Economic history of India and Licence Raj Indian economic policy after independence was influenced by the colonial experience which was seen by Indian leaders as exploitative in nature and by those leaders' exposure to Fabian socialism. Policy tended towards protectionismwith a strong emphasis on import substitution industrialization under state monitoring, state intervention at the micro level in all businesses especially in labour and financial markets, a large public sector, business regulation, and central planning. Steel, mining, machine tools, water, telecommunications, insurance, and electrical plants, among other industries, were effectively nationalised in the mids.
Considering the difficulties pertaining at that time government decided to follow LPG Model. The Growth Economics conditions of India at that time were not very good.
This was because it did not have proper resources for the development, not regarding natural resources but financial and industrial development. India had practiced some restrictions ever since the introduction of the first industrial policy resolution in Privatization is defined as when the control of economic is sifted from public to a private hand.
Soon after independence, the period was known as License Raj. Only four or five licenses would be given for steel, power, and communications.
License owners built up substantial powerful empires A substantial public sector emerged. State-owned enterprises made significant losses. Infrastructure investment was weak because of the public sector monopoly.
Manmohan Singh, the former finance minister, opened the way for a free economy in the country which led to the significant development of the country. As a result, it led to the development of country faster than previous. Now India is in the situation of world fastest developing economy and maybe chance that India will be at the top till However, globalization is usually recognized as being driven by a combination of economic, technological, sociocultural, political, and biological factors.
It did not delineate a concrete policy to develop infrastructure. Financial and technological support, particularly the infrastructural needs of agro-exports. LPG model hit the interests of the small and medium sector engaged in the production of consumer goods. There is a danger of labor displacement in the small industry if the unbridled entry of MNCs is continued.
Consequently, the benefits of rising exports are more than offset by the much higher rise in imports leading to a more significant trade gap.
The period before liberalization in India The annual growth rate of the economy of India before was low. It stagnated around 3. Only four or five licenses would be given for steel, electrical power, and communications. License owners built up substantial, powerful empires.
A vast public sector emerged.
State-owned enterprises made large losses. Inthe country faced a major foreign exchange crisis which made the economic position of the country very vulnerable.
As a result of this instability in the country, there were two Annual Plans for and The eighth five-year plan measures such as privatization and liberalization which were to have a far-reaching impact later were introduced during the Eighth Five Year Plan.
Opening up of the Indian economy to counter the foreign debt burden which was a significant threat for the country. Taking significant initiatives to increase the rate of employment and reduce poverty.
During this plan focus was on implementing plans and policies which would help in attaining objectives like the modernization of the industrial sector, increase the rate of employment in the country, reduce poverty and improve self-reliance on domestic resources.
Also, the Eighth Five Year Plan also focused on human resource development based on the reasoning that healthy and educated people could contribute more effectively to economic growth. Most important, the Eighth Five Year Plan marked the beginning of privatization and liberalization of the economy in the country.
Increase in the rate of employment. Reduction in the poverty rate. The inflation rate rose from 6. The rate of growth in the agriculture sector increased from 3 percent to 4.
In the ninth five-year plan it was envisaged to have balanced development.Foundation Course Semester 2 9 CONCEPT OF LIBERALIZATION, PRIVATIZATION AND GLOBALIZATION Unit structure Objectives Concept of Liberalization.
The economic liberalisation in India refers to the liberalisation, initiated in , of the country's economic policies, with the goal of making the economy more market- and service-oriented, and expanding the role of private and foreign caninariojana.comic changes include a reduction in import tariffs, deregulation of markets, reduction of taxes, and greater foreign investment.
In India, In ’s reforms were needed in the country’s policy for a better economic growth. In , India was almost bankrupt.
Narsimha Rao’s Govt.
adopted the LPG policy, under the pressure of IMF. It included opening of international trade and investment, deregulation 5/5(9). LPG stands for Liberalization, Privatization, and Globalization.
India under its New Economic Policy approached International Banks for development of the country. These agencies asked Indian Government to open its restrictions on trade done by the private .
Liberalization is defined as making economics free to enter the market and establish their venture in the caninariojana.comization is defined as when the control of economic is sifted from public to a private hand. Globalization is described as the process by which regional economies, societies, and cultures have become integrated through a global network of communication, transportation, and trade.
The Liberalization, Privatization and Globalization were the outcome of Economic Reform Policy of India. On the recommendation of Narsimha Rao committee these economic reforms started in Find here for main highlights of LPG Policy.5/5().