LIBERALIZATIONPRIVATIZATION AND GLOBALIZATION WITH REFERENCE TO FINANCE
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Transcript of LIBERALIZATIONPRIVATIZATION AND GLOBALIZATION WITH REFERENCE TO FINANCE
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CONTENTS
introduction
Reasons for implementing LPG
Liberalization
Privatization
Globalization
Impact of LPG with reference to finance
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Introduction:-In July 1991, India has
taken a series of measures tostructure the economy and
improve the Balance Of
Payment position. The new
economic policy introduced
changes in several areas.
The pol icy have sal ient feature which are: -
1.Liberlisation (internal and external)
2.Extending Privatization
3.Globalisation of the economy
Which are known as LPG.
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Reasons for implementing LPG
Excess of consumption and expenditure over
revenue resulting in heavy govt. borrowings.
Growing inefficiency on the use of resources.
Mismanagement of the firm and the economy.
Increase in losses for public sector enterprises
Low foreign exchange reserves.
Inflation
Poor technological development
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Liberalization:-
Liberalization means:- liberating the economy from various regulatory and
control mechanisms of the state.
giving greater freedom to private enterprise.
removal of controls so that economic development
gets encouragement.
abolition of those economic policies, rules,
regulations, administrative controls and procedures
which impede economic development.
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Advantages of liberalization
Industrial licensing
Increase the foreign investment.
Increase the foreign exchange reserve.
Increase in consumption and Control over price.
Reduction in dependence on external commercialborrowings .
Increase in unemployment. Loss to domestic units.
Increase dependence on foreign nations.
Disadvantages of Liberalization
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New FDI Policy - 2013sector % of investment
Banking sector - 74%
NBFCs - 100%
Insurance - 26% Telecom - 49%
Power sector - 100%
Mining - 100%
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Privatization:-
Transfer of ownership of property or businesses from a
government to a privately owned entity.
Moving from a government control system to a privately
run, for-profit making.
Transferring ownership of the public sector enterprise as
well as control.
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Advantages of Privatization Helps to reduce the burden on govt.
Help unit to modernize and diversify theirbusiness.
Help in making unit more competitive.
Help to improving the quality of decision making
Free from any political interference.
Encourage the new innovations without anyrestrictions.
Industrial growth.
Increase the foreign investment.
Increase in efficiency.
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Disadvantages of Privatization
Increase in unemployment.
Ignores the national importance
Increase in Tax Evasion
No political interference.
Lack of welfare.
Industrial sickness.
Prices may actually rise if the service was previously
subsidized by the government.
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Examples of privatization inIndia
Lagan Jute Machinery Company Limited (LJMC)
Videsh Sanchar Nigam Limited (VSNL)
Hindustan Zinc Limited (HZL)
Hotel Corporation Limited of India (HCL)
Bharat Aluminum Company limited (BALCO)
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Globalization
It is a free flow of man and material across national border.
integration of the economy of the country with the rest of the
world economy.
opening up of the economy for foreign direct investment.
It involves the distribution of ideas, practices and
technologies.
It is something more than internationalization and
universalization.
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Advantages of Globalization
Free flow of capital. Free flow of technology.
Increase in industrialization.
Spread of production facilities throughout the globe.
Increase in production and consumption.
Commodities at lower price with high quality.
Increase in jobs and income.
Higher Standard of living.
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Disadvantages of Globalization
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.
Increase in Competition may lead to some firms closing.
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Impact of LPG with reference to finance
PerCapita
Income
GDP
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