Globalisation and Privatisation
India was following the socialist economy policy since attaining independence in 1947. Adopting this method slowed down the economy.
The Gulf War, along with the downfall of the erstwhile Soviet Union triggered an economic crisis in the form of balance of payments during the early ’90s. It led India to pledge 67 tons of gold reserves as collateral for a $2.2bn fund from IMF.
The government under the rule of former Prime Minister Dr. P.V Narasimha Rao and finance minister Dr. Manmohan Singh IN 1991 initiated a plan of recovery with some groundbreaking reforms.
These reforms fall under the broad term of LPG( Liberalisation, Privatisation, and Globalisation) Policy in India. Let’s understand the concept of LPG in a better way.
Globalisation meaning can be understood as the integration of the national economy with the world economy. It represents a free flow of information, technology, goods and services, ideas, capital, and even people as a form of resources across different countries. Globalisation helps in improving t cross border connectivity between different markets in the form of investments, trade, and cultural exchanges.
The meaning of Privatisation can be explained as the process of transfer of ownership from the public sector to the private sector. It is also known as Disinvestment in business. Privatisation aims at reducing government ownership in industries.
It reduces the workload on the public center enterprises and also paves the way for economic development by encouraging foreign direct investment (FDI).
Liberalisation is the process or means of the elimination of the control of the state over economic activities. It provides greater autonomy to the business enterprises in decision-making and eliminates government interference.
The purpose of liberalisation is to increase competition between enterprises. It also encourages foreign trade between countries. It also helps the business expand its global footprint. The opening up of the economy improves the economic development of a nation by the inflow of funds from foreign resources.
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