The document discusses India's development strategy prior to 1991 which focused on mixed economy and state control of key industries like coal, steel, and power. While this led to growth in certain areas, it also had negative aspects like slow industrial growth and rising government expenditure. This necessitated reforms through liberalization, privatization, and globalization which aimed to relax rules for private sectors, reduce public sectors, and integrate India's economy globally. The strategies involved opening industries to private players, selling public enterprises, and removing trade barriers. The document outlines the processes, advantages, and disadvantages of each reform component.

1. LPGLiberalization, Privatization & Globalization

2. INDIA’S DEVELOPMENT STRATEGYPRIOR TO 1991-AN EVALUATIONPrior to 1991, India followed mixed economy and the control of critical industries as under were under the control of the state. Coal mining

3. Steel, power

4. Roads

5. The private sectors were allowed to establish certain industries again under the rules and regulations of the govt.

6. In case of the public sector, the Govt invested a large amount and the purpose behind this strategy was to remove poverty, reduce inequalities in the distribution of income and wealth and to achieve economic growth and social justicePOSITIVE ASPECTSA large industrial base and increase in industrial production.The proportion of population living below poverty line has declined.India has become self sufficient in food grainsA base for export-oriented industries has been created.India has mobilized savings and created their own resources.Educational institutions have produced large number of scientists and technically skilled working people.This has helped in industrial and technological growth and self-reliance.

7. NEGATIVEASPECTSIndustrialisation did not take place as per the expectation.The growth rate of industrial production declined from 8% to 4%.The laws that were framed to regulate the private sector were responsible for slow growth of Industrial sector.These laws have also failed to reduce the concentration of economic power in the private sector.Corruption, lack of efficiency in work and ineffective management became the common features of the public sector.Many public sector companies were making losses.Official machinery became a major hindrance to the development.

8. NEED FOR REFORMSNot only the negative aspects but also several problems like rising prices, shortage of adequate capital, slow economic development and technological backwardness contributed to the increase in govt’s expenditure than the revenue.India’s borrowings (1991) from abroad had increased to that level Indian Govt had to borrow money from World Bank and IMF.All these factors led to the framing a New Economic Policy (NEP) that contains three strategies- Liberalization, Privatization and Globalization

9. LIBERALIZATION 2 components Allow the private sector to run those activities which were restricted earlier only to public sector.Relaxation of rules and regulations which were restricted to the growth of private sector

10. PROCESSESPrivate sector has been allowed to produce all the goods except alcohol, cigarettes, hazardous chemicals, industrial explosives, electronic aerospace and drugs and pharmaceuticals.Industries reserved for public sector has been reduced from 17 to 3.Private sector can also enter in to core industries like iron and steel, electricity, air transport, shipbuilding, heavy machinery and some defence goods.The private sector has been freed from many regulations such as (a) licensing (b) permission to import raw materials (c) regulation on price and distribution and (d) restriction on investment by large business companies.

11. GLOBALIZATIONIntegrating the Indian economy with the world economy.Many producers from outside the country can sell their goods and services in India.India can also sell its goods and services to other countries.Globalization facilitates those who have capital to establish enterprises in India, produce goods for sale within the country or export them.Entrepreneurs from India also can go and invest in other countries.Not only the movement of capital but also the movement of people takes place.Exchange of capital, technology and experience take place between the various countries of the world.Govt has removed restrictions on import of goods, reduced taxes on imported goods and encouraged investors from abroad to invest in India.

12. ADVANTAGESPromise of increase productivity and higher living standardsIncrease in trade in goods and servicesProvide new opportunities for growthExports, Imports & Entre-portsGlobalization of financial marketsIncreased flow of foreign market capitalImpact on povertyIncrease in the level of interdependence & competitivenessInduce domestic firms to improve technology

13. DISADVANTAGESTakeover of national firmsRuin traditional crafts and industriesBrings instabilityWidens the disparity

14. PRIVATIZATIONMeans- Transfer of ownership or sale of public enterprisesLiberalization Approach: Fewer controls and regulation by the state.

15. Relative Share Enlargement Approach: Enlargement of the share of private enterprises in the production of goods and services in the economy.

16. Association of Private Sector Management Approach: Utilizing the services of managerial personnel or executives of private sector enterprises for the conduct and management of PSUs.

17. Transfer of Minority Equity Ownership Approach: Transfer of minority equity ownership of public enterprises to private individuals and institutions so that the ultimate control continues to remain with the state.

18. Transfer of Complete Ownership Approach: Sale of all the shares to the private parties so that the public enterprises are converted into private enterprises.HOW TO PRIVATIZE? FranchisingArrangement where one party (the franchiser) grants another party (the franchisee) the right to use its trademark or trade-name as well as certain business systems and processes, to produce and market a good or service according to certain specifications. The franchisee usually pays a one-time franchise fee plus a percentage of sales revenue as royalty, and gainsImmediate name recognitionTried and tested products Standard building design and décor, Detailed techniques in running and promoting the business, Training of employees, and Ongoing help in promoting and upgrading of the products