Liberalization of

India
Presented By
Avinash Kumar
A-4(M.com II)
St Vincent College of Commerce
Pune

Introduction of Liberalization in India

The Pre-liberalization Era

- Prior to 1991

The Post Liberalization Era - The Present Era.

Why Did it Start ?

In 1991, India Faced a Balance of Payments Crisis.
It had to Pledge its Gold to Foreign Countries.
It was a deal with the IMF.
Then PM of India, P V Narsimha Rao knew that it was time for
Some Bold Decision.

History of Liberalization in India

July 1991,India has taken a series of measures to structure the
economy and improve the BOP
The new economic policy introduced changes in several areas.
The policy have salient feature which are :
Liberalization (internal and external)
Extending Privatization
Globalization of the economy
Which are known as LPG. (liberalization privatization
globalization)

Economic Liberalization in India

It means the process of opening up of the Indian
economy to trade and investment with the rest of the world.
It means that opening the door for doing business to all
over the world.
Till 1991 India had a import protection policy wherein
trade with the rest of the world was limited to exports.
Foreign investment was very difficult to come into India
due to a bureaucratic framework.
After the start of the economic liberalization, India
started getting huge capital inflows and it has emerged as
the 2nd fastest growing country in the world.

The Policies of Liberalization includes : Opening the Gate for International Trade and Investment.
Deregulation
Initiation of Privatization.
Tax Reforms.
Inflation Controlling Measure.

Impact of Liberalization on Indian Economy

Increase in Employment.
Arrival of New Technology or Development of Technology.
Development of Infrastructure.
Identity at World Level.
Increase Our Currency Value (INR).
GDP Growth.
Increase Consumption and Adaptation of New Lifestyle.
Increment of Competition.
Increment in Foreign Investor.

Advantages of liberalization
Development of economy without capital investment.
Increase the foreign investment.
Increase the foreign exchange reserve.
Increase in consumption and Control over price.
Reduction in dependence on external commercial
borrowings

Disadvantages of Liberalization
Loss to domestic units.
Increase dependence on foreign nations.

Privatization
Privatization means transfer of ownership and/or management of an
enterprise from the public sector to the private sector .
Privatization is opening up of an industry that has been reserved for
public sector to the private sector.
Privatization means replacing government monopolies with the
competitive pressures of the marketplace to encourage efficiency,
quality and innovation in the delivery of goods and services.

Globalization
It Means that opening up of the economy for foreign direct
investment by liberalizing the rules and regulations and by creating
favorable socio-economic and political climate for global business.
Opening and planning to expand business throughout the world.
Buying and selling goods and services from/to any countries in
the world.

Thank You