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The economic liberalisation in India refers to ongoing economic reforms in India that started in 1991. After Independence in 1947, India adhered to socialist policies. In the 1980s, Prime Minister Rajiv Gandhi initiated some reforms. In 1991, after India sold 67 tons of gold to the International Monetary Fund (IMF), the government of P. V. Narasimha Rao and his finance minister Manmohan Singh started breakthrough reforms. The new neo-liberal policies included opening for international trade and investment, deregulation, initiation of privatization, tax reforms, and inflation-controlling measures. The overall direction of liberalisation has since remained the same, irrespective of the ruling party, although no party has yet tried to take on powerful lobbies such as the trade unions and farmers, or contentious issues such as reforming labour laws and reducing agricultural subsidies. The main objective of the government was to transform the economic system from socialism to capitalism so as to achieve high economic growth and industrialize the nation for the well-being of Indian citizens. Today India is mainly characterized as a market economy. As of 2009, about 300 million people²equivalent to the entire population of the United States² have escaped extreme poverty. The fruits of liberalisation reached their peak in 2007, when India recorded its highest GDP growth rate of 9%. With this, India became the second fastest growing major economy in the world, next only to China. An Organisation for Economic Cooperation and Development (OECD) report states that the average growth rate 7.5% will double the average income in a decade, and more reforms would speed up the pace. Indian government coalitions have been advised to continue liberalisation. India grows at slower pace than China, which has been liberalising its economy since 1978. McKinsey states that removing main obstacles "would free India¶s economy to grow as fast as China¶s, at 10 percent a year". For 2010, India was ranked 124th among 179th countries in Index of Economic Freedom World Rankings, which is an improvement from the preceding year.
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History of Modern India
Pre-Independence British Raj (1858 1947) Indian independence movement (1857 1947) Partition of India (1947) Post-Independence Political integration of India (1947 49) Indo-Pakistani War of 1947 States Reorganiation Act (1956) Non-Aligned Movement (1956 ) Sino-Indian War (1962) Indo-Pakistani War of 1965 Green Revolution (1970s) .
were required to set up business in India between 1947 and 1990. the rupee.Indo-Pakistani War of 1971 Emergency (1975 77) Siachen conflict (1984) 1990s in India Economic liberalisation in India Kargil War (1999) 2000s in India See also History of India History of South Asia This box: view · talk · edit Further information: Economic history of India and License Raj Indian economic policy after independence was influenced by the colonial experience (which was seen by Indian leaders as exploitative in nature) and by those leaders' exposure to Fabian socialism. India also operated a system . a large public sector. insurance. with a strong emphasis on import substitution. industrialization. Policy tended towards protectionism. regulations and the accompanying red tape. Before the process of reform began in 1991. business regulation. water. and central planning. Elaborate licences. was inconvertible and high tariffs and import licensing prevented foreign goods reaching the market. commonly referred to as Licence Raj. mining. machine tools. telecommunications. Steel. state intervention in labour and financial markets. the government attempted to close the Indian economy to the outside world. were effectively nationalized in the mid-1950s. Five-Year Plans of India resembled central planning in the Soviet Union. and electrical plants. among other industries. The Indian currency.
self-perpetuating bureaucracy that still exists throughout much of the country" and corruption flourished under this system. not international trade²a belief generated by a mixture of socialism and the experience of colonial exploitation. which stagnated around 3. South Korea by 10% and in Taiwan by 12%. while per capita income averaged 1. Planning and the state. Impact of reforms . Indonesia by 9%. Pakistan grew by 5%. would determine how much investment was needed in which sectors. Thailand by 9%. how much. A huge public sector emerged. the government led by Rajiv Gandhi started light reforms. State-owned enterprises made large losses. At the same time. ± BBC In the 80s. License Raj established the "irresponsible.of central planning for the economy. The government slightly reduced License Raj and also promoted the growth of the telecommunications and software industries. the belief that India needed to rely on internal markets for development. The labyrinthine bureaucracy often led to absurd restrictions²up to 80 agencies had to be satisfied before a firm could be granted a licence to produce and the state would decide what was produced. The central pillar of the policy was import substitution. The Vishwanath Pratap Singh government (1989±1990) and Chandra Shekhar Singh government (1990±1991) did not add any significant reforms.3%. rather than markets. Only four or five licences would be given for steel. Infrastructure investment was poor because of the public sector monopoly.  Impact y y y y y The low annual growth rate of the economy of India before 1980. The government also prevented firms from laying off workers or closing factories. License owners built up huge powerful empires. in which firms required licenses to invest and develop. at what price and what sources of capital were used. power and communications.5% from 1950s to 1980s.
