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About LPG

1. WELCOME V.K. SUNILKUMAR M.A.Eco ., M.A.socio ., B.Ed. HSST Senior (HG)Economics Govt. Sarvajana HSS Sulthan bathery

2. Economic crisis 1991

3. # Financial crisis due to inefficient management in 1980s. # External debt increased. # Prices of essential commodities shoot up (Inflation 19%). # Foreign Exchange Reserve was not sufficient # Quotas and Tariff, Permit License raj

4. Deficit in the Balance of Payment India approached IMF and IBRD $ 7 billion Imposed some conditions

5. To remove restrictions on private sector To reduce the role of government To reduce trade restrictions

6. Announced Liberalisation Policies

7. LPG

8. Liberalization measures Stabilization measures Short-term measures to correct the weakness in BoP and Inflation Structural reform measures Improve the efficiency of the economy and increasing international competitiveness

9. LIBERALISATION Means to reduce the restriction imposed by the govt. on the economy

10. Industrial sector

11. 1.Industrial licensing was abolished Alcohol Cigarettes Chemical Aerospace and drugs Pharmaceuticals

12. 2.Dereserved commodities produced by SSI

13. 3. Market have been allowed to determine prices

14. Financial sector

15. @ Control of RBI reduced

16. @ Private sector Banks were allowed to function

17. @Direct Foreign Investment and the limit was raised to 50 %

18. Tax Reforms

19. Direct Indirect and Corporation Tax reduced tax, and simplified

20. Foreign Exchange Reforms

21. Rupee was Devalued

22. Market was allowed to determine exchange rate freely

23. Trade and Investment Policy reforms

24. Quantitative restriction on import removed

25. Import Licensing was abolished

26. Export duties removed

27. PRIVATISATION

28. Means selling/shedding of ownership or management of govt. owned enterprises

29. Disinvestment (selling of PSUs)

30. Withdrawal of govt. from ownership

31. GLOBALISATION

32. means integration of the country with world economy

33. Globalisation is the out come of liberalisation and privatisation

34. Globalisation involves creation of networks and activities transcending economic, social and geographical boundaries

35. OUTSOURCING is an important out come of globalisation

36. The services such as Voice- based Business Processes (BPO)

37. Record keeping, accounting, banking services, film editing, book transcription, clinical advice, teaching etc. are being outsourced by companies from DCs to India

38. GATT-1948

39. WTO-1995 World Trade Organisation

40. Provide equal opportunities to all countries in the international market

41. Indian Economy during reforms: An Assessment

42. Positive side

43. 1.Increase in overall GDP growth

44. Growth Rates different sectors (%)

45. 2. Foreign Direct Investment

46. 3.Foreign Exchange 1990-91 $6 billion 2004-05 $125 billion

47. India become the 6 th Foreign exchange reserve holder India became the 6 th largest foreign exchange reserve holder

48. 4.Successfulexporter of auto parts, textiles, engineering goods, software etc.

49. CRITICISM

50. Reforms could not solve some basic problems

51. Employment : not generated sufficient employment opportunities Agriculture : decelerated Infrastructure : not adequate Industry : affected local industries Fiscal management :Fiscal deficit

52. Effect on agriculture

53. Public investment in agriculture especially in infrastructure reduced such as Irrigation Power Roads Market linkages and research

54. Causes Effect Removal of Fertilizer Subsidies Cost of production increased Removal of import duties Increase in agricultural products Removal of support price Increased international competitiveness Export oriented strategies Increased cultivation of cash crops Prices of food grains increased

55. Affected Small and Marginal farmers

56. Disinvestment years Target of disinvestment (Rs in crore ) Actual disinvestment (Rs in crore ) 1991-92 2,500 3,040 1998-99 5,000 5,400

57. *A substantial loss of the govt. Income from disinvestment were used to offset the shortage of govt. revenue rather than using it for development of PSU and building social infrastructure

58. Impact on Fiscal policy

59. Growth of public expenditure on social sector decreased

60. Tariff deduction curtailed the scope of raising revenue through customs duties

61. Tax revenue could not increased

62. CONCLUSION Impact general Positive aspects Negative aspects Access to global market Strategy of DCs to expand their markets high technology Affected the welfare and identity of the people in LDCs increased the possibility of large industries Widened economic disparities among nations and people

63. Indian context Positive aspects Negative aspects High growth Inequalities Growth concentrated in selected sectors- telecommunication, IT, finance, travel and hospital services, real estate and trade Increased income and quality of consumption of only the high-income groups