rajkumar singh

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RAJKUMAR SINGHMBF0918

APEEJAY SCHOOL

OF MANAGEMENT

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IntroductionObjectives

MeritsDemeritsCauses for adoption in India

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Despite the impressive growth performance of the1980s serious budgetary and fiscal deficits of thegovernment and severe pressure on the country¶s ofpayments position led to a critical economics andfinancial situation by 1991

The financial and balance of payments crises that thenation faced from the beginning of the 1990scompelled the acceptance of deregulation a reducedrole for public sector , making the public sectorefficient and surplus generating and much greaterreliance in general on the private sector forindustrial and infrastructure development.

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There was no other alternative but to introduce a newderegulatory and liberal economic regime. Thereby,drastically reducing the government·s licensing andregulatory functions.

Thus the liberalization was introduced by HonorablePrime minister P.V. Narsimha Rao during the year1991-1992.

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Liberation means dismantling of industriallicensing, softening MRTP regulation inrestrictions of foreign investment

Liberalization does not mean simply inviting anumber of foreign companies or multinational

corporations (MNCs) on whatever terms withwhatever objectives in mind and in whateversector indiscriminately

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Reform of financial systemReduction in controls on foreign exchange,both current and capital accountReduction in the level of personal andcorporate taxationReduction in restriction on foreign investments

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Softening of MRTP regulationsPartial privatization of public sector units

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Facing grave economics crisesFacing external pressure for foreign exchangesInternal debtLiquidity crisesNo sufficient foreign exchange reserves

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Increasing competitionAttracting MNC and FDIIntroduction of new servicesConsumer gain

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Deteriorating Balance of Trade1990-91 -94312002-03 -24045

Declining Rupee ValueMounting External Debt and Liabilities1991-163001 2000 ² 429271Disastrous Consequences of MNCs

Increasing Concentration of Economic andPolitical PowerDeclining Savings and Investment

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YEAR

1990-19911993-19941996-1997

1999-20002002-2003

MERCHANDISE EXPORTSF.O.B.

18,477

22,68334,13338,285

46,450

MERCHANDISE IMPORTSC.I.F.

27,914

26,73048,94855,383

72,495

TRADEBALANCE

-9,431

-4,056-14,815

-17,098-24,045

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YEAR1990-91

1992-93

1994-95

1996-97

1998-99

APRIL 30,2001

RUPEES PER US DOLLAR19.64

31.23

31.50

35.92

42.44

46.86

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END MARCH1991

1993

1995

1997

1999

2000

EXTERNAL DEBT1,63,001

2,80,746

3,11,685

3,35,827

4,14,595

4,29,271

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The overall post-liberalization growth of Indianeconomy has not inspiring. The liberalization process inthe country has not been able to take off in the realsense because the instrument of change, that is, the

bureaucracy has not been reformed. The entirebureaucratic administrative set-up needs to be lookedinto and redesign.The reforms would ensure that specialized departmentslike finance, science and technology are headed bypersons of sound knowledge in their field.If Indian industry is to be competitive in price, cost andquality it must provide a level playing field intechnology transfers, infrastructure, labour reforms,Govt. regulation, taxes of central and state Govt. and soon.

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Have a Great Day