The document discusses India's economic crisis in 1991 that led the country to adopt liberalization, privatization, and globalization (LPG) policies. It notes that in 1991 India faced high fiscal and current account deficits, rising debt obligations, and inflation. Previous oil shocks and increased military spending had contributed to the crisis. Under LPG, India reduced restrictions on trade and foreign investment. It privatized state-owned companies and integrated its economy with the global market. As a result, India's growth rates increased substantially and it became one of the fastest growing economies in the world. LPG helped revive the economy and various sectors like agriculture, industry, banking, and education.

1. Economic Crisis 1991- LPG
(Liberalisation ,Privatisation ,Globalisation)
Economic Crisis 1991- LPG
(Liberalisation ,Privatisation ,Globalisation)
Team Members
1.Aatish Raj
2.Ashutosh Vyas
3.Tarun Bhatt
4.Surendar Singh
5.Ankit Boradkar

2. In 1991 India faced a classic account deficit
High fiscal and current account deficit
External borrowings to finance the deficit
Rising debt service obligation
Rising inflation , and inadequate exchange rate adjustment

3. In 1979,
oil shock
Agriculture subsidies pushed the deficit
In mid 1980’s,
 Defence Expenditure
 Reduction of direct taxes
 Increased dependence on foreign oil import

4. Reliance on external funds
Negligible foreign investment i.e 0.1% of GDP
Reliance on commercial borrowing
Financial needs were met by external assitanace

5. Soft loans declined from 89% To 39%
Started dominating Balance sheet at 38.7%

6. 3 WEEKS FOR INDIA
TO SURVIVE

9. Liberalisation
 Act of making less Strict.
 Relaxation of govt. restriction
 Removal of tariff , subsidies and other restriction on
the flow of good and services.
 Basically meant for Economic liberalisation and Trade
liberalisation.

10. o Reached its peak in 2007 and recorded growth rate 9%
o 2nd fastest economy in world after china.
o Flow of money was increased in economy.
o Played important role in bringing out India out of
inflation.
o Increased purchasing power of citizens of India

11. Impact of Liberalisation
The low annual growth rate of the economy of India went up its peak
Increase Per capita income of country.
Increased infrastructure of the nation.
Removing barriers to international investing.
Increased willingness to do business in the country

12. Privatization
Transfer of ownership, property or business from the government to the
private sector is termed privatization.
The government ceases to be the owner of the entity or business.
The process in which a publicly-traded company is taken over by a few
people is also called privatization.

13. Impact of Privatization
• Privatization may help in reviving sick units which have become a liability
on govt.
• It frees the resources for a more productive utilization.
• Private concerns tend to be profit oriented and transparency in their
functioning.
• It reduces political influence on decision making of managers.
• It helps in making public sector unit more competitive.

14. • Lagan jute machinery company limited (LJMC).
• Modern food industries limited (MFIL)
• Paradeep Phosphates Limited (PPL)
• Bharat aluminium company limited (BALCO)
• Hotel Corporation of India limited (HCI)
• Hindustan Zinc limited (HZL)

15. Globalisation
 Integrating the domestic economy with the world economy.
 Process which draws country out of their isolation and make them
join rest of the world.
 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.”

17. GDP growth rate – 6.6% which is almost double of previous era
Industrial Growth Rate – Not much impressive and still 25%
Agriculture – Played a major role in farming by removing
restriction and providing new technologies.

18. Service sector – Facilitate IT revolution and providing numerous jobs in this
sector
Banking - India has been gainer in banking. IT is still on path of bringing banking
revolution.
Stock Market – Stock has shown a boom in economy after LPG. open wide
array of associated services such as Investment Banking, Asset Management,
Underwriting services, Hedging advice etc.
Education and health sector - There has been world class education available in
India and Deregulation has resulted in Mushrooming of private engineering and
Medical Colleges.