Liberalization, Privatization,

Globalization: An Appraisal

CHAPTER-3

GLOBALIZATION:-

The fact that different cultureAnd economic system around

the world are becoming connected and similar to each other because of the influence

of large MULTI NATIONAL companies and of improved

communication.

“Globalization is seen as the outcome of

Liberalization and privatization “

“CLOSER INTEGRATION OF COUNTRIES AND PEOPLES OF THE

WORLD WHICH HAS BEEN BROUGHT ABOUT BY THE

ENORMOUS REDUCTION OF COSTS OF TRANSPORTATION AND

COMMUNICATION”

CLOSER INTEGRATION OF COUNRTRIES.FREE FLOW OF GOODS,SERVICES,CAPITAL,KNOWLEDGE &PEOPLE ACROSS NATIONAL BORDERS.EXTENTION OF MARKETS THROUGH REDUSTION OF COSTS OF TRANSPORTATION &COMMUNICATION

IT’S CLEAR FROM THE DEFINITION THAT

GLOBALISATION IMPLIES:-

REPLACED GATT(General

Agreement on tariffs trade)

By wto.(1995)

TWO TYPES OF OUTSOURCING:-

ON SHORE OUTSOURCING

OFF SHORE OUTSOURCING

INDIA’S proficiency in ENGLISH language has made her a

leader in BPO(business process outsourcing) .

This industry has created

several million jobs in recent times .

BPO:-

ECONOMIC REFORMS & HIGH GROWTH RATE OF GDP HAVE NOT

BENEFITED AGRICULTURE.

WHAT DO YOU HAVE FOR US?

INCREASING PRICES:-

Foreign Investment:

Both foreign direct investment(FDI)&foreign

portfolio investment(FPI)increased

sharply.

FDI:-Offers long term participation of country A (x) country B involves company management join venture , transfer of technology & expertise.FPI:-it’s the entry of funds into a country where foreigners make purchase in the countries stock & bond market.

LIBERALIZATION

LIBERALIZATION MEANS TO MAKE SOMETHING SUCH AS A

LAW OR A POLITICAL OR RELIGIOUS SYSTEM LESS

STRICT.

DEREGULATION OF INDUSTRIALSECTOR: DELICENSING:THUS LICENCING A

FEW.DERESEVATION:REDUSING RESERVATIONSAMENDMENT OF MRTP&FERA.DERESERVATION OF GOODS FOR FEW SECTORS

Tax reforms :-1.Redustion in personal income tax

2.Reduction In corporation tax

3.Redustion in exercise duty 4.Redustion in customs duty .

FINANCIAL SECTOR REFORMS:

BANK branch licensing liberalized.New generation private bank came(ICICI,HDFC).Deposits &lending rate deregulated.Capital Markets liberalized.Mutual funds opened to the private sector.Foreign institutional investors were allowed to invest in Indian capital market.

FOREIGN EXCHANGE RESERVES:

NOW INDIA IS THE SIXTH LARGEST FOREIGN EXCHANGE

RESERVES IN THE WORLD.

INDIA IS NOW A LEADING EXPORTER OF COMPUTER

SOFTWARE,ITES,GEMS&JEWELARIES,TEXTILE ,Ect.

Savings And Investment:

The most important reason for the spurt India’s growth rate in recent times has been the

increase in savings&investment rate.

Higher savings has lead to higher growth &less

investment lead to less business!

Reforms & Agriculture:

The problems in agriculture are mainly due to:DECLINE IN PUBLIC INVESTMENT.

REDUCTION IN IMPORT DUTIES ON AGRICULTURAL PRODUCTS HAS LED TO IMPORT WHICH HURTS DOMESTIC PRODUCERS.INCREASE IN THE PRICES OF AGRICULTURAL INPUTS HAS LED TO INCREASE IN COST OF PRODUCTION.SHIFT IN PRODUCTION FROM

FOOD CROPS TO CASH CROP.

Privatization:

DISINVESTMENT: It’s one form of privatization .IT

IMPLIES SELLING GOVERNMENT INVESTMENT IN

PUBLLIC SECTOR UNDERTAKING(PSU).

THE NAVARATNAS:-India oil corporation (IOC).Hindustan petroleum corporation(HPCL)Bharat petroleum corporation(BPCL)Oil &natural gas corporation(ONGC).Steel Authority of India Ltd(SAIL)Gas Authority of India Ltd(GAIL).Mahanagar telephone nigam Ltd(MTNL).Bharat heavy electrical Ltd(BHEL).National thermal power corporation(NTPC).

Foreign exchange reforms:

THE SHORTAGE OF FOREIGN EXCHANGE WAS THE MAIN

REASON FOR THE CRISIS OF 1991.

CONCLUSION:

INDIA’S ECONOMIC REFORMS WEREGAINFULL AS WELL AS PAINFULL.