The document discusses India adopting the policy of liberalization, privatization and globalization (LPG) in 1991 to reform its economy. It introduced 3 key changes: 1) Liberalizing trade and industry, removing licenses and tariffs. 2) Extending privatization of public sector companies. 3) Globalizing the economy by opening it to foreign investments and trade. The reasons for LPG were issues like high government debt, inefficiencies, and losses in public sector firms. Liberalization deregulated industry and trade. Privatization sold public companies to private owners. Globalization integrated India's economy globally through foreign investments and trade. The goal of LPG was to make India's economy more efficient and competitive through market-oriented

1. LIBERALISATION,PRIVATISATION AND
GLOBALISATION

2. N
July 1991,India has taken a series of measures to structure
the economy and improve the BOP position. The new
economic policy introduced changes in several areas.
The policy have salient feature which are: 1.Liberlisation (internal and external)
2.Extending Privatization
3.Globalisation of the economy
Which are known as “ LPG ”. (liberalization privatization
globalization)

3. Reasons for implementing LPG :
 Excess of consumption and expenditure over revenue resulting in heavy govt.
borrowings.
 Growing inefficiency on the use of resources.
 Over protection to industries.
 Mismanagement of the firm and the economy.
 Increase in losses for public sector enterprises.
 Various distortion like poor technological development, shortage of foreign
exchange and borrowing from abroad.
 Low foreign exchange reserves.

4. LIBERALIZATION
 Liberalization is a very broad term that usually
refers to fewer government regulations and
restrictions in the economy in exchange for
greater participation of private entities
 Liberalization refers to the relaxation of the
previous government restriction usually in area of
social and economic policies. When government
liberalized trade , it means it has removed the
tariff ,subsidies and other restriction on the flow of
goods and services between the countries.

5. Measures taken for liberalization
•
Liberalization for industrial licensing
•
Concession from monopolies act
•
Freedom for expansion and production to industries
•
Increase in the investment limit of the small industries
•
Freedom to import the capital goods and raw material
•
Freedom to import technology
•
Liberalization of export and import transactions
•
Liberalization in taxation policy
•
Liberalization in banking sector

6. ADVANTAGE
 Industrial licensing
 Increase the foreign investment.
 Increase the foreign exchange reserve.
 Increase in consumption and Control over price.
 Reduction in dependence on external commercial borrowings
 Competition promotes efficiency, so resources are wasted much less
 Liberalization allows financial markets to provide loans to people who previously may
not have been able to access loans that they can pay off, and it allows more financial
instruments to be developed so people can choose the one that suits them
 Liberalization removes government regulations on the economy, which

7. DISADVANTAGE
• Increase in unemployment.
• Loss to domestic units.
• Increase dependence on foreign nations
• Unbalanced development

8. Name of the enterprise
situation
National Thermal Power Corporation
profit
Indian Oil Corporation
profit
Manager Telephone Nigam Limited
profit
Steel authority India limited
profit
Bharat petroleum corporation limited
profit
Hindustan petroleum corporation limited
profit
Bharat heavy electronics limited
profit

9. N
 Privatization means transfer of ownership and/or
management of an enterprise from the public sector
to the private sector .It also means the withdrawal of
the state from an industry or sector partially or fully.
Privatization is opening up of an industry that has
been reserved for public sector to the private sector.
 Privatization means replacing government
monopolies with the competitive pressures of the
marketplace to encourage efficiency, quality and
innovation in the delivery of goods and services .

12. Different Ways in privatization:
 Liberalization Approach
 Relative Share Enlargement Approach
 Association of Private Sector Management Approach
 Transfer of Minority Equity Ownership Approach
 Transfer of Complete Ownership Approach

13. METHODS
 FRANCHISING
 LEASING
 CONTRACTING
 DISINVESTMENT

14. ADVANTAGE
 Privatization helps to reduce the burden on Govt.
 It will help profit making public sector unit to modernize and diversify
their business.
 It will help in making public sector unit more competitive.


It will help to improving the quality of decision making, because the decisions are free
from any political interference.
It Encourage the new innovations without any restrictions.
 Industrial growth.

15.  Increase the foreign
investment.
 Increase in efficiency

16. DISADVANTAGE
•
•
•
•
Lack of welfare.
Class struggle.
Increase in inequality
Opposition by employees.
•
Problem of financing.
•
Problem in unemployment.
•
Ignores the weaker sections.
•
Ignores the national importance

17. EXAMPLE
 Lagan jute machinery company limited(LJMC)
o Vides Sanchar Nigam limited (VSNL)
o Hindustan zinc limited (HZL)
 Hotel corporation limited of India (HCL)
 Bharat aluminum company limited(BACLO)

18. GLOBALIZATION
 Globalization implies integration of the economy of the
country with the rest of the world economy and opening up of
the economy for foreign direct investment by liberalizing the
rules and regulations and by creating favorable socioeconomic and political climate for global business.
 According to IMF: -
“The growing economic interdependence of countries worldwide
through increasing volume and variety of cross border
transaction in goods and services and of international capital
cash flows, and through the more rapid and widespread
diffusion of technology.”

19. FEATURES
 Opening and planning to expand business
throughout the world.
 Erasing the difference between domestic and
foreign market
 Buying and selling goods and services from / to
any countries in the world.
 Locating the production and other physical
facilities on a considerations of the global
business dynamics, irrespective of national
considerations

20.  Global sourcing of factors of production i.e. raw
material, components ,machinery, technology,
finance etc. are obtained from the best source
anywhere in the world
 Global orientation of organizational structure and
management culture

21. FACTORS
 Technological Advances in communication
 Improvements in transportation and Technology
 other Factors:

22. ADVANTAGE
 Increase in Trade in Goods and Services
 Free flow of technology
 Increase in industrialization
 Increase in production and higher standard of living.
 Commodities at lower price with high quality
 Increase in jobs and incomes
 Balanced human development

23. DISADVANTAGE
 Loss of domestic industries
 Exploits human resources
 Decline in income
o Transfer of natural resources
 Widening gap between rich and poor
 Dominance of foreign institute

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