1. LPG Liberalization, Privatization & Globalization

3. Steel, power

4. Roads

5. The private sectors were allowed to establish certain industries again under the rules and regulations of the govt.

7. NEGATIVEASPECTS Industrialisation did not take place as per the expectation. The growth rate of industrial production declined from 8% to 4%. The laws that were framed to regulate the private sector were responsible for slow growth of Industrial sector. These laws have also failed to reduce the concentration of economic power in the private sector. Corruption, lack of efficiency in work and ineffective management became the common features of the public sector. Many public sector companies were making losses. Official machinery became a major hindrance to the development.

8. NEED FOR REFORMS Not only the negative aspects but also several problems like rising prices, shortage of adequate capital, slow economic development and technological backwardness contributed to the increase in govt’s expenditure than the revenue. India’s borrowings (1991) from abroad had increased to that level Indian Govt had to borrow money from World Bank and IMF. All these factors led to the framing a New Economic Policy (NEP) that contains three strategies- Liberalization, Privatization and Globalization

9. LIBERALIZATION 2 components Allow the private sector to run those activities which were restricted earlier only to public sector. Relaxation of rules and regulations which were restricted to the growth of private sector

10. PROCESSES Private sector has been allowed to produce all the goods except alcohol, cigarettes, hazardous chemicals, industrial explosives, electronic aerospace and drugs and pharmaceuticals. Industries reserved for public sector has been reduced from 17 to 3. Private sector can also enter in to core industries like iron and steel, electricity, air transport, shipbuilding, heavy machinery and some defence goods. The private sector has been freed from many regulations such as (a) licensing (b) permission to import raw materials (c) regulation on price and distribution and (d) restriction on investment by large business companies.

11. GLOBALIZATION Integrating the Indian economy with the world economy. Many producers from outside the country can sell their goods and services in India. India can also sell its goods and services to other countries. Globalization facilitates those who have capital to establish enterprises in India, produce goods for sale within the country or export them. Entrepreneurs from India also can go and invest in other countries. Not only the movement of capital but also the movement of people takes place. Exchange of capital, technology and experience take place between the various countries of the world. Govt has removed restrictions on import of goods, reduced taxes on imported goods and encouraged investors from abroad to invest in India.

12. ADVANTAGES Promise of increase productivity and higher living standards Increase in trade in goods and services Provide new opportunities for growth Exports, Imports & Entre-ports Globalization of financial markets Increased flow of foreign market capital Impact on poverty Increase in the level of interdependence & competitiveness Induce domestic firms to improve technology

13. DISADVANTAGES Takeover of national firms Ruin traditional crafts and industries Brings instability Widens the disparity

15. Relative Share Enlargement Approach: Enlargement of the share of private enterprises in the production of goods and services in the economy.

16. Association of Private Sector Management Approach: Utilizing the services of managerial personnel or executives of private sector enterprises for the conduct and management of PSUs.

17. Transfer of Minority Equity Ownership Approach: Transfer of minority equity ownership of public enterprises to private individuals and institutions so that the ultimate control continues to remain with the state.

23. Improvement in the quality of management and decision making:

24. No government financial backing, and therefore, capital market will compel these enterprises to be more efficient

25. Substantial reduction in government’s budgetary support resulting in reduction in budgetary deficit;

26. Recovery of government fund which could more productively be used in development activities;

27. Reduction in political and bureaucratic interferences;

29. Delay in implementation of projects leading to cost escalation and other consequences;

30. Ineffective and widespread inefficiency on management;

31. Many PSUs are operating without the leader (i.e., chief executive or chairman);

32. PSUs are over-staffed resulting in lower labour productivity, bad industrial relations, etc.;