Economic liberalization in India began in 1991 in response to a balance of payments crisis. Reforms across financial, fiscal, trade, and industrial sectors aimed to reduce restrictions and open the economy to private and foreign investment. This included abolishing industrial licensing, rationalizing tariffs, adopting a flexible exchange rate, and deregulating domestic markets. Liberalization led to increased growth rates in GDP, exports, industrial production, and per capita income. India's economy has become one of the fastest growing in the world as a result of these reforms.

1. ABHINAV TYAGI
Roll number-001

3. Liberalization refers to laws or rules being
liberalized, or relaxed, by a government.

5. Economic liberalization is generally defined as the
loosening of government regulations in a country
to allow for private sector companies to operate
business transactions with fewer restrictions. In
relation to developing countries, this term refers to
opening of their economic borders to
multinationals and foreign investment.

8. • A Balance of Payments (BOP) crisis in 1991 which
pushed the country to near bankruptcy
• The Rupee devalued and economic reforms were forced
upon India
• India central bank had refused new credit and foreign
exchange reserves had reduced to the point that India
could barely finance three weeks’ worth of imports
• No FDI & FII Investments

9. Liberalization : A beginning

10. Financial
Sector
Fiscal
Sector
Reforms
taken during
Liberalization
Trade
Sector
Industrial
Sector

11. Financial Sector Reform
Financial Sector Reforms refers to the deregulation of
domestic financial markets and the liberalization of the
capital account
Financial Sector Reforms are:– Reform in Banking Sector
– Reform in Stock Market
– Reform in Insurance

12. Industrial Sector Reform
Industrial Sector was among the first sectors to be liberalized
in India in a series of measures
Industrial licensing has been abolished except in a small
number of sectors where it has been retained on strategic
considerations
Industrial Sector Reforms are:-
• Abolition of industrial licensing
• Restriction were removed on expansion
• Reduction in the reservation of public sector

13. 18.00%
16.00%
14.00%
Year to year growth
12.00%
10.00%
Government Companies
8.00%
Non-Government
Companies
6.00%
4.00%
2.00%
0.00%
-2.00%
1993-94
1995-96
1996-97
1997-98
1998-99
Year
1999-00
2000-01
2001-02
2002-03

14. Trade Sector Reform
Trade policy allowing domestic providers (of goods and/or
services) to compete more freely in world markets and
foreign providers to compete more freely in domestic
markets
Trade Sector Reform :• Elimination of Import Licensing
• Rationalization of Tariff Structure
• Adoption of Flexible Exchange rate

15. Merchandise Exports
Merchandise Imports
2011
2010
182.2
189.0
250.5
308.5
300.6
257.6
350.0
2009
166.2
190.7
300.0
2008
128.9
157.1
250.0
2007
105.2
118.9
200.0
2006
85.2
150.0
2005
2004
2003
2002
2001
2000
1999
1998
1997
1996
1995
1994
1993
0.0
1992
100.0
18.5
21.1
18.3
24.3
18.9
26.7
22.7
35.9
26.9
43.7
32.3
48.9
34.1
51.2
35.7
47.5
34.3
55.4
37.5
57.9
45.5
56.3
44.7
64.5
53.8
80.0
66.3
27.9
50.0
1991
(US$ Billion)
380.9
400.0

16.  India's fiscal sector reforms help to raise the rate of
savings and investment in India. This further helps to
enhance the productivity of public expenditures
 India has established itself as one of the fastest growing
economies in the world. India is also advancing towards
the economical growth and improvement in literacy.

17. SENSEX DURING
LIBRALZIATION
Trends in Capital Market - SENSEX ans BSE 100
21,000.0
18,000.0
15,000.0
12,000.0
9,000.0
6,000.0
3,000.0
SENSEX
BSE 100
2011
2009
2007
2005
2003
2001
1999
1997
1995
1993
1991
0.0

18. • Annual growth in GDP
• A rate of growth that will double average income in a
decade
• Rapid Growth in all sectors
• Exports of information technology enabled services
particularly strong

19. GDP
GDP Growth Rate
2011
2010
2009
2008
2007
2006
2005
2004
8.0%
6.0%
4.0%
2.0%
0.0
0.0%
Y-O-Y Growth (%)
8.5%
8.0%
6.8%
9.3%
9.6%
9.5%
8.5%
7.5%
6.4%
6.7%
5.8%
4.4%
4.3%
3.8%
2000.0
2003
2002
2001
2000
1999
1998
8.0%
7.3%
5000.0
1997
1996
6.4%
5.7%
5.4%
4000.0
1995
1994
1993
1.4%
1000.0
1992
5.3%
3000.0
1991
(Rs. 000' Crore)
6000.0
12.0%
10.0%

20. 1991
1992
1993
1994
1995
1996
1997
1998
1999
2000
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
2011
(Rs.)
-0.5%
3.4%
3.8%
3.8%
5.1%
5.9%
2.4%
4.7%
4.5%
2.5%
4.1%
2.1%
6.8%
7.1%
7.8%
8.0%
7.8%
5.3%
6.5%
7.1%
45,000
40,000
35,000
30,000
25,000
20,000
15,000
10,000
5,000
-
Per Capita Income
Growth in Per Capita Income
Y-O-Y Growth (%)
9.0%
8.0%
7.0%
6.0%
5.0%
4.0%
3.0%
2.0%
1.0%
0.0%
-1.0%

21. •
•
•
•
Political Reforms for Good Governance
Re-engineering the Role of the government
Administrative and Legal Reforms
Strategic Management of the Economy with a focus on
knowledge based HRD Activities
• Fiscal Prudence

22. •
•
•
•
•
Agricultural Sector Reforms
Industrial Restructuring
Labour Sector Reforms
Foreign Trade and Outward Investment Policies
Financial Sector Reforms

24. Among the Top-15 Countries in terms
of GDP at constant prices

25. Robust Economic Platform

26. Surging Exports

27. • Attractive Investment Destination
• Vibrant Capital Market
• Pacing Ahead to Emerge as a
Major Economy in the World

28. Major M&A Deals Undertaken Abroad by India Inc.
USD 12.1
billion
Tata Steel buys Corus Plc
USD 6 billion
Hindalco acquired Novelis Inc.

29. Vodafone buys Hutch
Renault, Nissan and Mahindra & Mahindra
has initiated a Greenfield automobile
plant project in Chennai.
USD 11 billion
USD 0.905
billion

31. Arguments in the favor of
Liberalization
 Increase in rate of economic growth
 Increase in competitiveness of industrial sector
 Reduction in poverty and inequality
 Fall in fiscal deficit
 Control on prices
 Decline in deficit of BOP
 Increase in Efficiency

32. Arguments in the Against of
Liberalization
• Pressure by IMF and World Bank
• More depending on Foreign Debt
• Dependence on Foreign technology
• Undue importance to Privatization
• Problem of Unemployment