asset management and information technology²output has grown rapidly. portfolio investment. Bangalore. Corruption High fiscal deficit This list is incomplete. Cities like Gurgaon. Failing education. Inefficient public sector. such as telecoms and civil aviation.. employment growth has been concentrated in firms that operate in sectors not covered by India¶s highly restrictive labour laws. In those infrastructure sectors which have been opened to competition. Labour market reform is essential to achieve a broader-based development and provide sufficient and higher productivity jobs for the growing labour force. which is often government monopoly. The impact of these reforms may be gauged from the fact that total foreign investment (including foreign direct investment. Hyderabad.. Pune and Ahmedabad have risen in prominence and economic importance. In the formal sector. employment has been falling and firms are becoming more capital intensive despite abundant low-cost labour. became centres of rising industries and destination for foreign investment and firms. Inflation in basic consumable goods. In .The HSBC Global Technology Center in Pune develops software for the entire HSBC group. Inadequate infrastructure. a rate of growth that will double average income in a decade. where these labour laws apply. [. you can help by expanding it. ± OECD  Ongoing economic challenges Main article: Economy of India y y y y y y y y Problems in the agricultural sector.3 billion in 1995± 96. the private sector has proven to be extremely effective and growth has been phenomenal. OECD summarized the key reforms that are needed: In labour markets. with exports of information technology enabled services particularly strong. Annual growth in GDP per capita has accelerated from just 1¼ per cent in the three decades after Independence to 7½ per cent currently.] In service sectors where government regulation has been eased significantly or is less burdensome²such as communications. and investment raised on international capital markets) in India grew from a minuscule US$132 million in 1991±92 to $5. insurance. Highly restrictive and complex labour laws.
greater labour-market flexibility. British Prime Minister Tony Blair wrote that: "Success will go to those companies and countries which are swift to adapt. open markets. Public expenditure should be re-oriented towards infrastructure investment by reducing subsidies. particularly those in the third world. The task of modern governments is to ensure that our countries can rise to this challenge. Three of the fastest growing developing economies today. A number of barriers to competition in financial markets and some of the infrastructure sectors. The arguments for economic liberalization include greater efficiency and effectiveness that would translate to a "bigger pie" for everybody. lower tax rates for businesses. China and India. economic liberalization refers more to liberalization or further "opening up" of their respective economies to foreign capital and investments. also need to be addressed. which are other constraints on growth. acts as a barrier to entrepreneurship and need to be improved. Furthermore. have achieved rapid economic growth in the past several years or decades after they have "liberalized" their economies to foreign capital. social policies should be improved to better reach the poor and²given the importance of human capital²the education system also needs to be made more efficient.  Many countries nowadays. The indirect tax system needs to be simplified to create a true national market. . have pursued the path of economic liberalization: partial or full privatisation of government institutions and assets. while for direct taxes. Most first world countries. slow to complain." In developing countries. Brazil. In the Philippines for example. the taxable base should be broadened and rates lowered. inefficient government procedures. in order to remain globally competitive. less restriction on both domestic and foreign capital. particularly in some of the states. the contentious proposals for Charter Change include amending the economically restrictive provisions of their 1987 constitution. Economic liberalization 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. etc. open and willing to change. arguably have no choice but to also "liberalize" their economies in order to remain competitive in attracting and retaining both their domestic and foreign investments. Public companies are generally less productive than private firms and the privatisation programme should be revitalised.product markets. the doctrine is associated with classical liberalism.
