1. The document discusses various aspects of economic systems including economic planning, industrial policy, liberalization, privatization, and globalization reforms in India. 2. It provides details on the objectives and components of India's five year plans from the 1st to 12th plans. 3. The reforms in the 1990s known as LPG (Liberalization, Privatization, Globalization) aimed to make India a fast growing global economy and included opening various sectors to foreign investment and trade.

1. By
Dr. Kiran Kumar Thoti
Module 4

2. Economic system
An economic system
of production and exchange of goods and
services as well as allocation of
resources in a society.
It includes the combination of the
various institutions, agencies, entities (or
even sectors as described by some
authors) and consumers that comprise the
economic structure of a given community.
A related concept is the mode of
production.
The study of economic systems includes

3. Contd..
planning, coordination, and reform
productive enterprises; factor and product
markets; prices; population
public economics; financial economics
national income, product, and expenditure;
money; inflation
international trade, finance, investment,
and aid
consumer economics; welfare and poverty
performance and prospects

4. The role of government in
economic development
The Government as Prime Mover Phase: In
the first phase, lasting from 1940 to 1979,
government was assigned a primary,
entrepreneurial role.
The Government as a Problem Phase: This
second phase, lasting from 1979 to about
1996, was a continuation of the
neoclassical "getting prices right" line of
thought. Neo-classical trade theorists
(Krueger, and Bhagwati), who came to
dominate the field of economic
development, emphasized that
international trade can provide a substitute

5. Indian economic planning
The planning is nothing but to make
decisions with respect to the use of
available resources.
The Economic planning is nothing but the
long term plans of government to co-
ordinate and develop the economy
In India the economic planning was started
in the year 1950.
The first Prime Minister, Pt. Jawaharlal
Nehru was also its first chairman.
The Finance Minister and the Minister for

6. Objectives of Economic Planning
Economic Growth
To reduce the economic inequalities
Balanced regional development
Modernization
Reduction of Unemployment
To improve national income and raise the
standard of living in the country
To attain rapid industrialization with an
emphasis on basic and heavy industries

7. Five Year Plans
1st Five Year Plan (1951-56)- Agriculture
2nd Five Year Plan (1956-61)- Industries
Sector
3rd Five year Plan (1961-66)- Self Reliance
4th Five Year Plan (1969-74)- Removal of
Poverty, Growth with justice
5th Five Year Plan (1974-79)- Removal of
Poverty and Self reliance
6th Five Year Plan (1980-85)- The emphasis
same as 5th Plan

8. Contd..
8th Five Year Plan (1985-90)- Food
Production, Employment, Productivity
9th Five Year Plan (1992-97)- Employment
Generation, Control of population
10th Five year Plan (1997-02)- Growth Rate
of 7%
11th Five year Plan (2002-07)-
Comprehensive and Faster growth
12th Five Year Plan (2012-17)-
Improvement of Health, Education and
Sanitation

9. Industrial policy
The Industrial Policy plan of a country,
sometimes shortened IP, is its official
strategic effort to encourage the
development and growth of the
manufacturing sector of the economy.
The government takes measures "aimed at
improving the competitiveness and
capabilities of domestic firms and
promoting structural transformation.“
A country's infrastructure (transportation,
telecommunications and energy industry) is
a major part of the manufacturing sector

10. LPG
The economy of India had undergone
significant policy shifts in the beginning of
the 1990s.
This new model of economic reforms is
commonly known as the LPG or
Liberalization, Privatization and
Globalization model.
The primary objective of this model was to
make the economy of India the fastest
developing economy in the globe with
capabilities that help it match up with the
biggest economies of the world.

11. Highlights of the LPG Policy
Foreign Technology Agreements
Foreign Investment
MRTP Act, 1969 (Amended)
Industrial Licensing
Deregulation
Beginning of privatization
Opportunities for overseas trade
Steps to regulate inflation
Tax reforms

12. Liberalization
Liberalization was introduced to put an end
to these restrictions and open up various
sectors of the economy.
Liberalization measures were introduced in
1980s in areas of industrial licensing,
export- import policy, technology up
gradation, fiscal policy and foreign
investment, reform policies initiated in
1991 were more comprehensive

13. Liberalization with..
Deregulation of Industrial Sector (Industrial
licensing)
Financial Sector Reforms (Investment
banks, stock exchange)
Tax Reforms (government’s taxation and
public expenditure)
Foreign Exchange Reforms (Foreign
exchange market, payments crisis, Rupee
values)
Trade & Investment Policy Reforms
(international competitiveness of industrial

14. Privatization
Privatization, also spelled privatization,
may have several meanings.
Primarily, it is the process of
transferring ownership of a business,
enterprise, agency, public service, or public
property from the public sector (a
government) to the private sector, either to
a business that operates for a profit or to
a nonprofit organization.
It may also mean
government outsourcing of services or
functions to private firms, e.g. revenue

15. Contd..
Privatization has also been used to
describe two unrelated transactions.
The first is the buying of all outstanding
shares of a publicly traded company by a
single entity, making the company
privately owned.
This is often described as private equity.
The second is a demutualization of
a mutual organization or cooperative to
form a joint-stock company

16. Forms of privatization
There are four main methods of
privatization:
Share issue privatization (SIP) - selling
shares on the stock market
Asset sale privatization - selling an entire
organization (or part of it) to a strategic
investor, usually by auction or by using
the Treuhand model
Voucher privatization - distributing shares
of ownership to all citizens, usually for free
or at a very low price.


