52356335 ppt on liberalization

8/2/2019 52356335 Ppt on Liberalization

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Presented By:


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Definition

Indian trade before liberalization

Measures taken for liberalization Key players in the battle field

Changing environment after 1991

Challenges ahead Limitations

Suggestions

Conclusion


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DEFINITION

Liberalization means to free economy from

direct or physical controls imposed by the

government.


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1980s suggests that the root cause of the crisis was the large

and growing fiscal imbalance.

Large fiscal deficits emerged as a result of mounting

government expenditures, particularly during the second halfof the 80s.

These fiscal deficits led to high levels of borrowing by thegovernment from the Reserve Bank of India (RBI), IMF,

World Bank.

Over the 1980s, government expenditure in India grew at aphenomenal rate, faster than what government earns as arevenues.


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The subsidies grew at a rate faster than government

expenditures.

Expenditure on subsidies rose from Rs.19.1 billion in 1980-81to Rs. 107.2 billion in 1990-91.

The Indian economy was indeed in deep trouble.

Lack of foreign reserves .

Gold reserve was empty.

Before 1991, India was a closed economy.


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Abolition of Industrial Licensing and

Registration

Concession from Monopolies Act

Freedom for Expansion and Production to

Industries

Increase in Investment Limit of the Small

Industries

Freedom to Import Capital Goods

Freedom to Import Technology

Free Determination of Interest Rates


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Dr. Man Mohan Singh

Dr. Arvind Virman

C. Rangarajan Montek Singh Ahluwalia

Shankar Acharya

Y. Venugopal Reddy


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Opening up of the Indian Economy

Before 1991 there was closed economy and import of certain goodswas restricted.

After 1991 competition increased tremendously after theliberalisation.

Competitors from all over the world enter the Indian market

Competition from Low Wage Countries

Low range products are floating into the market

Low price, low quality


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1. Governance

o Need for elimination of large number of Rules & Regulations inthe books

Sharply reducing the number of implementing agencies Moving towards single window clearance.

2. Infrastructure: A Challenge and an opportunity

Investments required up to 2012 US$ 334 billion

Power Generation - US$ 143 billion Power Transmission & Distribution US$ 116 billion

Roads US$ 40 billion

Ports US$ 20 billion

RailwaysUS$ 15 billion


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BRIC Study of Goldman Sachs (2003) predicts that:

INDIA WILL EXCEED

Frances GDP in 2020

Germanys in 2025

Japans in 2035

TO BECOME THE 3RD LARGEST ECONOMY IN THEWORLD BY 2050


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GDP growth at constant prices

6.1

8.2 8

0

12

3

4

5

6

7

89

Average for 1993-2003 2003-04 10th Plan Projection (2002-07)

inp

erce

nt


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Indian Foreign Exchange Reserves: a steady rise after

liberalization

Foreign exchange reserves (US$ billion)

2.2 17.0

54.1

75.4

118.3

0

50

100

150

1990-91 1995-96 2001-02 2002-03 2003-04


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Foreign Investments after liberalization

103

5,138 5,3856,789

8,152

5,639

15,872

0

2000

4000

6000

8000

10000

1200014000

16000

18000

1990-91 1994-95 1997-98 2000-01 2001-02 2002-03 2003-04

Total Foreign Investment (US$ million)US$ million


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Import duty Reductions after liberalization

Reduction in Peak Customs Duties on Manufactured items

150

110

5038.5 30 25 20

42

0

2040

60

80

100

120

140

160

1991 Mar-92 Mar-95 Mar-97 Mar-00 Mar-02 Mar-03 w.e.f March

2004

inp

ercen

t


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Rising share of Indias external trade after liberalizationTotal Exports in 2003-04 - US$ 61.8 Bn; ImportsUS$ 75.2 Bn.

Assume target for exports for 2009 - US$150 Bn

Share of external trade in GDP

18.123.1 25.5

26.930.3 28.9

31.6 32

0

5

10

15

20

25

30

35

1991-92 1994-95 1997-98 1999-

2000

2000-01 2001-02 2002-03 2003-04

inp

ercent


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Less importance to agriculture

Induced by IMF and World Bank

More dependence on Foreign Debt Promotion of consumerism

Missing of social motive

Problem of employment Dependence on foreign technology


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Policy formulation that supports overall planning

objectives

Monitoring the performance of market

Adhere to contract conditions, especially quality ofservice

Abide with relevant laws

Contribute to social well-being Respect contract clauses on safety, social order,

environmental protection

Seek reasonable profit


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Thus in the end it can be concluded that

removal of or reduction in the trade practices

that was free flow of goods & services from

one nation to another can lead to mass

production, increases GDP, Import and

Export. More steps should be initiated to

enhance the performance of economy in realtime manner.


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52356335 ppt on liberalization

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