economics

1. Industrial
policy of
India

2. New
INDUSTRIAL
POLICY1991

3.  The spread of industrialization to backward areas of
the country will be actively promoted
through appropriate incentives, institutions and
infrastructure investments.
 Foreign investment and technology collaboration will be
welcomed to obtain higher technology, to increase
exports and to expand the production base.
 Abolish monopoly
 Workers’ participation in management will be
promoted

4. INDUSTRIAL POLICY
1991 ISSUES
 Government recognizes the need for
• social and economic justice, to end poverty and
unemployment and to build a modern, democratic, socialist,
prosperous and forward-looking India
• India to grow as part of the world economy and not in
isolation
 Enhanced support to the small-scale sector so that it flourishes
in an environment of economic efficiency and continuous
technological up gradation
 Emphasis on building our ability to pay for imports through
our own foreign exchange earnings

5. INDUSTRIAL POLICY 1991
OBJECTIVES
In pursuit of the above objectives,
Government have decided to take a series
of initiatives in respect of the policies
relating to the following areas:
A. Industrial Licensing.
B. Foreign Investment.
C. Foreign TechnologyAgreements.
D. Public Sector Policy.
E. MRTPAct.

6. A.Industrial Licensing:
 Industrial licensing abolished for all projects except a short list
of 18 industries related to security and strategic concerns, social
reasons, hazardous chemicals etc. (Annex II)
 Areas where security & strategic concerns predominate,
reserved for public sector. (Annex I)
 In projects where imported capital goods are required,
automatic clearance given.
 In locations other than cities of more than 1 million population,
no requirement of obtaining industrial approvals from Central
Government.
 Incentives & investments in infrastructural development, to
promote dispersal to rural and backward areas.
 Existing units enabled to produce any article without additional
investment.

7. INDUSTRIAL POLICY 1991
B. Foreign Investment:
 Approval upto 51 percent foreign equity in high
priority industries.(Annex-III)
 Imports governed by general policy applicable to
other domestic units, payment of dividents
monitored by RBI to ensure that outflows on
account of dividents are balanced by export
earnings.
 Other foreign equity proposals, not covered
above, need prior clearance.
 A special Empowered Board- to negotiate with a
number of large international firms & get FDIs
approved.

8. INDUSTRIAL POLICY
1991
C. Foreign Technology Agreements:
 Automatic permissions for foreign technology
agreements in high priority industries
(Annex-III) upto a lumpsum payment of Rs.
1 crore.
 For industries other than those in Annex
III, automatic permissions if no foreign
exchange is required for payment
 All other proposals need specific approval
 No permission for foreign
technicians, foreign testing of indigenously
developed technologies.

9. INDUSTRIAL POLICY 1991
D. Public Sector Policy:
 Portfolio of public sector investments reviewed with a view
to focus public sector on strategic, high tech & essential
infrastructure.
 Chronically sick public enterprises, referred to Board
of Industrial & Financial Reconstruction (BIFR).
 A part of government’s shareholding in public sector
offered to mutual funds, financial institutions, public &
workers.
 Boards of public sector companies- more professional
& powerful.
 MOU system- managements would be granted greater
autonomy & held accountable.

10. INDUSTRIAL POLICY
1991
E. MRTP Act: (Monopolistic Restrictive Trade Practices):
 Removal of threshold limits of assets in respect of
MRTP Companies & dominant undertakings.
 Elimination of need of prior approval of Central
Government for establishment, expanding, merger,
amalgamation & takeover.
 Emphasis on controlling & regulating monopolistic,
restrictive & unfair trade practices.
 Enabling the MRTP Commission to exercise punitive &
compensatory powers.

11. POST 1991-
THE REFORM
PHASE

12. LIBERALIZATION, PRIVATIZATION AND
GLOBALIZATION AND ITS IMPACT ON
INDIAN ECONOMY
NIP (LPG)

13. NEW ECONOMIC POLICY ,1991

14. NEW ECONOMIC POLICY(1991)-
LIBERALIZATION ,PRIVATIZATION
AND GLOBALIZATION (LPG)
LPG phenomenon was first initiated in the Indian Economy
in 1991 by the union finance minister Dr. Manmohan
singh
 There was decline in the country’s
 export earnings
 national income
 industrial output.
That is when the government decided to introduce the New
Industrial Policy (NIP) in 1991 to start liberalizing the
Indian economy

15. THE MAJOR OBJECTIVE OF THE NEW
ECONOMIC POLICY
 1. Utilizing fully the indigenous capabilities of entrepreneurs.
 2. Fostering research and development efforts for the
development of indigenous technologies.
 3. Raising investments.
 4. Removing regulator system and other weaknesses.
 5. Improvement in efficiency and productivity.
 6. Controlling monopolistic power.
 7. Assigning the right areas for the public sector undertakings.
 8. Ensuring welfare as also skills and facilities to the workers
to enable them to face new technologies.
 9. Retaining the capacity to earn our own foreign exchange
through exports.
 10. To achieve self-reliance

16. LIBERALIZATION
Liberalization means elimination of state control over
economic activities
It is commonly known as free trade. It implies removal
of restrictions and barriers to free trade.
Liberalization refers to freedom to business enterprises
from excessive government control and they are given
freedom to make their own decisions regarding
production, consumption, pricing, marketing,
borrowing, lending & investments.

