LPG : LIBRELISATION ,PRIVATISATION AND GLOBALIZATION IMAPACT ON INDIA
From independence till the later part of the 1980s, India economic approach was mainly based on government control and a centrally operated market. The country did not have a proper consumer oriented market and foreign investments were also not coming in. This did not do anything good to the economic condition of the country and as such the standard of living did not go up. In the 1980s ,stress has given on globalization ,privatization and globalization of the market by the congress government under Rajiv Gandhi .
In his government tenure ,plenty of restrictions were abolished on a number of sectors and the regulations on pricing were also put off-effort was also put to increase the condition of the GDP of the country and to increase exports.
Even if the economic liberalization policies were undertaken ,it did not find much support and the country remained in its backward economic state. The imports started exceeding the exports and the India suffered huge balance of payment problems. The International Monetary Fund (IMF) asked the country for the bailout loan . The fall of the soviet union, a main overseas business market of India, also aggravated the problem . The country at this stage was in need of an immediate economic reform.
It was in the 1990s,that the first initiation towards globalization and economic liberalization was undertaken by Dr. Manmohan Singh , who was the finance minister of India under the congress government headed by P.V. NARSHIMHA RAO. This is perhaps the milestone in the economic growth if India and it aimed towards welcoming globalization. Since , the liberalization plan , the economic condition gradually started improving and today India is one of the fastest growing economics in the world with an average yearly growth rate of around 6.7 per cent. Narasimba Rao had played a key role in implementing these reforms policies,
- Liberalization
Liberalization refers to the slacking of government regulations. The which began since july24,1991. In the other words we can say that liberalization means elimination of state control over economic activities, It implies greater autonomy to the busines enterprises in decision-making and removal of government interference . It was believed that the market forces of demand and supply would automatically operate to bring about greater efficiency and the economy would recover. This was to be done internally by introducing reforms in the real and financial sectors of the economy and externally by relaxing state control on foreign investments and trade.
Its objectives
- To boost competition between domestic businesses and to promote foreign trade and regulate imports and exports.
- Improvements of technology and foreign capital ,to develop a global market of a country and to reduce the debt burden of a country.
- PRIVATIZATION
Privatization refers to the participation of private entities in businesses and services and transfer of ownership from the public sector to the private sector as well.
Privatization is the transfer of control of ownership of economic resources from the public sector to the private sector . It means a decline in the role of the public sector as there is a shift in the property rights from the state to private ownership .The public sector had been experiencing various problems , since planning such as low efficiency and profitability ,mounting losses, excessive political interference , lack of autonomy , labour problems and delays of in completion of projects.
- GLOBALIZATION
Globalization essentially means integration of the national economy with the world economy. It implies a free flow of information , ideas , technology , goods and services , capital and even people across different countries and societies. It increases connectivity between different markets in the form of trade, investment and cultural exchanges.
The concept of globalization has been explained by the IMF 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 ,
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