Liberalisation Economics Project

This is an economics project made by panav, a student of krm

1. Liberalization In India By Panav XII-C

2. Section Break Insert the Subtitle of Your Presentation PRE-LIBERALISATION ERA

3. Need for liberalization A Balance of payments (BOP) crisis in 1991 which pushed the country to near bankruptcy . BOP Crisis 01 The Rupee devalued and economic reforms were forced upon India . Devalued Currency 02 Indian Central Bank had refused new credit and foreign exchange reserves had reduced to the point that India could barely finance 3 weeks worth of imports . Forex Depleted 03 There were no FDI & FII investments . Investments 04

4. Section Break Insert the Subtitle of Your Presentation What is LIBERALISATION?

5. Objectives : The key objective of industrial policy was rapid industrialization of the country To maintain sustained growth in the productivity and gainful employment To attain international competitiveness Therefore, the basic philosophy of the new IP, 1991 has been the continuity with a change Liberalization refers to relaxation of previous government restrictions usually in areas of social and economic policies Thus when government liberalizes trade it means it has removed the tariff, subsidies and other restrictions on the flow of goods and services between countries

6. A B C D E Some reforms introduced by liberalization A B C E D Abolition of industrial licensing and registration. Liberalizing the MRTP act Freedom for expansion and production . Increase in the investment limit of the small industries . Freedom to import technology and capital goods

7. Sectors Impacted by liberalization F F T I FINANCIAL SECTOR FISCAL SECTOR INDUSTRIAL SECTOR TRADE SECTOR

8. Financial sector reforms are : Reforms in Banking Sector Reform in stock market Reform in insurance Financial sector reforms refers to the deregulation of domestic financial markets and the liberalization of the capital account

9. Industrial sector reforms are : Abolition of industrial licensing Restriction was removed on expansion Reduction in the reservation of public sector Industrial Sector Reform was among the first sector to be liberalized in India in a series of measures Industrial learning has been abolished except in a small number of sectors where it has been rtained on statergic considerations

10. Trade sector reforms are : Elimination of import licensing Rationalization of tariff structure Adoption of flexible exchange rate Trade sector reforms refers to the trade policy which allows domestic providers (of goods & services) to compete more freely in world markets and foreign providers to compete more freely in domestic markets

11. Fiscal sector reforms helps to raise the rate of savings and investment in India. This further helps to enhance the productivity of public expenditures India has established itself as one of the fastest growing economies in the world. India is also advancing towards the economical growth and improvement in literacy

12. Section Break Insert the Subtitle of Your Presentation Post-LIBERALISATION

13. Impact of liberalization Average annual growth of services shifted from 6.9% during 1981-1991 to 8.1% in 1991-2001 Average growth Rapid growth in communication services , financial services, business services & community services Service sector growth Exports of information technology enabled services particularly strong IT Advancement

14. Major M&A Deals Undertaken Abroad by India Tata Steel buys Corus Plc TATA STEEL Hindalco acquired Novelis Inc HINDALCO Vodafone buys Hutch VODAFONE Aditya Birla group increased its stake in Idea Cellular by acquiring 48.14% stake ADITYA BIRLA GROUP Essar steel acquired Algoma steel. ESSAR STEEL Videocon acquired Daewoo Electronics Corporation limited VIDEOCON Suzlon Energy acquired RE Power SUZLON ENERGY Microsoft spent on its development operations in India over the last 4 years . Microsoft

15. Arguments in favor of liberalization 01 03 02 04 Growth Rate There is a sharp increase in growth rate of the country’s economy Disparities Liberalization have helped us reduce disparities and reduce poverty and inequality Competitiveness Liberalization increases the competitiveness among companies in the industrial sector Fiscal deficit fall There was a fall in fiscal deficit 05 06 Price Control There was seen a price control on the goods and services provided BOP Deficit fall A fall in BOP Deficit was observed after liberalization

16. Arguments against liberalization 01 03 02 04 Pressure There was pressure by IMF & World Bank Dependance on Foreign Technology A heavy dependance on foreign technology was observed Foreign Debt India was becoming more dependent on foreign debt Privatization Undue importance was given to privatization 05 Unemployment The issue of unemployment is also a serious problem

17. Conclusion The New Industrial Policy, 1991 certainly differs significantly from the earlier philosophies, approaches etc of the government. For instance, prior to 1991, scope of public sector was expanded by reserving more number of industries for the public sector But now, its scope has been reduced drastically by reducing the number of industries reserved for the public sector. Like this, a large number of changes can be noticed in the new policy This process has been continuing even in post liberalization era . Adding to this, the government has taken a number of steps to give effect to its policy decisions included in the new industrial policy,1991 Though the economy has been benefited significantly from these measures, the economy has not been able to reap the full benefits of the economic reform package owing to the political instability

18. THANK YOU