LPG IN INDIA

PIMR 2012-2014

Introduction:

In July 1991, India took a series of measures to restructure the economy and BOP position. The new economic policy had salient features: Liberalization (internal & external) Extending Privatization Globalization of the economy. Because of which it is called as LPG

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. Poor technological development, shortage of foreign exchange, borrowings from abroad, inflation.

LIBERALIZATION:

It is very broad term that usually refers to fewer govt regulations & restrictions in the economy in exchange of greater participation of private entities. It refers to the relaxation of previous govt restrictions in the area of social and economic policies. It helped in reducing tariffs, restriction on the flow of goods & services between two countries were reduced.

Advantages and Disadvantages:

ADVANTAGES: Increase in foreign investment. Increase in foreign exchange reserve. Increase in consumption and control over price. Reduction in dependence on external commercial borrowings.

Increase in unemployment. Loss to domestic units. Increased dependence on foreign nations. Unbalanced development.

Examples of Liberalization:

Industries that went in profit were: National Thermal Power Corporation. Indian Oil Corporation Mahanagar Telecom Nigam Limited Steel Authority of India Limited Bharat Heavy Electronic Limited

PRIVATIZATION:

It means transfer of ownership and/or management of an enterprise from public sector to private sector. it means replacing govt monopolies with the competitive pressures of the marketplace to encourage efficiency, quality & innovation in the delivery of goods and services.

Advantages & Disadvantages:

It reduces burden on govt Helps PSUs to modernize & diversify their business. Encourages new innovations without any restrictions. Increase in foreign investment & efficiency

Industrial sickness. Lack of welfare. Class struggle. Increase in inequality. Problems of financing. Ignores the weaker sections.

Examples of Privatization:

Following were the units that were privatized in India: Lagan Jute Machinery Company Limited. Videsh Sanchar Nigam Limited. Hindustan Zinc Limited. Bharat Aluminum Company Limited. Hotel Corporation Limited of India

GLOBALIZATION:

It implies integration of the economy of the country with the rest of the world economy & opening up of the economy for foreign direct investment by liberalizing the rules & regulations & by creating favourable socioeconomic & political climate for global business.

Impacts of Globalization:

Free flow of capital, technology and increase in total capital employed. Increase in industrialization Spread of production facilities throughout the globe. Balanced development of World economies. Higher standard of living

Impacts of Globalization:

End of GATT. Establishment of WTO. Apart from that FICCI was established in India to keep a check on foreign investments and functioning of various Indian enterprises.

After-effects of implementing LPG

India has been able to dominate the Asian markets after the end of License Raj. Competitive methods are being used by enterprises. Better quality of goods and services. Considerable amount of foreign exchange reserve and reduction in BOP.

Sources:

Wikipedia India.gov.in Economic Times