Unit 3 - LPG a. Liberalization b. Privatization c. Globalization

1. KAUSHIK JAISWAL
7276888855 kaushjaiswal@gmail.com

2. INTRODUCTION
❑ In July 1991,India has taken a series of measures to structure
the economy and improve the Balance Of Payment position.
❑ The new economic policy introduced changes in several
areas.
❑ The policy have salient feature which are: -
23-01-2023
Kaushik Jaiswal
2
1.Liberlisation
(internal and
external)
2.Extending
Privatization
3.Globalisation of
the economy

3. REASONS FOR IMPLEMENTING LPG
23-01-2023
Kaushik Jaiswal
3
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.
Inflation.

4. LIBERALIZATION
Liberalization is a very broad term that usually refers to fewer
government regulations and restrictions in the economy.
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.
23-01-2023
Kaushik Jaiswal
4

5. OBJECTIVES OF LIBERALIZATION
23-01-2023
Kaushik Jaiswal
5
To increase competition amongst domestic
industries.
To encourage foreign trade with other countries with
regulated imports and exports.
Enhancement of foreign capital and technology.
To expand global market frontiers of the country.
To diminish the debt burden of the country.

6. THE PATH OF LIBERALIZATION
23-01-2023
Kaushik Jaiswal
6
Relief for
foreign
investors
New industrial
Policy
New trade
policy
Removal of
import
Restrictions
Liberalization
of NRI
remittances
Freedom to
import
technology
Encouraging
foreign tie-ups
MRTP(Monopolistic and Restrictive
Trade Practices) relaxation
Privatization of public
sector

7. ADVANTAGES OF LIBERALIZATION
23-01-2023
Kaushik Jaiswal
7
Increase the foreign investment.
Increase the foreign exchange
reserve.
Increase in consumption and Control
over price.
Check on corruption.
Reduction in dependence on external
commercial borrowings.

8. DISADVANTAGES OF LIBERALIZATION
23-01-2023
Kaushik Jaiswal
8
Increase in unemployment
Loss to domestic units
Unbalanced development
Increased dependence on foreign
nations

9. PRIVATIZATION
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 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.
23-01-2023
Kaushik Jaiswal
9

10. NEED FOR PRIVATISATION
❑ A sizable number of PSUs have been incurring and reporting losses on a
continual basis.
❑ Multiplicity of authorities to whom the PSUs are accountable;
❑ Delay in implementation of projects leading to cost escalation and other
consequences;
❑ Ineffective and widespread inefficiency on management;
❑ With a view to provide opportunities for more and more unemployed
youths, a greater number of people, than required, were recruited and
therefore, many PSUs are over-staffed resulting in lower labour productivity,
bad industrial relations, etc.;
❑ Several sick companies (40 companies) which were in the private sector
was taken over by public sector mainly to protect the employees. These
sick units are causing a big drain on the resources of the state; etc.
23-01-2023
Kaushik Jaiswal
10

11. PRIVATIZATION ROUTES
The important ways of privatization are:
❑ Privatization of ownership, through the sales of equity.
❑ Denationalization or reprivatisation.
❑ Contracting - under which government contracts out services to other
organizations that produce and deliver them.
❑ Franchising - authorizing the delivery of certain services in designated
geographical areas- is common in utilities and urban transport.
❑ Government withdrawing from the provision of certain goods and
services leaving them wholly or partly to the private sector.
❑ Privatization of management, using leases and management contracts
❑ Liquidation, which can be either formal or informal. Formal liquidation
involves the closure of an enterprise and the sale of its assets. Under
informal liquidation, a firm retains its legal status even though some or all
of its operations may be suspended.
23-01-2023
Kaushik Jaiswal
11

12. OBJECTIVES OF PRIVATIZATION
23-01-2023
Kaushik Jaiswal
12
Improve the financial situation of the government.
Reduce the workload of public sector companies.
Raise funds from disinvestment.
Increase the efficiency of government
organizations.
Provide better and improved goods and services
to the consumer.
Create healthy competition in the society.
Encouraging foreign direct investments (FDI) in
India.

13. ADVANTAGES OF PRIVATIZATION
23-01-2023
Kaushik Jaiswal
13
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 improve the quality of decision
making, because of no political
interference.
Privatization may help in reviving sick units
which are the liability of the public sector.
Increase in
efficiency.
Industrial
growth.
Increase the
foreign
investment.