17. 0THER FEATURES OF
LIBERALIZATION
 Freedom in deciding the scale of business activities i.e.,
no restrictions on expansion or contraction of business
activities,
 Removal of restrictions on the movement of goods and
services,
 Freedom in fixing the prices of goods and services,
 Reduction in tax rates and lifting of unnecessary controls
over the economy,
 Simplifying procedures for imports and exports, and
 Making it easier to attract foreign capital and technology
to India.
 Free flow of foreign investment.

19. PRIVATIZATION
The transfer of ownership, property or business from
the government to the private sector is termed
privatization
. The government ceases to be the owner of the entity
or business

20. FEATURES OF PRIVATIZATION
 Decentralization the transfer of the ownership of
productive assets to the private sector.
 Entry of private sector industries into the areas
exclusive reserved for the state sector or which are
considered exclusive monopolies of state.
 Limiting the scope of the public sector or no more
diversification of existing public sector
understandings.

22. GLOBALIZATION
Globalization means integration of the national economy
with the world economy. It implies
 free flow of information,
 ideas, technology,
 goods and services,
 capital and even people across different countries and
societies.
It increases connectivity between different markets in the
form of trade, investments and cultural exchanges

23. FEATURES OF
GLOBALIZATION

26. DISINVESTMENT IN
INDIA

27. Disinvestment
‘‘ The conversion of money claims or securities
into money or cash”
‘‘ The action of an organisation/government
selling or liquidating an asset or subsidiary,
also known as divestment or divestiture’’

28. OBJECTIVES OF DISINVESTMENT
burden on the
• To Reduce the financial
Government
and market
• To Improve public finances
• To introduce the competition
discipline
• To fund growth of sectors
• To encourage wider share of ownership

29. • To depoliticise non-essential services
• To meet the budgetary needs
• To improve overall economic efficiency
• To raise funds for
technological upgradation, modernization
• To expand the PSUs.

30. TYPES OF DISINVESTMENT
• Minority Disinvestment
• Majority Disinvestment
• Complete Privatisation

31. MRTP act 1969
MRTP full form is Monopolistic and Restrictive Trade
Practices and it is an important yet extremely
controversial piece of economic legislation. The MRTP
bill was passed in 1969 and the MRTP act India came into
full force from 1st June 1970
The law made sure that the economic power does not get
concentrated into the hands of a few companies.To
provide for monopolies controlRegulation of monopolistic
and restrictive trade practices

32. Competition law2002
The Competition Act, 2002 is a law that governs
commercial competition in India. It replaced the erstwhile
Monopolies and Restrictive Trade Practices Act, 1969.
The Competition Act aims to prevent activities that have
an adverse effect on competition in India.

33. Features
1. Anti Agreements:
2. 2. Abuse of dominant position
3. 3. Combinations:
4. Prohibition of anti competitive agreements.
5. Prohibition of abuse of dominance.

34. FERA and FEMA).

36. FERA FEMA
FERA is an acronym for Foreign Exchange
Regulation Act.
FEMA is an acronym for Foreign Exchange
Management Act.
It was passed by the Parliament of India in 1973.
The act came into force on 1st January 1974.
FEMA Act was passed by the Parliament of India in
1999 to replace the FERA. It came into force on
1st June 2000.
FERA Act was repealed by the Vajpayee
government in 1998.
FEMA is currently active in the country.
It was enacted to regulate foreign exchange and
payments in India. Its main objective was to
conserve forex transactions.
It was enacted to remove the stringent regulations
on foreign exchange and promote orderly
management of foreign exchange and payments.
Its main objective was to manage the forex
transactions.
The rules and regulations of FERA on foreign
exchange were conservative and restrictive.
The approach of FEMA Act toward foreign
exchange is flexible.

37. This act came into force when the forex
position in the country was not good.
This act was introduced when the strict
provisions of FERA were hampering the
growth of the Indian economy.
Comparatively, FERA Act is lengthier as it
has 81 sections.
FEMA has 49 sections and is shorter than
the FERA.
Under this act, the definition of the term
‘Authorized person’ was narrow.
Under this act, the definition of the term
‘Authorized person’ is broad and it has
included the banks under it.
Under this act, the citizenship of an
individual was the basis for determining
his/her residential status.
Under this act, the basis for determining
the residential status was that an individual
should be residing in India for the past 6
months.

38. The appeals were sent to the Supreme Court. A special director and a special court were
introduced under FEMA to address the
appeals.
According to FERA, an individual should
obtain permission from the RBI to carry out
forex transactions.
Under FEMA, no such pre-approval or
permission of RBI is required to carry out
forex transactions.