17. Globalization
Globalization is the process of
international integration arising from the
interchange of world views, products,
ideas and other aspects of culture.
Advances in transportation
and telecommunications infrastructure,
including the rise of the telegraph and
its posterity the Internet, are major
factors in globalization, generating
further interdependence of economic
and cultural activities.

18. Contd..
The term globalization has been
increasingly used since the mid-1980s and
especially since the mid-1990s.
In 2000, the International Monetary Fund
(IMF) identified four basic aspects of
globalization: trade and transactions,
capital and investment movements, migrati
on and movement of people, and the
dissemination of knowledge.
Further, environmental challenges such as
climate change, cross-
boundary water and air pollution, and over-

19. Public, Private, Joint and Co-operative
Sectors
 A vast percentage of population was extremely poor.
There existed considerable inequalities in income, low
level of employment opportunities, serious regional
imbalances in economic attainments and lack of trained
man-power in various fields of management.
 It was, thus, obvious that if the country was to speed up
its economic growth and maintain it in the long run at a
steady level, a big push was required.
 As such, State’s intervention in all the sectors of the
economy, was inevitable because private sector had
neither the necessary resources in terms of funds,
managerial and scientific skill, nor the will to undertake
risks involved in large long-gestation investments.
 Among the imperatives were removal of regional,
imbalances, accelerated growth of agricultural and

20. Objectives of Public Sector
1) To help in the rapid economic growth and
industrialisation of the country and create the
necessary infrastructure for economic
development.
2) To earn return on investment and thus then
generate resources for development.
3) To promote redistribution of income and wealth.
4) To create employment opportunities.
5) To promote balanced regional development.
6) To assist the development of small scale and
ancilliary industries.

21. Growth and Performance of Public
Enterprises
They are :
1) IOCL – Indian Oil Corporation Limited (It was ranked 135 in
Fortune’s global 500A (2007),
2) BPCL - Bharat Petroleum Corporation Limited
3) HPCL – Hindusthan Petroleum Corporation Limited
4) ONGC – Oil and Natural Gas Corporation Limited (Oil
exploration and crude oil producing company)
5) SAIL – Steel Authority of India Limited (India’s largest
integrated steel producer)
6) IPCL – Indian Petrochemicals Corporation Limited
7) BHEL – Bharat Heavy Electricals Limited (Biggest power
equipment manufacturer in India)
8) NTPC – National Thermal Power Corporation (which produces

22. Private Sector
In a mixed economy, the private sector too has an
important role to play.
The Industrial policy resolution 1956 had made it
very clear that private sector will also have the
opportunity to development and expand.
The policy of the state was to encourage the
development of industries in the private sector in
accordance with the programs formulated in
successive five year plans.
By ensuring the development of transport, power
and other services. And by appropriate budget
allotment.

23. Joint Sectors
The term joint sectors refers to the
enterprise owned and managed jointly by
the private sector and government (public
undertakings).
The main objectives of joint sectors are:
1) To decrease the concentration of economic
power.
2) Social control of industry,
3) Acceleration of economic development
4) Promotion of mixed economy

24. Industry Analysis
A market assessment tool designed to provide
a business with an idea of the complexity of a
particular industry.
Industry analysis involves reviewing the
economic, political and market
factors that influence the way the
industry develops.
Major factors can include the power wielded
by suppliers and buyers,
the condition of competitors, and
the likelihood of new market entrants.

25. Issues in Defining an Industry
What part of the industry corresponds to our
firm’s goals?
What are the key ingredients of success in that
part of the industry?
Does our firm have the skills needed to compete
in that part of the industry?
Will the skills enable us to seize emerging
opportunities and deal with future threats?
Is our definition of the industry flexible enough
to allow necessary adjustments to our business
concept as the industry grows?

26. Characteristics of Industry Structure
Structural attributes – Enduring
characteristics giving an industry its
distinctive character
Variations among industries involves
examining
• Concentration – Extent to which industry sales are
dominated by only a few firms
• Economies of Scale – Savings firms within an
industry achieve due to increased volume
• Product Differentiation – Extent to which customers
perceive products of firms in industry as different
• Barriers to Entry – Obstacles a firm must overcome
to enter an industry

27. Sector Analysis
Sector analysis is typically employed by
investors who are practicing a sector-
rotation strategy, or by those who are using
a top-down approach to selecting stock to
invest in.
In the top-down approach to investing, the
most promising sectors are identified first,
and then the investor reviews the
companies within that sector to determine
which individual stocks will ultimately be
purchased.

28. Indian Agri Sector
The written history of agriculture
in India dates back to the Rig-Veda, written
about 1100 BC.
Today, India ranks second worldwide in farm
output.
Agriculture and allied sectors
like forestry and fisheries accounted for 13.7%
of the GDP(Gross Domestic Product) in
2013, about 50% of the total workforce.
The economic contribution of agriculture to
India's GDP is steadily declining with the
country's broad-based economic growth. Still,
agriculture is demographically the broadest

29. Export of Agro Products 2004-05

30. Agri Export 2012

31. Industrial development and
regulation
Growth of the industrial sector at a
higher rate and on a sustained basis is
a major determinant of a country's
overall economic development.
In this regard, the Government of India
has issued industrial policies, from
time to time, to facilitate and foster
the growth of Indian industry and
maintain its productivity and
competitiveness in the world market.
In order to provide the Central

32. Contd..
The main objectives of the Act is to
empower the Government:-
(i) to take necessary steps for the
development of industries;
(ii) to regulate the pattern and direction of
industrial development;
(iii) to control the activities, performance
and results of industrial undertakings in the
public interest.
The Act applies to the 'Scheduled
Industries' listed in the First Schedule of the