Economic planning / policies
(1950-1990)
Restrictive policies
Ex- industrial licensing
1980
Why were
ECONOMIC CRISES
reform FINANCIAL CRISES
introduced EX- AMERICA IMPORT PAYMENT
in India ?
WORLD BANK / IMF
7 BILLION DOLLAR LOAN
PROPOSE CONDITIONS
ECONOMIC REFORM
( CHANGES )
NEED
ECONOMIC REFORM 1991
NEP 1991
# DEFICIT BALANCE OF PAYMENT ( 10000 CRORE )
IMPORT > EXPORT
# INADEQUATE FOREIGN EXCHANGE RESERVE ( 1.8 BILLION )
( TWO WEEK )
# DEFICT BUDGET
EXPENDITURE > RECIEPT
EXPENDITURE INCURRED ON THOSE DEVELOPMENT PROJECT WHICH
GENERATE LESS REVENUE
EMPLOYEMENT GENERATING PROGRAMMES
POVERTY ERADICTION
NEED
ECONOMIC REFORMS
NEW ECONOMIC POLICY 1991
NEP 1991
FATHER OF ECONOMIC REFORM
DR. MANMOHAN SINGH
STRUCTURAL REFORM
(LONG-RUN )
IMPROVE EFFICENCY
INTERNATIONAL
COMPETITIVENESS
ECONOMIC
STABILIZATION REFORM
REFORM
(SHORT-RUN)
INFLATION
X< M
DEFICIT BOP
LIBERALIZATION
LIBERTY
( FREEDOM)
PROCESS
UNNECCESSARY /UNWANTED
RESTRICTIONS
ABOLISH
( FINISH)
EX – DELICENSING
DE-RESERVE PRODUCT FOR SSI
Privatization
Decreasing Increasing
Role Role
Public Private
sector
sector
D
I
S
I
N
V
E
S
T
M
E
N
T
Minority
Dilution of ownership disinvestment
Less than 51%
Stragic
disinvestment
More than 51 %
17
Motive : -
Inflow of FDI ( Privatization helps to attract FDI )
Improve financial discipline & facilitate modernization
Improve the performance of PSU’S
Govt. Provide special status to some PSU’s
Maharatana’s - IOC , SAIL Background
Navratana’s - MTNL Vikramaditya king
Miniratana’s - BSNL , AAI , IRCTC 9 ministers
( excellent in diff. fields.)
BENEFIT: Greater managerial & operational autonomy
RESULT : Better performance of PSU,s
Globalization
Indian economy
Closed
OPEN ECONOMY GLOBALIZATION
INTEGRATE
REST OF THE WORLD
OUR OR
ECONOMY FOREIGN ECONOMY
A WORLD WITHOUT BOUNDRIES
FREE FLOW OF CAPITAL , TECHNOLOGY , PEOPLE
Outsourcing
Contracting out
Non-core activity
Outside firm
BPO
BUSINESS PROCESSING OUTSOURCING
(ADVERTISEMENT , CALL CENTRE , ETC )
KPO
KNOWLEDGE PROCESSING OUTSOURCING
( LEGAL CONSULTANCY , ACCOUNTING , IT , PLACEMENT AGENCIES )
3 MARKS : Why India is the favorable Destination for the outsourcing .
Skilled labor at a cheaper rate
Time gap ( time zone )
GENERAL AGREEMENT OF TRADE & TARRIFS
(GATT )
BETWEEN 23 COUNTRIES
REPLACE
WORLD TRADE ORGANIZATION ( WTO )
1995
149 COUNTRIES
(2016 ) 164 COUNTRIES
FUNCTIONS :
TP PROMOTE INTERNATIONAL TRADE
SIMPLIFING THE PROCEDURES & RULES OF INTERNATIONAL TRADE
TO RESOLVE DISPUTES BETWEEN THE MEMBER COUNTRIES
(MRTP) 1968 POWER
MONOPOLIES & REGULATION POLICY ACT CONCENTRATE
FEW HANDS
MRTP ACT
RBI CONTROLLER ------- FACILATOR
Bank----- Branch
Interest
FOREIGN SECTOR REFORM
1) FDI LIMIT RELAXATION
2) DEVALUATION OF DOMESTIC CURRENCY
( DECREASE IN THE VALUE OF THE RUPEE)
EXPORT ( INCREASE)
APPRAISAL OF NEP 1991
1 ) ECONOMIC GROWTH i.e. GDP
1980-1990 5.6 SEVICE SECTOR INDUSTRIAL AGRICULTURAL
2007 -12 8.2
GDP REFERES TO THE AGGREGATE VALUE OF ALL THE FINAL GOODS AND SERVICES PRODUCED
IN ALL THE SECTORS OF THE ECONOMY i.e. AGRICULTURAL , INDUSTRIAL & SERVICE
