Economic Liberalization, Privatization and Globalization

It’s a Economic structural reforms or a new economic policy made by Indian government in 1991 for stabilizing Indian economy and for making economy as fastest growing economy and globally competitive. ..

What is LPG?

In 1990-91 Government was very low of cash. Foreign currency reserves had plummeted to almost $1

billion. Inflation had roared to an annual rate of 17 percent. Fiscal deficit was very high and had become

unsustainable. Foreign investors and NRIs had lost confidence in

Indian Economy.

Why LPG?

L :- Liberalization. P :- privatization. G :- Globalization.

What LPG stands for?

Liberalization

To put end on rules / Regulation to control economy Open up various sectors of Economy.

End of license Raj. Financial Sector Reformed. Tax Reform. Forex Reform. Trade Investment Reform.

Method for Liberlization

Privatization

Privatization of Public Sector Undertaking. How? Disinvestment Selling PSU’s equity to public

Benefit Problem1. Increased financial discipline 1. Income generated from Disinvestment

used to fill Revenue deficit

2. Modernization 2. Privatization of PSU instead of making Navaratna a Global Player.

3. Increased performance of PSU by

i. Private capital ii. Managerial techniques

4. FDI incoming

Globalization

The term globalization refers to the integration of economies of the world through uninhibited trade and financial flows, as also through mutual exchange of technology and knowledge. Ideally, it also contains free inter-country movement of labor.

Opening up the economy to foreign direct investment.Removing constraints and obstacles to the entry of

MNCs in India.Allowing Indian companies to enter into foreign

collaborations and to set up joint venture.The removal of quantitative restrictions on imports.

Globalization means to India

The rate of growth of Gross Domestic Rate of India is increasing.

The foreign exchange Reserve is increasing every year. The cumulative FDI is increasing every year. India controls at the present 45 per cent of the global

outsourcing market with an estimated income of $ 50 billion.

Benefit of Globalization

In respect of Market Capitalization India is in the fourth position $ 894 billion after the US ($ 17,000 billion), Japan ($ 4800 billion) and China ($ 1000). India is expected to soon cross the trillion dollar mark.

As per the Forbes list for 2007, the number of billionaires of India has risen to 40 (from 36 last year)more than those of Japan (24), China (17), France (14) and Italy (14) this year.

Globalization is facilitated via WTO

WTO :- World Trade Organization. Formation :- January 1, 1995 Headquarters :- Geneva, Switzerland Membership:- 153 member states Official languages:- English, French, Spanish Director-General :-Pascal Lamy Budget :- 182 million USD in 2009. Staff :- 625.

What is the WTO?

Deals with regulation of trade between participating countries.

It provides a framework for negotiating and formalizing trade agreements, and a dispute resolution process aimed at enforcing participants adherence to WTO agreements which are signed by representatives of member governments and ratified by their parliaments.

The World Trade Organization

The WTO has 153 members, representing more than 97% of total world trade and 30 observers, most seeking membership.

The WTO is governed by a ministerial conference, meeting every two years; a general council, which implements the conference's policy decisions and is responsible for day-to-day administration; and a director-general, who is appointed by the ministerial conference.

It oversees the implementation, administration and operation of the covered agreements.

It provides a forum for negotiations and for settling disputes.

WTO's duty to review and propagate the national trade policies, and to ensure the coherence and transparency of trade policies through surveillance in global economic policy-making.

Function

Another priority of the WTO is the assistance of developing, least-developed and low-income countries in transition to adjust to WTO rules and disciplines through technical cooperation and training.

The WTO is also a center of economic research and analysis: regular assessments of the global trade picture in its annual publications and research reports on specific topics are produced by the organization.

The process of becoming a WTO member is unique to each applicant country, and the terms of accession are dependent upon the country's stage of economic development and current trade regime.[

The process takes about five years, on average, but it can last more if the country is less than fully committed to the process or if political issues interfere.

Accession and membership

The WTO launched the current round of negotiations, the Doha Development Agenda (DDA) or Doha Round, at the fourth ministerial conference in Doha, Qatar in November 2001.

To Enhance equitable participation of poorer countries which represent a majority of the world's population.

WTO current Trade Negotiation

Agreement on Agriculture (AoA) General Agreement on Trade in Services (GATS). Trade-Related Aspects of Intellectual Property Rights

Agreement (TRIPs) Sanitary and Phyto-Sanitary (SPS) Agreement Agreement on Technical Barriers to Trade (TBT) Agreement on Customs Valuation

Agreements

Major volume of International trade between Developed Nations.

Critics claim that the issues of labor relations and environment are steadfastly ignored.

Criticism of Globalization / WTO

Before LPG we were doing 'Import Substitution' strategy.

Result of Import Substitution strategy was that we were not importing any luxury electronic items , walkman, VHS players, Stereos, cars etc from Japan, Taiwan, America, etc

How LPG changed India's International Relations?

After LPG, our market was flooded with cheap electronic goodies. Our trade relations with Japan, Singapore, ASEAN, & America improved.

Attracting foreign investors.

Today you're able to surf internet, buy computer, mobile phones.

Have dozens of toothpastes, cars, bikes to select from...

all that thanks to LPG. 

How LPG changed your life?