NEW ECONOMICPOLICY - (LPG)

PRESENTED BY :- ADHIRAJ SINGH SAGAR AMIT YADAV AFTAB Akash Gahlot

WHAT IS NEW ECONOMIC POLICY 1991?

It refers to ongoing economic liberalisation or relaxation started in 1991 of the countries economic policies

It was introduced with the goal of making the economy more market-oriented and expanding the role of the private and foreign investment.

NEW ECONOMIC POLICY

LIBERALISATION PRIVATISATION GLOBALISATION

BRANCHES OF NEW ECONOMIC POLICY 1991

Reasons for implementing LPG• Large and growing fiscal imbalances.(Gross fiscal deficit rose to

12.1% of GDP in 1991)

• Growing inefficiency in the use of resources.

• Low foreign exchange reserves.

• High inflation rate

• The low annual growth rate of Indian economy stagnated around 3.5% from 1950s to 1980s, while per capita income averaged 1.3%.

LIBERALISATIONThe first aspect of new economic policy was

liberalisation

Liberalisation of an economy means removing or relaxing government controls and restrictions on economic activities

Relief for foreign invertorsRevaluation of Indian CurrencyNew Industrial PolicyNew Trade PolicyImport TechnologyEncouraging foreign tie-upsPrivatisation in Public Sector

POSITIVE EFFECTS Increase in foreign investment Increase in Production Technological advancement Increase in GDP growth rate

NEGATIVE EFFECTS Increase in Unemployment Decrease in Tax Receipt

IMPACTS OF LIBERALISATION

PRIVATISATION The transfer of ownership property pr business from

the government to the private sector is termed privatization.

Increasing inefficiency on part of public sector led to privatization

Forms of Privatization :- Decentralization Joint Venture Leasing Franchising

POSITIVE EFFECTS Private companies cut cost and

be more efficient Increased competition More Responsive to customer

complaints

NEGATIVE EFFECTS Lack of welfare Ignore the weaker section Privatisation is expensive

IMPACTS OF PRIVATISATION

GLOBALISATIONGlobalisation means reduction or

removal of government restriction on the movement of goods and service, capital, technology and talent across national boundaries.

It is the increasing interdependence, integration and interaction among people and cooperation in various locations around the world.

POSITIVE EFFECTS Expansion of market Development of infrastructure Higher living standards

NEGATIVE EFFECTS Cut throat competitions Rise in Monopoly Take over of Domestic Firms

IMPACTS OF GLOBALISATION

01/05/2023 Economic Policy 1991 13

Impact of NEP 1991 on Indian Economy

a) Increasing Competitionb) More Demanding Customersc) Rapidly Changing Technological

Environmentd) Necessity for Changee) Need for Developing Human Resourcesf) Market Orientation

Foreign Direct InvestmentForeign direct investment (FDI) is a direct investment into production or business in a country by an individual or company in another country, either by buying a company in the target country or by expanding operations of an existing business in that country.

FDI in IndiaFDI caps in various sectors:• Defence 26%• Insurance 49% (earlier 26%)• Telecom 100% (earlier 74%)• Single brand retailing 100%• Multi brand retailing 51%• Civil aviation 49%

Multi National CorporationMultinational corporation (MNC) is a enterprise that manages production or delivers services in more than one country can also be referred to as an international corporation.

Multi National Corporation

GROWTH OF GDP POST LIBERALISATION

Conclusion• The advent of globalization as a result of liberalization and

privatization has both positive and negative impacts on our economy.• While one group of people argue that globalization provides greater

opportunities ,opens up new markets, promotes the use of better technology and increases the efficiency of production, • Another group of people feel it does not protect the domestic

industries particularly in developing nations.• From India’s perspective ,it has improved our condition of living and

opened up employment in field like entertainment ,IT ,telecommunication, travel and hospitality .