Economic Crisis 1991- LPG (Liberalisation ,Privatisation ,Globalisation)Economic Crisis 1991- LPG (Liberalisation ,Privatisation ,Globalisation)

Team Members

1.Aatish Raj2.Ashutosh Vyas3.Tarun Bhatt4.Surendar Singh5.Ankit boratkar

Economic Crisis 1991In 1991 India faced a classic account deficit

High fiscal and current account deficit

External borrowings to finance the deficit

Rising debt service obligation

Rising inflation , and inadequate exchange rate adjustment

Reasons for crisis In 1979,oil shockAgriculture subsidies pushed the deficit

In mid 1980’s, Defence Expenditure Reduction of direct taxes Increased dependence on foreign oil import

Results

Reliance on external funds

Negligible foreign investment i.e 0.1% of GDP

Reliance on commercial borrowing

Financial needs were met by external assitanace

Soft loans declined from 89% To 39%

Started dominating Balance sheet at 38.7%

3 WEEKS FOR INDIA TO SURVIVE

Prime Minister:-P.V.Narsimha Rao

Finance minister :-Dr. Manmohan Singh

L P GLberalisation Privatisation Globalisation

Liberalisation Act of making less Strict.

Relaxation of govt. restriction

Removal of tariff , subsidies and other restriction on the flow of good and services.

Basically meant for Economic liberalisation and Trade liberalisation.

Liberalisation

o Reached its peak in 2007 and recorded growth rate 9% o 2nd fastest economy in world after china.

o Flow of money was increased in economy.

o Played important role in bringing out India out of inflation.

o Increased purchasing power of citizens of India

Impact of LiberalisationThe low annual growth rate of the economy of India went up its peak

Increase Per capita income of country.

Increased infrastructure of the nation.

Removing barriers to international investing.

Increased willingness to do business in the country

Privatization

Transfer of ownership, property or business from the government to the private sector is termed privatization.

The government ceases to be the owner of the entity or business.

The process in which a publicly-traded company is taken over by a few people is also called privatization.

Impact of Privatization • Privatization may help in reviving sick units which have become a

liability on govt.

• It frees the resources for a more productive utilization.

• Private concerns tend to be profit oriented and transparent in their functioning.

• It reduces political influence on decision making of managers.• It helps in making public sector unit more competitive.

• Lagan jute machinery company limited (LJMC).

• Modern food industries limited (MFIL)

• Paradeep Phosphates Limited (PPL)

• Bharat aluminium company limited (BALCO)

• Hotel Corporation of India limited (HCI)

• Hindustan Zinc limited (HZL)

Successful Privatizations in India