Economic Growth Models in

India
LPG & PURA
The Crisis of June 1991
India was having balance of payment
problems since 1985

Foreign exchange reserves reduced by a
large amount

Central Bank had refused new credit

Gulf War-Downfall of Soviet Union


India had to pledge 67 tons of gold reserves to IMF in order
to secure an emergency loan

P.V. Narsimha Rao took over as Prime Minister and roped
in Dr. Manmohan Singh as Finance Minister

Government ushered several reforms collectively known as
Liberalization in media.
Liberalization, Privatization and
Globalization model of development(LPG)
In 1991, The then Finance Minister Dr. Manmohan Singh
presented a new strategy with emphasis on LPG and many
changes were proposed:

Areas reserved for the public sector were opened to private
sector

The private sector was permitted to set up Industrial units
without taking a license

The threshold limit of assets was abolished in respect of
MRTP companies and dominant undertakings

With a view to facilitate direct foreign investment, the
government decided to grant approval for direct foreign
investment up to 51 percent in high priority areas.

Chronically Sick Public sector enterprises were referred to
the Board for Industrial and Financial Reconstruction(BIFR)
for formulation of revival/rehabilitation schemes.

Autonomy was given to PSU managements and Boards of
public sector companies were made more professional in
order to improve the performance of public sector
enterprises



Abolishment of
Industrial Licensing
De-reservation of
Industries
For Public Sector

Liberalized policy towards
Foreign Capital and Technology

Changes in MRTP act
PURA-Providing Urban Amenities in
Rural Areas
Dr. A.P.J. Abdul Kalam ever since he became the President of
India has been advocating his Vision 2020 and to eradicate
poverty from India, he has been emphasizing the adoption
of PURA
The roadmap involves integrated action on following areas:

Agriculture and food processing

Reliable and quality electric power

Development of strategic sectors


Education and health care for all

Expansion of information and communication technology
(ICT) to rural areas and to promote education and create
national wealth

PURA MODEL:

It involves four connectivity :Physical Connectivity,
Electronic, Knowledge and thereby leading to economic
connectivity
Depending upon region and the State of present
development, PURA can be classified into three different
categories
Type A Cluster Situated close to an urban area
having minimal road connectivity , limited infrastructure,
limited support

Type B Cluster Situated close to urban area but
has sparsely spread infrastructure and no connectivity

Type C Cluster located far interior with no
infrastructure and no connectivity


PURA model- Implementations
Government in 2004 accorded in principle
approval for the execution of PURA

A sum of Rs 3 cr was provided for each cluster

The Eleventh Plan provided Rs 248 cr for PURA in
PPP mode.