LPG REFORMS IN INDIA AND THEIR IMPACT ON INDIAN ECONOMY

PPT describes about state of Indian Economy and LPG Reforms in detail and presentable way

1. L P G Liberalisation , Privatisation and Globalisation Bhagya A. BCOM20040

2. WHAT IS ????

3. Liberalisation is a broad term that refers to the practice of making laws, systems, or opinions less severe, usually in the sense of eliminating certain government regulations or restrictions. Privatisation refers to the transfer of ownership of property or business from a government to a privately owned entity. Globalisation refers to the expansion of economic activities, transcending political boundaries of nation states.

4. Historic Image!!!.......Why is it Important ?

5. Rise in Prices: The inflation rate increased from around 6% to 16% and the country’s economic position became worse. Adverse Balance of Payments: To cover the deficit, the government took a large amount of foreign loans, which further increased the interest payments. Iraq War: In 1990-91, the war in Iraq broke out, which led to a rise in petrol prices. The flow of foreign currency from Gulf countries stopped and this further aggravated the problem. Dismal Performance of PSUs: PSUs were not performing well due to a number of reasons, including political interference and unprofessionalism in operations. Fall in Foreign Exchange Reserves: India’s foreign exchange reserve fell to its record lowest in 1990-91 and it was insufficient to pay for an import bill even for 2 weeks. INDIA BEFORE LPG REFORMS.

6. LPG Reforms of 1991. Abolition of Industrial licensing/ Permit Raj The public sector’s role diluted Beginning of privatization Free entry to foreign investment and technology Industrial location policy liberalized Abolition of phased manufacturing programs for new projects Removal of mandatory convertibility clause Reduction in import tariffs Deregulation of markets Reduction of taxes.

7. Why LPG is Important ? Increase in India’s GDP growth rate: During 1990-91, India’s GDP growth rate was only 1.1% but after the LPG reforms of 1991, the GDP growth rate increased year by year and in 2015-16 it was estimated to be 7.5% by the IMF. Foreign investment destination: Since 1991, India has firmly established itself as a lucrative foreign investment destination and FDI equity inflows in India in 2019-20 (till August) stood at US$ 19.33 billion. Decrease in the unemployment rate: In 1991, the unemployment rate was high. However, the LPG reforms of 1991 led to the arrival of new foreign companies, and more jobs got generated thus leading to a decrease in the unemployment rate. Per Capita income increased due to an increase in employment. Exports have increased and stood at USD 26.38 billion as of October 2019.