2. Economic Reforms Since 1991
The new economic policy started by the government since 1991
in order to solve the economic crisis and to accelerate the rate of
Economic growth is called economic reforms.
Its also known as new economic policy which consist of
Liberalisation ,Privatization, Globalization.
Economic reforms is a long-term multi-dimensional package of
various policies and programmes for further economic
development. It includes reforms in agricultural sector, Industrial
sector, financial stocks, International trade, etc.
3. NEED FOR ECONOMIC REFORMS
Mounting fiscal deficit
Adverse balance of payment
Gulf crisis
Rise in prices
Poor performance of public sector units
Fall in foreign exchange reserves
4. Elements of New Economic Policy
Privatization Liberalisation
Globalization
5. Liberalisation
Liberalization means removing all unnecessary controls and
restrictions like permits, quantitative restriction, quotas, etc.
It means to free the economy from the direct and physical control
imposed by the government.
Liberalization refers to the removing 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.
6. Objectives of Liberalization
To raise internal competitiveness of industrial production.
To raise foreign investment and technology.
To reduce debt burden of the country.
To get an opportunity to export to developed countries and to
import capital goods and machinery from them.
7. Industrial licensing
Increase the foreign investment.
Increase the foreign exchange reserve.
Increase in consumption
Control over price.
Check on corruption.
Advantages of liberalization
8. Disadvantages of Liberalization
• Increase in unemployment.
• Loss to domestic units.
• Increase dependence on foreign nations
• Unbalanced development
9. Privatization
Privatization means transfer of ownership and management of an
enterprise from the public sector to the private sector .
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.
10. Examples of Privatization
Toll roads, bridges and airport
The lease of toll roads, bridges, and tunnels by state and local
governments to private contractors.
Mundra port in Gujarat has became a highly efficient and well
managed major port in 10 years.
ICICI bank is the country’s largest private bank in second place
after the SBI.
13. Privatization helps to reduce the burden on Govt.
It will help profit making public sector unit to modernize and
diversify their business.
It will help in making public sector unit more competitive.
It will help to improving the quality of decision making, because
the decisions are free from any political interference.
Industrial growth.
Increase the foreign investment.
Increase in efficiency.
Advantages of Privatization
14. Disadvantages of Privatization
• Industrial sickness.
• Lack of welfare.
• Increase in inequality
• Opposition by employees.
• Problem of financing.
• Increase in unemployment.
15. Globalization
It is the process of integration of world into one huge market.
It refers to the increasing integration of economies around the
world particularly through trade and financial flows.
Political barriers and geographical barriers are irrelevant.
Sometimes it refer to the movement of people and knowledge
across the international boundaries.
16. A company which has gone global is called Multinational
company, i.e. It is one that operating in more than one country
The pressure by consumers and competitors to continually
innovate and come up with new products is an important cause to
globalization
17. Globalization strategies
Development of exports
• Appropriate export development strategies
• Value added exports
• More marketing efforts and quality improvements
• Import technology and collaborate with foreign companies
Foreign investments
• Investing money in foreign markets
• Establishing manufacturing units in foreign countries
18. Mergers and acquisitions
• Easy access to foreign markets
Joint venture
• Helps companies consolidate their business in the domestic
market along with increasing their international business
19. Advantages of Globalization
Free flow of technology.
Increase in industrialization.
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.
20. Loss of domestic industries
Exploits Human resource
Decline in income
Unemployment
Transfer of natural resources
Widening gap between rich and poor
Dominance of foreign institutions
Disadvantages of Globalization