14. DISADVANTAGES OF PRIVATIZATION
23-01-2023
Kaushik Jaiswal
14
Industrial sickness.
Lack of welfare.
Increase in inequality
Opposition by employees.
Problem of financing.
Increase in unemployment.
Ignores the weaker sections.
Ignores the national importance

15. DISINVESTMENT
Disinvestment can also be defined as the action of an
organisation selling or liquidating an asset or subsidiary.
❑ The government had appointed a committee under the
chairmanship of C. Rang Rajan to study and recommend new
measures to make privatization more effective.
❑ The committee submitted its report in 1993 which suggested the
sectors where privatization was needed and suggested
government to set up an autonomous body to monitor
disinvestment.
23-01-2023
Kaushik Jaiswal
15

16. GLOBALIZATION
Globalization implies integration of the economy of the country
with the rest of the world economy and opening of the economy
for foreign direct investment by liberalizing the rules and
regulations and by creating favourable socio-economic and
political climate for global business.
❑ The term globalization refers to the integration of economies of the world
through uninhibited trade and financial flows.
❑ This implies free flow of goods and services, capital, technology and labour
across national boundaries.
23-01-2023
Kaushik Jaiswal
16

17. FEATURES OF GLOBALIZATION
❑ Opening and planning to expand business throughout the
world.
❑ Erasing the difference between domestic market 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
consideration of the global business dynamics, irrespective of
national consideration.
❑ Global sourcing of factor of production i.e. raw-material,
components, machinery, technology, finance etc. are
obtained from the best source anywhere in the world.
23-01-2023
Kaushik Jaiswal
17

18. STAGES OF GLOBALISATION
There are five different stages in the development of a firm into global corporations.
❑ First stage The first stage is the arm’s length service activity of essentially domestic
company, which moves into new markets overseas by linking up with local
dealers and distributors.
❑ Second stage In the stage two, the company takes over these activities on its
own.
❑ Third stage In the next stage, the domestic based company begins to carry out
its own manufacturing, marketing and sales in the key foreign markets.
❑ Fourth stage In the stage four, the company moves to a full insider position in
these markets, supported by a complete business system including R & D and
engineering. This stage calls on the managers to replicate in a new environment
the hardware, systems and operational approaches that have worked so well at
home.
❑ Fifth stage In the fifth stage, the company moves toward a genuinely global
mode of operation.
23-01-2023
Kaushik Jaiswal
18

19. FOREIGN MARKET ENTRY STRATEGIES
23-01-2023
Kaushik Jaiswal
19
Exporting
Licensing/
Franchising
Contract
manufacturing
Management
contract
Assembly
operations
Fully owned
manufacturing
facilities
Joint venturing
Merger and
acquisition
Strategic
alliance
Countertrade

20. POSITIVE EFFECTS OF GLOBALIZATION
23-01-2023
Kaushik Jaiswal
20
Free flow of capital and increase in the total capital.
Free flow of technology.
Increase in industrialization.
Higher Standard of living.
Balanced human development.
Increase in jobs and income.
Commodities at lower price with high quality.
Increase in production and consumption.
Balanced development of world economies.
Spread of production facilities throughout the globe.

21. NEGATIVE EFFECTS OF GLOBALIZATION
23-01-2023
Kaushik Jaiswal
21
Unemployment
Decline in income
Exploits Human resource
Loss of domestic industries
Transfer of natural resources
Dominance of foreign institutions
Widening gap between rich and poor
Lead to commercial & political colonism

22. India’s Top Trading Partners in FY 2021-22 (in US$ Billion)
Country Export Import Total trade Trade balance
US 76,167.01 43,314.07 119,481.08 32,852.94
China 21,259.79 94,570.57 115,830.36 -73,310.78
UAE 28,044.88 44,833.48 72,878.36 -16,788.60
Saudi Arabia 8,758.94 34,100.58 42,859.52 -25,341.64
Iraq 2,403.27 31,927.05 34,330.33 -29,523.78
Singapore 11,150.61 18,962.19 30,112.80 -7,811.58
Hong Kong 10,984.80 19,096.61 30,081.41 -8,111.81
Indonesia 8,471.51 17,702.83 26,174.34 -9,231.31
Korea Rp 8,085.03 17,477.20 25,562.24 -9,392.17
Australia 8,283.13 16,756.17 25,039.30 -8,473.04
See : Trading Partners of India
Rank Country Exports Imports Total Trade Trade Balance
1 United States 76.11 43.31 119.42 32.80
2 China 21.25 94.16 115.41 -72.91
3 United Arab Emirates 28.10 44.80 72.90 -16.7
4 Saudi Arabia 8 34.00 42 -28
5 Russia 1.00 21.00 22.00 -20.00
6 Germany 8.21 13.69 21.9 -5.48
7 Hong Kong 13.7 20.34 34.04 -6.64
8 Indonesia 4.12 15.06 19.18 -10.94
9 South Korea 4.85 15.65 20.5 -10.8
10 Malaysia 3.71 9.08 16.93 -5.30
Kaushik Jaiswal

