LPG policy 1991

1. Jasmine Kaur
Assistant Professor
RGNUL

2.  Indian economy had experienced major
policy changes in early 1990s. The new design
of economic reforms are popularly known by
the name of LPG model
 The new economic policy aimed at making
the Indian economy more competitive

3.  Rise in fiscal deficit
 Low foreign exchange reserves
 Balance of payments crisis
 Rise in general price level of essential goods
 Poor performance of Industrial sector

4.  Liberalisation was introduced to put an end to the
regulations that hampered growth and open various
sectors of the economy
 Restrictions were relaxed for private companies to enter
the areas which were previously reserved for public sector
 It implies greater autonomy to the business enterprises in
decision making and removal of government interference

5.  Industrial Delicensing
 Freedom for expansion and production to industries
 Scrapping the limit of MRTP companies
 Freedom to import technical know-how
 Freedom to hire foreign technicians
 Liberalisation of industrial location
 Tax reforms
 Liberalization in banking sector
 Foreign exchange reforms
 Trade and investment policy reforms

6.  Rise in foreign investment inflows
 Increase in foreign exchange reserves
 Increased competition
 Rise in employment
 Increase in efficiency of industrial units

7.  Transfer of control of ownership from public sector to private
sector
 De-reservation of public sectors
 The policy of disinvestment
 The objective was to effectively utilize private capital and
managerial capabilities to improve the performance of PSUs
 Privatisation aims at providing a strong base to the FDI inflows
 Establishment of national renewal fund for retrenched employees
of PSUs

8.  Integration of economy with rest of the world
 It implies free flow of goods and services,
ideas, technical know-how and even people
across borders
 Interconnectedness and interdependence of
nations

9.  Increase in employment
 High living standards
 More competition
 Optimum utilisation of resources
 Check on monopoly
 Development of SOCs
 Helps in international cooperation
 Wide market

10.  Impact on industrial sector
 Impact on agriculture sector
 Impact on service sector
 Impact on FDI inflows
 Impact on foreign exchange reserves
 Impact on employment
 Impact on disinvestment

11.  Consumer’s Sovereignty
 Urban concentration of growth process
 Problem of brain drain
 Rise in inequalities
 Dependence on foreign countries

12. THANKYOU