Privatization and Globalization (LPG model) aimed at making the Indian economy as fastest growing economy and globally competitive. Liberalization. Privatization and Globalization  Indian economy had experienced major policy changes in early 1990s. trade as well as financial sector aimed at making the economy more efficient. To be Continued««  . Besides. a new chapter has dawned for India and her billion plus population. it also marks the advent of the real integration of the Indian economy into the global economy. The new economic reform. With the onset of reforms to liberalize the Indian economy in July of 1991. popularly known as.An Overview Of Liberalization. This period of economic transition has had a tremendous impact on the overall economic development of almost all major sectors of the economy. The series of reforms undertaken with respect to industrial sector. and its effects over the last decade can hardly be overlooked.

which mainly due to the inward looking restrictive form of governance. overall backwardness and inefficiency of the economy. despite the fact that India has always had the potential to be on the fast track to prosperity.  . And having witnessed the positive role that Foreign Direct Investment (FDI) has played in the rapid economic growth of most of the Southeast Asian countries and most notably China. resulted in the isolation. such as self reliance and socialistic policies of economic development. as it deviates from the traditional values held since Independence in 1947. the need to speed up her economic development is even more imperative. Now that India is in the process of restructuring her economy. amongst a host of other problems. with aspirations of elevating herself from her present desolate position in the world. This. India has embarked on an ambitious plan to emulate the successes of her neighbors to the east and is trying to sell herself as a safe and profitable destination for FDI. This era of reforms has also ushered in a remarkable change in the Indian mindset.

Definitions Of The Term ´Liberalizationµ and ´Economic Liberalizationµ Liberalizationµ    The term ³Liberalization´ stands for ³the act of making less strict´. Liberalization in Economy stands for ³The process of making policies less constraining of economic activity. the doctrine is associated with neoneoliberalism." And also ³Reduction of tariffs and/or removal of non-tariff nonbarriers.´ Economic liberalization is a very broad term that usually refers to fewer government regulations and restrictions in the economy in exchange for greater participation of private entities. . The arguments for economic liberalization include greater efficiency and effectiveness that would translate to a "bigger pie" for everybody.

slow to complain. have achieved rapid economic growth in the past several years or decades after they have "liberalized" their economies to foreign capital. greater labor-market flexibility. Most first world countries. have pursued the path of economic liberalization: partial or full privatization of government institutions and assets. British Prime Minister Tony Blair wrote that: "Success will go to those companies and countries which are swift to adapt. Three of the fastest growing developing economies today. open and willing to change.  . China and India. etc. economic liberalization refers more to liberalization or further "opening up" of their respective economies to foreign capital and investments. The task of modern governments is to ensure that our countries can rise to this challenge. open markets. laborlower tax rates for businesses. Brazil. challenge. In developing countries. in order to remain globally competitive. less restriction on both domestic and foreign capital.

License owners built up huge powerful empires. License Raj established the "irresponsible. selfselfperpetuating bureaucracy that still exists throughout much of the country" and corruption flourished under this system.Impact Of Liberalization On Indian Economy      The low annual growth rate of the economy of India before 1980. while per capital income averaged 1.At the same time. State-owned enterprises Statemade large losses. . Pakistan grew by 5%. A huge public sector emerged. Infrastructure investment was poor because of the public sector monopoly. power and communications. Only four or five licenses would be given for steel. Thailand by 9%. which stagnated around 3. Indonesia by 9%.3%.5% from 1950s to 1980s. South Korea by 10% and in Taiwan by 12%.

Financial Liberalization Capital Account & Financial Liberalisation Impact on Government Budget Impact on Private Economy Revenue & Expenditure Private Flows Official Flows Domestic Financial Markets Foreign Multinationals Access To Credit Industrial Performance .

´ The process of converting or "selling off" governmentgovernmentowned assets. After several decades of increasing government control over productive activities. investors can no longer purchase a stake in that company. along with business deregulation and an overall movement toward greater use of markets. or production activities to private ownership.Definitions Of The Term ´Privatizationµ and ´Economic Privatizationµ  The term ³Privatization´ refers to ³The transfer of ownership of property or businesses from a government to a privately owned entity.´ The transition from a publicly traded and owned company to a company which is privately owned and no longer trades publicly on a stock exchange. When a publicly traded company becomes private. privatization came into vogue in the 1980s.´   . properties.

arguing that entrusting private businesses with control of essential services reduces the public's control over them and leads to excessive cost cutting in order to achieve profit and a resulting poor quality service. but it can also apply to any asset.´  Privatization helps establish a "free market". which its supporters argue will give the public greater choice at a competitive price. sanitation. manufacturing or power generation. roads. or even rights to water. socialists view privatization negatively.´ . Conversely. and education have been particularly targeted for privatization in many countries. as well as fostering capitalist competition. such as land. government services such as health. such as mining. Privatization is frequently associated with industrial or serviceservice-oriented enterprises. In recent years.

To be continued««    . Gets rid of employment inconsistencies like free loaders. or over employed departments reducing the strain on resources.Impact Of Privatization On Indian Economy   It frees the resources for a more productive utilization. Since the system becomes more transparent. all underlying corruptions are minimized and owners have a free reign and incentive for profit maximization so they tend to get rid of all free loaders and vices that are inherent in government functions. Reduce the government's financial and administrative burden. Private concerns tend to be profit oriented and transparent in their functioning as private owners are always oriented towards making profits and get rid of sacred cows and hitches in conventional bureaucratic management.

 Effectively minimizes corruption and optimizes output and functions. or over employed departments reducing the strain on resources. Gets rid of employment inconsistencies like free loaders.     . Development of the general budget resources and diversifying sources of income. Private firms are less tolerant towards capitulations and appendages in government departments and hence tend to right size the human resource potential befitting the organization's needs and may cause resistance and disgruntled employees who are accustomed to the benefits as government functionaries Permit the private sector to contribute to economic development.

Privatization Chart .

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