liberalizationprivatization and globalization with reference to finance

7/29/2019 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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THANK YOU

liberalizationprivatization and globalization with reference to finance

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