m Inconvertible Rupee m High Tariffs m Import Licensing
m Central Planning System
m Labyrinthine Bureaucracy m Import Substitution m Socialism and Colonial Exploitation m s and s ± Progress in banking and large commercial houses m Nexus between banks and businesses was lacking m Dec Government introduced bill for social control over banks m Feb National Credit Council (NCC) Established for Prioritizing Credit m July - commercial banks nationalized m s - Financial System Widening m s growth and development m Questions on allocative efficiency m Narasimham Comittee Report ± Financial Sector reform measures u acro Economical Stebilisation u Structural adjustment u Price controls
u oving to post Liberalisation«
p p p pp m s, suggests that the root cause of the crisis was the large and growing fiscal imbalance. m Large fiscal deficits emerged as a result of mounting government expenditures, particularly during the second half of the s. m These fiscal deficits led to high levels of borrowing by the government from the Reserve Bank of p
(RBI),IF,World Bank. m vver the s, government expenditure in p
grew at a phenomenal rate, faster than what government earns as a revenues. m The subsidies grew at a rate faster than government expenditures. m Expenditure on subsidies rose from Rs. . billion in - to Rs. .2 billion in - . m Although, a large part of the problem concerning external imbalances in p
could be attributed to extraneous developments, such as two oil-shocks during the last decade. m in the bottom quartile of developing nations in terms of the ease of doing business compared to China. m The Indian economy was indeed in deep trouble. u Lack of foreign reserves . u Gold reserve was empty. m Before , p
was a closed economy. m The government was close to default and its foreign exchange reserves had reduced to the point that p
could barely finance three weeks worth of imports. m The Government of p
headed by Chandra Shekhar decided to usher in several reforms that are collectively termed as liberalisation in the Indian media with an ohan Singh whom he appointed as a special economical advisor. m u vpening up of Indian Economy u Competition increased tremendously u Competitors from all over World m 6 u ajor shift in momentum of export growth u Emphasis on bringing in large inflows of foreign capital m opening up of economy for import penetration m Import tariff was continuously lowered m Significant change in anufacturing goods m Got embership in WTv m Severe competition in Export market m Rupee devaluation in followed by removal of export subsidies [tea, coffee]
m Restrictions removed from April 2
u Agricultural Seeds u Wheat u Wheat products u Butter u Rice m Indian negotiations had declared zero rates and tariff binding m After u The Government of India was forced to negotiate the bound tariff level for as many as agricultural items u World trade price of various crops crashed m r p
is one of the fastest growing economies in the world. m r AT Kearneys FDI Confidence Index Report ± p
has been upgraded to th most attractive destination worldwide in 2 (from th in 22) r m In Services sector, p
was ranked as the 4th most attractive destination (up from 4th place in 22) m BRIC Study of Goldman Sachs (2) predicts that: p p WILL EXCEED u Frances GDP in 22 u Germanys in 22 u Japans in 2 u
m @ 6p6 p p pp
m p
is world's 4th largest pharmaceuticals producer with share of
global production. r m New olecules discovered by Indian companies - 2 more in the final stages. m vver Indian formulations have received United States FDA approval
m p6 p pp
m ore than companies involved in traditional biotech products
m Biopharma products ± new NC companies set up in past years. r m R&D and commercialization of products on agricultural biotechnology is the latest trend. r m vpportunities for fresh investment in Indian biotech sector in next - years - US$ . ± 2 billion m p ! @6p p pp
m p
is looking for investment in infrastructure, packaging and
marketing. m p
- vne of the largest food producers of the world m The Indian scientific and research talent had boomed up liberalization because of various NC are investing big money in R&D.
m ! 6@
p pp "
m 2nd largest small car market in the world.
m Largest motorcycle manufacturer in the world. m 2nd largest scooter and tractor manufacturer in the world. m any international auto majors are manufacturing in p
± Daimler Chrysler, General otors, Toyota, Ford, Honda, Hyundai, Volkswagen, Suzuki etc r m ost of them are also outsourcing their components from p
as a hub.