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THE WAVE OF ECONOMIC
REFORMj The wave of economic reforms was born out of
the crisis in the economy which climaxed in 1991.
j The main reasons which leads to economic
reforms are :Increasing Fiscal deficit
Increase in Adverse balance of payment
Overall agricultural and industrial production
showed negative growth.
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Foreign Exchange reserves fell
Inflation rate increases to 14%
Confidence of International financial
institutions was badly shaken
Due to Gulf war, the prices of oil rises
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TYPES OF ECONOMIC REFORMS
TYPES OF ECONOMIC REFORMS
LIBERALISATION
PRIVATISATION
GLOBALISATION
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LIBERALISATION
jLiberalization of the economy means to freeit from direct or physical controls imposed
by the Government.jThe various types of controls are as follows:
Industrial licensing system
Price control or financial control on goods
Import licenseForeign exchange control
Restrictions on investment by big business houses
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MEASURES FOR
LIBERALISATIONj Abolition of Industrial Licensing and Registration
j Concession from monopolies Act
j Freedom for expansion and production to
Industries
j Increase in investment limit of SSI
j Freedom to import capital goods
j Freedom to import technology
j Free determination of Interest rate
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ADVANTAGES OF
LIBERALISATIONj Improvements in Industries & service sector
j Free flow of FDI & MNCs
j More availability of imported goods at cheaper
rates
j Quality education and careers to people
j Improvement of technology in the field of SSI &
LSIj Improvement in means of communication and
Transport.
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PRIVATISATION
jPrivatization of Industries means opening
the gates of Public Sector to Private sector
jTransferring the ownership of public sectorto private sector
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CAUSES OF PRIVATISATION
jDisintegration of Socialist Economies
j Inefficient public sector
jUneconomic pricing policyjBurden on the Government
j Inefficient management control
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OBJECTIVE OF PRIVATISATION
j To increase the efficiency and competitive power
of the enterprise.
j To reduce deficit financing.
j To strengthen industrial management
j To earn more and more foreign currency
j To make optimum use of economic resources
j To achieve rapid industrial development
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MEASURES FOR PRIVATISATION
jPrivatization covers three sets of measures
1. OWNERSHIP MEASURES
Total denationalizationJoint Venture
Liquidation
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2. ORGANISATIONAL MEASURES
A holding company structure
Leasing
Restructuring( Financial, Basic )
3. OPERATIONAL MEASURES
Grant of autonomy to PE s indecision making
Provision of incentives to theemployees
Freedom to acquire certain inputsfrom the market
Development of proper investmentcriteria
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GLOBALISATION
j Globalization is the process by which a firmsactivity become worldwide in scope
j Doing, or planning to expand , business globally
j Giving distinction between the domestic market &foreign market
j Locating the production and other physicalfacilities of global business dynamics
j Basing product development and productionplanning on the global consideration
j Global sourcing of factors of production
j Global orientation of organizational structure and
management culture
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FEATURES OF
GLOBALISATION1. NEW MARKETS
Growing global markets in services
New financial marketsDeregulation of antitrust laws of
mergers
Global Consumer markets with globalbrands
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2. NEW ACTORS
Multinational corporationsThe World Trade Organization
International Criminal Court System
Regional BlocsMore policy Coordination groups-
G-77,G-7, OPEC, OECD
3. NEW RULES AND NORMS
Multilateral agreements in trade new agendas
on environment and social conditions
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New multilateral agreements for services
property rights and communicationConventions and agreements on the Global
environment
4. NEW TOOLS OF COMMUNICATION
Internet and electronic communication
Cellular phones
Fax machines
Faster and cheaper transport
Computer aided design
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FACTORS LEADS TO
GLOBALISATIONjHuman Resources
jWide Base
j
Growing EntrepreneurshipjGrowing Domestic Market
jNiche markets
jExpanding Markets
jEconomic Liberalization
jCompetition
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OBSTACLES TO GLOBALISATIONj Government Policy and Procedures
j High cost of basic inputs
j Poor Infrastructure
j Obsolescence
j Resistance to changej Poor Quality Image
j Supply problems
j Small Size
j Lack of Experience
j Limited R&D and marketing research
j Growing Competition
j
Trade barriers