PPT - Liberalisation , Privatisation and Globalisation : An Appraisal Commerce Notes | EduRev

Economics Class 12

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Commerce : PPT - Liberalisation , Privatisation and Globalisation : An Appraisal Commerce Notes | EduRev

 Page 1


LIBERALISATION 
PRIV ATISATION 
GLOBALISATION
Page 2


LIBERALISATION 
PRIV ATISATION 
GLOBALISATION
HISTORY .....
? July 1991,India has taken a series of measures to
structure the economy and improve the BOP position.
The new economic policy introduced changes in several
areas. The policy have salient feature which are:
? Liberalization (internal and external)
? Extending Privatization
? Globalization of the economy Which are known as “
LPG ”. (liberalization privatization globalization)
Page 3


LIBERALISATION 
PRIV ATISATION 
GLOBALISATION
HISTORY .....
? July 1991,India has taken a series of measures to
structure the economy and improve the BOP position.
The new economic policy introduced changes in several
areas. The policy have salient feature which are:
? Liberalization (internal and external)
? Extending Privatization
? Globalization of the economy Which are known as “
LPG ”. (liberalization privatization globalization)
REASONS …
? 1991 CRISIS
Towards the end of 1980s, India was facing a Balance of Payments (BoP)
crisis, due to unsustainable borrowing and high expenditure. The Current
Account Deficit (3.5 percent) in 1990-91 massively weakened the ability to
finance deficit.
Macroeconomic Indicators and Balance of Payments
Situation in 1990-1991:
? The trade deficit increased from Rs. 12,400 crore in 1989-90 to Rs. 16,900
crore in 1990-91.
? The current account deficit increased from Rs. 11,350 crore in 1989-90 to
Rs. 17,350 crore in 1990-91.
? The CAD/GDP ratio increased from 2.3 in 1989-90 to 3.1 percent in 1990-
91. Besides this, the fiscal deficit to GDP ratio was more than 7 percent
during the two years 1989-90 and 1990-91. The foreign exchange reserves,
meant to cover import costs for two years (1989-1991),were just sufficient
to cover close to two and half months of imports.
?
Page 4


LIBERALISATION 
PRIV ATISATION 
GLOBALISATION
HISTORY .....
? July 1991,India has taken a series of measures to
structure the economy and improve the BOP position.
The new economic policy introduced changes in several
areas. The policy have salient feature which are:
? Liberalization (internal and external)
? Extending Privatization
? Globalization of the economy Which are known as “
LPG ”. (liberalization privatization globalization)
REASONS …
? 1991 CRISIS
Towards the end of 1980s, India was facing a Balance of Payments (BoP)
crisis, due to unsustainable borrowing and high expenditure. The Current
Account Deficit (3.5 percent) in 1990-91 massively weakened the ability to
finance deficit.
Macroeconomic Indicators and Balance of Payments
Situation in 1990-1991:
? The trade deficit increased from Rs. 12,400 crore in 1989-90 to Rs. 16,900
crore in 1990-91.
? The current account deficit increased from Rs. 11,350 crore in 1989-90 to
Rs. 17,350 crore in 1990-91.
? The CAD/GDP ratio increased from 2.3 in 1989-90 to 3.1 percent in 1990-
91. Besides this, the fiscal deficit to GDP ratio was more than 7 percent
during the two years 1989-90 and 1990-91. The foreign exchange reserves,
meant to cover import costs for two years (1989-1991),were just sufficient
to cover close to two and half months of imports.
?
? The average rate of inflation was 7.5 percent in 1989-90,
which went up to 10 percent in the year 1990-91. In 1991-92,
it crossed 13 percent. The GDP growth rate which was 6.5
percent in 1989-90, went down to 5.5 percent in 1990-91.
? The Balance of Payments crisis also affected the performance
of industrial sector. The average industrial growth rate was 8
percent in the second half of 1980s. In 1989-90, it was 8.6
percent and in 1990-91 it was 8.2 percent.
? In di a’ s foreign exchange reserves stood at Rs. 5,277 crore on
31 December 1989, which declined to Rs. 2,152 crore by the
end of December 1990. Between May and July 1991, these
reserves ranged between Rs. 2,500 crore to 3,300 crore.
? Dr.Manmohan Singh, from the Indian National Congress
was the 19th Finance Minister of India, from 21st June
1991 to 16th May 1996, when P. V . Narasimha Rao was the
Prime Minister of India.
Page 5


LIBERALISATION 
PRIV ATISATION 
GLOBALISATION
HISTORY .....
? July 1991,India has taken a series of measures to
structure the economy and improve the BOP position.
The new economic policy introduced changes in several
areas. The policy have salient feature which are:
? Liberalization (internal and external)
? Extending Privatization
? Globalization of the economy Which are known as “
LPG ”. (liberalization privatization globalization)
REASONS …
? 1991 CRISIS
Towards the end of 1980s, India was facing a Balance of Payments (BoP)
crisis, due to unsustainable borrowing and high expenditure. The Current
Account Deficit (3.5 percent) in 1990-91 massively weakened the ability to
finance deficit.
Macroeconomic Indicators and Balance of Payments
Situation in 1990-1991:
? The trade deficit increased from Rs. 12,400 crore in 1989-90 to Rs. 16,900
crore in 1990-91.
? The current account deficit increased from Rs. 11,350 crore in 1989-90 to
Rs. 17,350 crore in 1990-91.
? The CAD/GDP ratio increased from 2.3 in 1989-90 to 3.1 percent in 1990-
91. Besides this, the fiscal deficit to GDP ratio was more than 7 percent
during the two years 1989-90 and 1990-91. The foreign exchange reserves,
meant to cover import costs for two years (1989-1991),were just sufficient
to cover close to two and half months of imports.
?
? The average rate of inflation was 7.5 percent in 1989-90,
which went up to 10 percent in the year 1990-91. In 1991-92,
it crossed 13 percent. The GDP growth rate which was 6.5
percent in 1989-90, went down to 5.5 percent in 1990-91.
? The Balance of Payments crisis also affected the performance
of industrial sector. The average industrial growth rate was 8
percent in the second half of 1980s. In 1989-90, it was 8.6
percent and in 1990-91 it was 8.2 percent.
? In di a’ s foreign exchange reserves stood at Rs. 5,277 crore on
31 December 1989, which declined to Rs. 2,152 crore by the
end of December 1990. Between May and July 1991, these
reserves ranged between Rs. 2,500 crore to 3,300 crore.
? Dr.Manmohan Singh, from the Indian National Congress
was the 19th Finance Minister of India, from 21st June
1991 to 16th May 1996, when P. V . Narasimha Rao was the
Prime Minister of India.
DEFINATION
? Liberalization is a relaxation of government restrictions,
usually in such areas of social, political and economic
policy. This may be similar to deregulation.
? Examples for liberalization
1. Abolishing licensing requirement in most of the industries
2. Freedom in fixing the prices
3. Freedom in deciding the scale of business activities
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