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Economic Liberalization and Privatization Insights

The document discusses the concepts of liberalization, privatization, and globalization. Liberalization refers to freeing the economy from direct government controls like industrial licensing and import restrictions. Privatization means allowing private sector involvement in industries previously reserved for public sector through methods like asset sales, joint ventures, and public listing of state-owned enterprises. Globalization is defined as the growing economic interdependence between countries through increasing cross-border trade, capital flows, and technology diffusion.

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Mohit Goyal
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67 views16 pages

Economic Liberalization and Privatization Insights

The document discusses the concepts of liberalization, privatization, and globalization. Liberalization refers to freeing the economy from direct government controls like industrial licensing and import restrictions. Privatization means allowing private sector involvement in industries previously reserved for public sector through methods like asset sales, joint ventures, and public listing of state-owned enterprises. Globalization is defined as the growing economic interdependence between countries through increasing cross-border trade, capital flows, and technology diffusion.

Uploaded by

Mohit Goyal
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as PPTX, PDF, TXT or read online on Scribd

LIBERALISATION

Shumeet K Grewal
Liberalization of economy means to free it
from direct and physical controls imposed by
the Govt. ( such as industrial licensing, import
licensing, foreign exchange control,
restrictions on investment etc)

Shumeet K Grewal
Measures taken for liberalization

Abolition of Industrial licensing


Relaxation of MRTP Act
Freedom of expansion and production
Increase in level of investment
Freedom to import capital goods
Freedom to import technology

Shumeet K Grewal
PRIVATISATION

Shumeet K Grewal
Privatization means allowing the private sector
to set up more and more industries that were
previously reserved for public sector.

It also means Disinvestment in existing Public


sector

Shumeet K Grewal
Ways of privatization

Sale of Enterprise
Joint venture
Disinvestment
Holding company structure
Leasing

Shumeet K Grewal
Causes of privatization

Inefficient public sector


Uneconomic price policy
Burden on Govt.

Shumeet K Grewal
Benefits
It reduced financial burden of the govt.
Enabled govt. to collect funds
Helped in trimming the size of administrative
machinery.
Helped govt. to concentrate on more essential
matters
Results in better management of enterprises.
Helps to increase the pace of economic
development.

Shumeet K Grewal
Disinvestment Policy

Enunciated by Govt. in1991-92.


Divest up to 20% of the Govt. equity in
selected PSEs.
The objective was to broaden Equity Base,
Improve Management etc.
In 1993 Govt. of India set up a Committee on
Disinvestment in PSE under the chairmanship
of C. Rangarajan.

Shumeet K Grewal
2nd Phase

In 1998-99 , Govt. decided to bring down


Govt. shareholding in PSUs to 26% thus
facilitating ownership changes, as was
recommended by the Disinvestment
Commission.
The highlight of the policy was that word
privatisation was used for the first time.

Shumeet K Grewal
Arguments against

Privatization means discarding the noble


objectives of public sector
Encourages concentration of economic power
Danger of monopoly power of private sector
There are well managed and ill managed firms
both in public and private sector.

Shumeet K Grewal
GLOBALISATION

Shumeet K Grewal
Globalization is defined as the growing
economic interdependence of countries
worldwide through increasing volume and
variety of cross border transactions in goods
and services and of international capital flows,
and also through the more rapid and
widespread diffusion of technology

Shumeet K Grewal
Globalization encompasses
Doing or planning to expand business globally.
Giving up distinction between the domestic and foreign
market.
Manufacturing of goods in any part of the world on the
basis of feasibility.
Outsourcing of goods and services.
Basing product development and planning on global
market considerations.
Global sourcing of factors of production i.e. raw
material, technology etc
Shumeet K Grewal
Factors favoring globalization
Human Resources.
Wide base
Growing Entrepreneurship
Growing domestic market
Niche marketing
Competition
Economic liberalisation

Shumeet K Grewal
Obstacles to globalization
Govt. policy and procedures
High costs
Poor infrastructure
Obsolescence
Resistance to change
Poor quality image
Small size
Lack of experience
Limited R & D
Trade barriers
Shumeet K Grewal

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