SHIV PRATAP K.

ANUSHA

July 1991,India has taken a series of measures to structure the economy and improve the BOP position. The new economic policy introduced changes in several areas. The policy have salient feature which are:1.Liberlisation (internal and external) 2.Extending Privatization 3.Globalisation of the economy Which are known as LPG. (libearlisation privatisation globalisation)

The term Liberalization stands for the act of making less strict. Liberalization is a very broad term that usually refers to fewer government regulations and restrictions in the economy in exchange for greater participation of private entities. Liberalization in Economy stands for The process of making policies less constraining of economic activity." And also Reduction of tariffs and/or removal of non-tariff barriers.

ADVNANTAGES: Increase the foreign investment. Increase the foreign exchange reserve. Increase in consumption and Control over price.

DISADVANTAGES: Increase in unemployment. Loss to domestic units. Increase dependence on foreign nations.

Privatization means transfer of ownership and management of an enterprise from the public sector to the private sector .It also means the withdrawal of the state from an industry or sector partially or fully. 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.

ADVANTAGES: Privatization helps to reduce the burden on Govt. It will help in making public sector unit more competitive. It Encourage the new innovations without any restrictions. Industrial growth. Increase the foreign investment. DISADVANTAGES: Increase in inequality. Opposition by employees. Increase in unemployment. Ignores the weaker sections.

Globalization implies integration of the economy of the country and opening up of the economy for foreign direct investment by liberalizing the rules and regulations. According to IMF: -The growing economic interdependence of countries worldwide through increasing volume and variety of cross border transaction in goods and services and of international capital cash flows, and through the more rapid and widespread diffusion of technology.

Opening and planning to expand business throughout the world.

Erasing the difference between domestic market and foreign market.

Buying and selling goods and services from/to any countries in the world. Global sourcing of factor of production i.e. raw-material, components, machinery, technology, finance etc. are obtained from the best source anywhere in the world.

ADVANTAGES:

Increase in industrialization. Spread of production facilities throughout the globe. Increase in production and consumption. Commodities at lower price with high quality. Increase in jobs and income.

DISADVANTAGES:

Decline in income. Unemployment. Transfer of natural resources. Widening gap between rich and poor. Dominance of foreign institutions.
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