bringing with them international best practices and better skills and technologies.  Liberalisation of services in the developing world  Potential benefits of trade liberalisation The service sector is probably the most liberalised of the sectors.  Potential risks of trade liberalisation Yet. researchers at thinks tanks such as the Overseas Development Institute argue the risks are outweighed by the benefits and that what is needed is careful regulation. there is a risk that private providers will µskim off¶ the most profitable clients and cease to serve . The entry of foreign service providers is not necessarily a negative development and can lead to better services for domestic consumers. Some argue foreign providers crowd out domestic providers and instead of leading to investment and the transfer of skills. North Korea receives hundreds of millions of dollars worth of aid from other countries in exchange for peace and restrictions in their nuclear programme. Thus. In fact. Furthermore. trade liberalisation also carries substantial risks that necessitate careful economic management through appropriate regulation by governments.The total opposite of a liberalized economy would be North Korea's economy with their closed and "self sufficient" economic system. improve the performance and competitiveness of domestic service providers.to 10-year period would create global gains in economic welfare of around $250 billion per annum. As such. Liberalisation offers the opportunity for the sector to compete internationally. include: y y y Risks of financial sector instability resulting from global contagion Risk of brain drain Risk of environmental degradation However. Another example would be oil rich countries such as Saudi Arabia and United Arab Emirates. India's IT services have become globally competitive as many companies have outsourced certain administrative functions to countries where costs are lower. service exports are an important part of many developing countries' growth strategies. Other potential risks resulting from liberalisation. some research suggest a 50% cut in service trade barriers over a five. it is often argued that protection is needed to allow domestic companies the chance to develop before they are exposed to international competition. contributing to GDP growth and generating foreign exchange. as well as simply attract FDI/foreign capital into the country. which see no need to further open up their economies to foreign capital and investments since their oil reserves already provide them with huge export earnings. if service providers in some developing economies are not competitive enough to succeed on world markets. taking the money out of the country. For instance. overseas companies will be attracted to invest. it allow foreign providers and shareholders to capture the profits for themselves.
html We often hear the term Human Resource Management. this bears the risk that this barrier to entry will dissuade international competitors from entering the market (see Deregulation).certain unprofitable groups of consumers or geographical areas. Liberalization often includes privatization and deregulation of state-run industries. which has resulted in a rapid growth in demand for nursing education and a related supply response. Employee Relations and Personnel Management used in the popular press as well as by Industry experts. to prevent such a situation from occurring. the ³art and science´ of HRM is indeed complex. we conjure images of efficient managers busily going about their work in glitzy offices. Of course. as well the reduction or removal of tariffs and other trade barriers.org/wgbh/rxforsurvival/glossary.org/wiki/Economic_liberalization Also liberalization. Though as with all popular perceptions. Yet such concerns could be addressed through regulation and by a universal service obligations in contracts. Examples of such an approach include South Africa's Financial Sector Charter or Indian nurses who promoted the nursing profession within India itself. it is a science as well because of the precision and rigorous application of . In this article. the above imagery has some validity.pbs. Definitions of Economic liberalization on the Web: y y 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. we look at the question ³what is HRM ?´ by giving a broad overview of the topic and introducing the readers to the practice of HRM in contemporary organizations. ... www.wikipedia. or in the licensing. We have chosen the term ³art and science´ as HRM is both the art of managing people by recourse to creative and innovative approaches. the fact remains that there is much more to the field of HRM and despite popular depictions of the same. An economic policy that limits the role of government in an effort to make a market economy function more efficiently. the doctrine is associated with neoliberalism. en. Whenever we hear these terms.