23. 111.63
65.04
38.94
29.15
0
20
40
60
80
100
120
Engineering
Goods
Petroleum
Products
Gems &
Jewellery
Organic &
Inorganic
Chemicals
Key Export Products (FY22) (US$
Billion)
Exports
160.7
73.1
46.1
39.9
0
20
40
60
80
100
120
140
160
180
Petroleum
Products
Electronic
Goods
Gold Machinery,
Electric & Non-
electric
Key Import Products (FY22)
(US$ Billion)
Imports
Kaushik Jaiswal

24. INDIA EXPORTS
23-01-2023
Kaushik Jaiswal
24
o Exports from India fell to
B$ 29.78 in Oct 2022
from B $35.45 in the
previous month.
o A year earlier, exports
were 17% higher at
B$ 35.73
o Considering April to Oct,
exports rose 12.55% to
B$ 263.35
See : India Exports

25. INDIA IMPORTS
23-01-2023
Kaushik Jaiswal
25
See : India Imports
o Imports to India
declined to B$ 56.69 in
Oct 2022 from B$ 61.16
in Sept, the lowest in
eight months and
compared to B$53.64 a
year earlier.
o Considering April to Oct,
imports advanced
33.12% to B$ 436.81.

26. INDIA BALANCE OF TRADE
23-01-2023
Kaushik Jaiswal
26
o India's trade deficit
widened to $26.91 B in
Oct ’22 from $25.71 B in
Sept.
o Exports fell to $29.78
B from $35.45 B in the
previous month. A year
earlier, exports were
17% higher at $35.73 B.
o Imports declined to
$56.69 B from $61.16 B.
See : Balance of Trade

27. INDIA FOREIGN EXCHANGE RESERVES
23-01-2023
Kaushik Jaiswal
27
o Forex Reserves in India
increased to 5,50,140
USD Million in 2022
Nov 25 from 5,44,720
USD million in the
previous week.

28. GROSS DOMESTIC PRODUCT
23-01-2023
Kaushik Jaiswal
28
o The GDP in India was
worth 3173.40 billion US
dollars in 2021, according
to official data from the
World Bank.
o The GDP value of India
represents 0.21% of the
world economy.

29. SENSEX
23-01-2023
Kaushik Jaiswal
29

30. NIFTY 50
23-01-2023
Kaushik Jaiswal
30

31. USD-INR
23-01-2023
Kaushik Jaiswal
31

32. INDIA IMPORTS BY COUNTRY - 2021
23-01-2023
Kaushik Jaiswal
32

33. INDIA IMPORTS BY CATEGORY - 2021
23-01-2023
Kaushik Jaiswal
33

34. INDIA EXPORTS BY COUNTRY - 2021
23-01-2023
Kaushik Jaiswal
34

35. INDIA EXPORTS BY CATEGORY - 2021
23-01-2023
Kaushik Jaiswal
35

36. INDIA’S SHARE IN GLOBAL TRADE
23-01-2023
Kaushik Jaiswal
36

37. % SHARE OF THE GLOBAL ECONOMY
23-01-2023
Kaushik Jaiswal
37

38. GDP BASED ON SHARE OF 2021 WORLD TOTAL, IN %
23-01-2023
Kaushik Jaiswal
38

39. TOP 10 GDPS – 2022
23-01-2023
Kaushik Jaiswal
39
Country
Nominal GDP
(in trillions)
PPP Adjusted GDP
(in trillions)
Annual Growth (%) GDP Per Capita
United States $23.0 $23.0 5.7% $69,287
China $17.7 $27.3 8.1% $12,556
Japan $4.9 $5.4 1.6% $39,285
Germany $4.2 $4.8 2.9% $50,801
United Kingdom $3.2 $3.3 7.4% $47,334
India $3.2 $10.2 8.9% $2,277
France $2.9 $3.4 7.0% $43,518
Italy $2.1 $2.7 6.6% $35,551
Canada $2.0 $2.0 4.6% $52,051
South Korea $1.8 $2.4 4.0% $34,757
See : Top Economies of world

40. THANK YOU..!
KAUSHIK JAISWAL
7276888855 kaushjaiswal@gmail.com