IN GDP , THE CONTRIBUTION OF SERVICE SECTOR IS MORE COMPARE TO THE INDUSTRIAL
AND AGRICULTURAL SECTOR
AGRICULTURAL SECTOR ( DECLINE ) OR INDUSTRIAL SECTOR ( FLUCTUATING )
NEGLANCE OF AGRICULTURE SECTOR
INCREASE IN FOREIGN DIRECT INVESTMENT
OR
FOREIGN INSTITUTIONAL INVESTMENT
FOREIGN EXCHANGE RESERVE
1990-91 2011-13
FDI 100 MILLION 467 BILLION
FOREIGN 6 BILLION 304 BILLION
EXCHANGE
RESERVE
INDIA BECOME THE WORLD ‘S LARGEST HOLDER OF FOREIGN EXCHANGE RESE RVE
INFLATION ( HIGHER PRICES ) HAVE ALSO KEPT UNDER CONTROL
INDIA BECOME THE SUCCESSFUL EXPORTER OF
AUTO COMPONENTS , IT SOFTWARE , TEXTILES , ENGINEERING GOODS
GROWTH & EMPLOYMENT SECTOR
GDP ( INCREASE ) EMPLOYEMENT
(INCREASE SLOWER RATE )
JOBLESS GROWTH
REFORM IN AGRICULTURE SECTOR
NEGLECT AGRICULTURE SECTOR
A)
PUBLIC EXPENDITURE
DECREASE
SUBSIDY
INFRASTRUCTURE
( IRRIGATION , ROADS , POWER, ETC )
LEADS
INCREASE
COST OF PRODUCTION
NEG . AFFECT
SMALL & MARGINAL FARMERS
B) POLICY CHANGE IN AGRICULTURE SECTOR
1) REDUCTION IN IMPORT DUTY
2) REMOVAL OF QUANTATIVE RESTRICTION ( QUOTA)
3) REMOVAL OF MSP ( MINIMUM SUPPORT PRICE )
EXPORT – ORIENTED POLICY
FOCUS SHIFT DOMESTIC MARKET TO EXPORTS
SHIFT FOOD CROPS TO CASH CROPS
REFORM IN INDUSTRY
SLOWDOWN THE GROWTH OF INDUSTRIAL SECTOR
REASON: DECREASE IN DEMAND OF INDUSTRIAL PRODUCT
1) CHEAPER IMPORTS
2) INADEQUATE INVESTMENT IN INFRASTRUCTURE ( POWER SUPPLY , ETC )
3) DEVELOPING COUNTRIES ( INDIA ) ARE FORCED TO OPEN THEIR ECONOMY FOR
THE INFLOW OF G/S AND CAPITAL .
BUT
INDIA STILL DOES’T ALLOW TO EXPORT IN DEVELOPED COUNTRIES
( BECOZ OF HEAVEY TARRIFS )
FOR EX- AMERICA IMPOSED TARRIFS ON THE IMPORTS FROM INDIA & CHINA
BUT REMOVE TARRIFS / RESTRICTIONS IN INDIA FOR AMERICA
DISINVESTMENT
2500 CRORE TARGET 1991-92
3041 CRORE
5600 CRORE 2013-14
2600 CRORE
SOME SCHOLARS ARGUED –
PSU’S UNDER -VALUED -- SELL PRIVATE SECTOR
LEADS LOSS TO THE GOVT
DECREASES THE REVENUE RECIEPTS
( SOURCE OF REVENUE TO THE GOVT. )
REFORM IN FISCAL POLICY
EXPENDITURE & RECIEPTS ( TAX ,ETC)
DECREASE IN PUBLIC EXPENDITURE :
REASON-:
1 ) REDUCTION IN TAX ( TO CONTROL TAX EVASION , BUT GOVT FAILED )
LEADS TO LOW TAX COLLECTION
2 ) REMOVAL OF IMPORT DUTY / CUSTOM
3 ) INCENTIVES ON FDI
LEADS TO DECREASE IN GOVT . REVENUE .
CONCLUSION
Globalization
Now , India has access to the technology , capital , large industries , etc
& greater access to the global market ,
Some scholars ,
Globalization is the strategy of the developed countries to access / entry 0r expand in the
developing countries / other nations
MNC ‘S are market driven / oriented , which leads to creates disparity among rich 7&
poor
Financial crises 1980’s
Income inequality
( which already exist in Indian society )
ECONOMIC REFORMS 1991
( GOVT . INTRODUCE TO TAKLE THE CRISES )
AGGREVATED
INEQUALITY
BECOUSE GROWTH CONCENTRATE
IN SERVICE SECTOR
(IT , TECHNOLOGY , FINANCE , ETC )
INSTEAD VITAL SECTOR
( AGRICULTURE SECTOR WHICH PROVIDE (EMPLOYEMENT TO
MILLIOONS )
SO IT LEADS TO INCREASE INCOME & QUALITY CONSUMPTION OF
ONLY HIGH INCOME GROUP PEOPLE
Demonetisation
GST
