Liberalization, Privatization and Globalization in India. The economy of India had undergone significant policy shifts in the beginning of the 1990s. This new model of economic reforms is commonly known as the LPG or Liberalisation, Privatisation and Globalisation model.

1. NEW ECONOMIC
REFORMS AND LPG

2. BACKGROUND OF REFORMS IN
INDIA
1947-1964

3. 1964-1984

4. REFORMS 1991

5. INTRODUCTION
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”. (libearlisation
privatisation globalisation)
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6. 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.
 Inflation
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7. 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.
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8. THE PATH OF
LIBERALIZATION
 Relief for foreign investors
 Devaluation of Indian rupees
 New industrial Policy
 New trade policy
 Removal of import Restrictions
 Liberalization of NRI remittances
 Freedom to import technology
 Encouraging foreign tie-ups
 MRTP relaxation
 Privatization of public sector 8

9. ADVANTAGES OF
LIBERALIZATION
 Industrial licensing
 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
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10. DISADVANTAGES OF
LIBERALIZATION
 Increase in unemployment.
 Loss to domestic units.
 Increase dependence on foreign
nations
 Unbalanced development
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11. 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 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.
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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
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13. OBJECTIVES OF
PRIVATIZATION
 To increase efficiency & competitive power of the
enterprises.
 To strengthen industrial management.
 To earn more & more Foreign currency.
 To make optimum use of resources
 To achieve rapid industrial development of the country.

14. ADVANTAGES OF
PRIVATIZATION
• Reduction in economic burden
• Increase in efficiency
• Reduction in sense of irresponsibility
• Scientific Management
• Reduction in Political Interference
• Encouragement of new Inventions

15. DISADVANTAGES OF
PRIVATIZATION
• Lack of social welfare
• Class struggle
• Increase in inequality
• Increase in unemployment
• Exploitation of weaker section

16. EXAMPLES OF
PRIVATIZATION IN
INDIA
 Lagan Jute Machinery Company
Limited (LJMC)
 Videsh Sanchar Nigam Limited
(VSNL)
 Hindustan Zinc Limited (HZL)
 Hotel Corporation Limited of
India (HCL)
 Bharat Aluminum Company
limited (BALCO)
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17. 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 socio-economic and political
climate for global business.
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18. 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.”
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19. 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. 19

20.  Basing product development and production
planning on the global market 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.
 Global orientation of organizational structure
.and management culture
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21. FOREIGN MARKET
ENTRY STRATEGIES
 Exporting
 Licensing/Franchising
 Contract manufacturing
 Management contract
 Assembly operations
 Fully owned manufacturing facilities
 Joint venturing
 Merger and acquisition
 Strategic alliance
 Countertrade
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22. PROS AND CONS OF
GLOBALISATION
Globalization have several benefits ,these are: -
 Free flow of capital and increase in the total
capital employed.
 Free flow of technology.
 Increase in industrialization.
 Spread of production facilities throughout the
globe.
 Balanced development of world economies.
 Increase in production and consumption.
 Commodities at lower price with high quality.
 Increase in jobs and income.
 Higher Standard of living.
 Balanced human development
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23. Negative
effects of
Globalization
 Loss of domestic industries
 Exploits Human resource
 Decline in income
 Unemployment
 Transfer of natural resources
 Lead to commercial and political
colonism
 Widening gap between rich and
poor
 Dominance of foreign institutions
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24. CONCLUSION
Economic liberalization has
increased the responsibility and
role of the private sector. At the
same time, it has reduced the
control of the government on
economy affairs. It is expected
that the reforms would liberalize
the Indian economy enough to
create a conducive environment
for rapid economic development.
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