG POLICY

2. Objective of LPG Policy
To pull the
country out of
economic crisis. Accelerating the
rate of growth.

3. Reasons for LPG policy
Fiscal deficit was 5.4% of gross domestic product in
1981-82 which rose up to 8.4% in the year 1990-01.
In 1991 amount of interest liabilities rose further to
36.4% of total government expenditure.
Country was moving towards debt trap. Mounting
“Adverse balance of payment(BOP)”

4. Reasons for LPG policy (Cont..)
Fall in foreign exchange reserve.
Rise in prices.
Poor performance of public sector undertakings.
First Gulf war caused spikes in oil prices which
caused a major balance-of –payment crisis for India.

5. Reasons for LPG policy (Cont..)
India asked for $1.8 billion bailout loan from IMF, in
return demanded reforms.
This New Economic Policy was inaugurated by
former prime minister P.V. Narasimha Rao under
the guidance his FM Manmohan Singh.

6. Salient features of LPG-1991
LPG
Liberalization
Privatization
Globalization

7. LIBERALIZATION
Several types of controls on
Indian economy(licensing,
price control , financial
control) .
LPG made a bid
to reduce
restrictions on
economy (based
on market
economy)
This Led to
corruption , undue
delays &
inefficiency.

8. ECONOMIC REFORMS UNDER
LIBERALIZATION
•Tax reforms.
•Efforts to ensure
VAT in all states.
•Foreign exchange
reforms.
•Foreign trade policy
reforms.
•Role of RBI shifted
from “a regulator ” to
“a facilitator”.
•FII were allowed to
invest in India.
•Domestic and
international banks
emerged.
• Abolition of licensing.
• De-reservation of
production areas.
• Expansion of production
quantity .
• Freedom to import
capital goods.
INDUSTRIAL
SECTOR
REFORMS
FINANCIAL
SECTOR
REFORMS
FISCAL
REFORMS
EXTERNAL
SECTOR
REFORMS

9. PRIVATIZATION
 Privatization is the general process of involving the
private sector in the ownership or operations of a state
owned enterprise.
PRIVATIZATION
 outright sale of govt.
 Withdrawal of the govt. enterprises ownership &
mangt. from mixed enterprises.
 The ownership of PSUs is being gradually sold off to
pvt. Entrepreneurs.

10. PRIVATIZATION
Gains
100%
commitment &
efficiency.
Competition up
gradation and
modernization.
Diversification
of production.
Promotes
consumer ‘s
sovereignty.

11. Losses due to Privatization
Weaker
section
suffers.
Self interest
supersede
social interest.

12. GLOBALIZATION
Process associated with increasing openness,
growing economic interdependence and deepening
economic integration in the world economy.
Unrestricted flow of goods and services, technology
and expertise among different countries of the world.

13. GLOBALIZATION
Policy
strategies
promoting
Globalization
Increase in
equity limit of
foreign
investment.
Partial
convertibility.
Long term
trade policy.
Reduction in
tariffs.

14. Positive impact of LPG
Economic activities has picked up and the growth
rate of GDP has shown an impressive increase.

Stimulated industrial production.
Significant increase in govt. revenues and
subsequent decrease in fiscal deficit.
Greater flow of goods and services checked inflation
rate.

15. Positive impact of LPG (Cont..)
Consumer’s sovereignty has widened. substantial
increase in forex reserves.
Flow of pvt. Foreign investment increased.
India has been recognized as emerging super power.
Monopoly markets has been converted into
competitive market.

16. Negative impacts of LPG
 Agriculture is totally neglected.
 Concentration of growth processes in urban area.
 Might be results into Economic colonism.
 Consumerism has been increased.
 Lopsided growth process.
 Cultural erosion.