This approach focuses on the objectives and outcomes of the HRM function. It is all about people at work. people development and a focus on making the ³employment relationship´ fulfilling for both the management and employees. retention of people. skills. Human resources may be defined as the total knowledge. managing people in the form of a collective relationship between management and employees. It is the sum total or aggregate of inherent abilities. performance management. The first definition of HRM is that it is the process of managing people in organizations in a structured and thorough manner. pay and perks setting and management. the process of defining HRM leads us to two different definitions. Human Resource Management: Scope . As outlined above. This is the traditional definition of HRM which leads some experts to define it as a modern version of the Personnel Management function that was used earlier. creative abilities. whereas from the viewpoint of the individual enterprise. change management and taking care of exits from the company to round off the activities. acquired knowledge and skills as exemplified in the talents and aptitudes of its employees. they represent the total of the inherent abilities. It helps an organization meet its goals in the future by providing for competent and wellmotivated employees. The various features of HRM include: It is pervasive in nature as it is present in all enterprises. acquired knowledge and skills represented by the talents and aptitudes of the persons employed in the organization. Human Resource Management: Nature Human Resource Management is a process of bringing people and organizations together so that the goals of each are met. as well as the values. economics. talents and aptitudes obtained in the population. etc. From the national point of view. It tries to put people on assigned jobs in order to produce good results.e. It is a multidisciplinary activity. attitudes. This covers the fields of staffing (hiring people). talents and aptitudes of an organization's workforce. It tries to build and maintain cordial relations between people working at various levels in the organization. approaches and beliefs of the individuals involved in the affairs of the organization. creative abilities. utilizing knowledge and inputs drawn from psychology. The second definition of HRM encompasses the management of people in organizations from a macro perspective i. Its focus is on results rather than on rules.theory that is required. The human resources are multidimensional in nature. human resources may be defined as the knowledge. It encourages employees to give their best to the organization. both as individuals and groups. It tries to help employees develop their potential fully. What this means is that the HR function in contemporary organizations is concerned with the notions of people enabling. skills.
settlement of disputes. 3. training and development. To identify and satisfy the needs of individuals. recruitment. To increase to the fullest the employee's job satisfaction and self-actualization. Human Resource Management: Objectives To help the organization reach its goals. Employees feel highly motivated if the organization provides for satisfaction of their basic and higher level needs. Human Resource Management: Beliefs The Human Resource Management philosophy is based on the following beliefs: Human resource is the most important asset in the organization and can be developed and increased to an unlimited extent. etc. rest and lunch rooms. To develop and maintain a quality of work life. Employee commitment is increased with the opportunity to dis¬cover and use one's capabilities and potential in one's work. Welfare aspect-It deals with working conditions and amenities such as canteens. HRM can be planned and monitored in ways that are beneficial both to the individuals and the organization. transport. health and safety. placement. medical assistance. To provide the organization with well-trained and well-motivated employees. if the organization perpetuates a feeling of belongingness. education. To equip the employees with precision and clarity in trans¬action of business. grievance and disciplinary procedures. trust.The scope of HRM is very wide: 1. remuneration. etc. To achieve and maintain high morale among employees. promotion. joint consultation. creches. A healthy climate with values of openness. Employees feel committed to their work and the organization. It is every manager's responsibility to ensure the development and utilisation of the capabilities of subordinates. To ensure reconciliation of individual goals with those of the organization. selection. To develop overall personality of each employee in its multidimensional aspect. Human Resource Management undertakes the following activities: . To be ethically and socially responsive to the needs of society. productivity etc. incentives. To ensure effective utilization and maximum development of human resources. Personnel aspect-This is concerned with manpower planning. To inculcate the sense of team spirit. transfer. To enhance employee's capabilities to perform the present job. layoff and retrenchment. collective bargaining. To ensure respect for human beings. 2. recreation facilities. housing. Industrial relations aspect-This covers union-management relations. team work and inter-team collaboration. enthusiasm. mutuality and collaboration is essential for developing human resource. Human Resource Management: Functions In order to achieve the above objectives.
Potential Appraisal. 4. 11. Social security and welfare of employees. Developing and maintaining motivation for workers by providing incentives. Human resource or manpower planning. Feedback Counseling. 3. Taking corrective steps such as transfer from one job to another. Remuneration of employees. Aiding in the self-development of employees at all levels. 12. selection and placement of personnel. Reviewing and auditing man¬power management in the organization 14. 8. . Quality Circle. Staffing the organization. 15. Collective bargaining. Training and development of employees. Role Analysis for job occupants.1. contract negotiation and grievance handling. 5. Recruitment. Organization development and Quality of Working Life. 2. Job Rotation. 16. 7. Setting general and specific management policy for organizational relationship. 6. 9. 17. 10. 13. Appraisal of performance of employees.
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