A Study of Globalization, Liberalization and Privatization (LPG) and its impact on Economy

 

Dr. Yulendra Kumar Rajput^1*, Ridwana Hasan²

¹Principal, Agrasen College, Raipur (C.G.)

²Assistant Professor, Department of Management, Agrasen College , Raipur (C.G.)

 

ABSTRACT:

In the year 1990 our country is facing a epidemic economic crisis. Before 1990 the Indian businesses carried within the boundary of our country, there is a restriction in trade of goods and services with other countries. As the economy of the country expands, the need of exchanging goods and service or free flow of business is required. So the globalization, liberalization and privatization(LPG) of economy takes place. By doing this world is considered as one market , business policies are liberalized and some of the government owned business and its control is handed over to a private owners .There are various pros and cons of this economic reforms .This paper deals with the study of it. The various positive effect are sales of goods and services increases, new technology are introduced ,market expands, customer increases,  less costly products are made available to customers etc. The negative effect are sickness of domestic industries, sales of domestic industries declines, customers are more dependent upon foreign products etc.

 

 

 

INTRODUCTION:

The economic reform leads a great change in Indian economy. As the population of our country is increasing the economy also expands. The need of free flow of trade between the countries arises. The country market is not concentrated to one place it becomes global all emerges as World business. This process of doing the above things is considered as economic reform. Under the economic reform, liberalization, privatization and globalization (LPG) takes places. India is facing a huge economic crisis, shortage of the currency occur. During the year 1990 this process of (LPG) takes place simultaneously. It helps is overcoming this problems to

 

 

 

some extent. As the time passes the restrictive barriers of trade are removed. The government of our country runs on the concept of ease of doing business. Due to the new industrial policy, economic reform and (LPG) the inflow of foreign direct investment (FDI) increases this leads to the development of Indian industries. By performing this act the economy of our country strengthens. The government of Indian taken this step to link the Indian economy to the world economy.

 

OBJECTIVES OF THE STUDY:

1.       To study and understand the economic reform of Indian economy.

2.       To study and examine the positive effects of (LPG).

3.       To study and examine the negative effects of (LPG).

 

RESEARCH METHODOLOGY:

Research design of this paper is descriptive in nature. The various concept i.e., economic reform, new industrial policy, liberalization, privatization and globalization are studied and understood. The basic focus of this paper is to know the various positive as well as negative effects of liberalization, privatization and globalization. The date is collected from secondary sources. The secondary data is collected from various articles, research paper, books ,magazines and internet etc. 

 

1. Liberalisation

Liberalization is the process of making the industrial licensing and business policies liberalized. So that the trade of various goods and services within the country and between the country takes place easily.

 

When the new industrial policy (NIP) of our country India was introduced in year 1991, the state or government control over the business is removed. When any person who wants to start a business, have to take a license from the government, then only he will be able to commence business. But under NIP the amendment is made in policy of licensing. The (NIP) is liberalized and individual do not have to take license.  Any person can easily start his or her own business. After NIP, it has been seen that many new industries are arising. By doing this the employment rate increases, poverty level decreases, income level of household increases, saving increases  and economy grows. Apart from the above benefits inflow of foreign direct investment (FDI) increases, relaxation of local restrictions and introduction of foreign Technology, foreign currency reserve increases and import happened thereon.

 

2. Privatization

Privatization is the process in which the government or public sector businesses are partially and fully handed over to the private owners.

 

During 1990's India is facing a condition of economic crisis and all the business have been owned and controlled by the government. To overcome this major problem, some of the Government or public sector enterprises are partially or fully handed over to the private owners. When enterprise is run by government, operated and control by private owners then it is called partial privatisation. When all the share capital and assets are purchased by private owners, operated and controlled by them only, then it is called full privatization.

 

Privatisation is a process that reduces the involvement of state or a public sector in the nation's economic activity. (Prof. D.R. Pendse)

 

From the above description it is clear that this is time taking process and based upon various reasons. At the earlier time telephone companies are owned by government only i.e., BSNL, but now many private telephone companies are in market like Airtel, Idea, Tata Docomo, Reliance etcthis is a result of privatization. The process of selling the asset of government owned company to a private owner is known as disinvestment.

 

By doing the privatization of some business our economy able to overcome the economic crisises. There are various methods of privatization such is shared issues ,asset sale, contracting out, franchising etc. As per the above situation and need of business any one of the above or combination of any two method is adopted for privatization. The main reason of privatisation in India are budget deficit, Gulf crisis, integration of World Trade and speculative growth of Korea Taiwan Malaysia economics etc .

 

3. Globalisation

Globalization is the process in which each and every countries market is considerd as one market or world market.

 

It takes place in year 1990, where there is  utmost need arises for exchanging goods, services , information and intellectual properties etc. Then the whole country is considered as one market and becomes Global. The removal on the restriction on trade and free flow of goods and services takes place.  Each countries market is considered as one huge market. There are various positive and negative effect of globalization on Indian and world economy. The positive is the expansion of market globally and negative effect is sickness domestic traders.

4. Positive effects of LPG

1.       The business opportunities of domestic industries increased.  As a result there is a expansion of market, customer, sales and profit of the firm.

2.        The inflow of FDI increases, it leads to the increase in capital and industrial growth.

3.        New technology is inculcated in business which leads to the increased efficiency and effectiveness of business.

4.        Due to adoption of various new machines in production of goods and services. The productivity of the firm increased at a faster rate.

5.        There is a increase in Gross domestic product(GDP) , per capita income, employment rate, reduction in poverty and literacy rate etc

 

5. Negative effect of LPG

1.       The sales and profit of domestic industries decreasing at a faster rate.

2.        The competition level among the business increases due to foreign competitors.

3.        Due to the increase in the level of competition over utilization of natural resources takes places.

4.       It leads to over population of cities, the basic amenities and facilities are reduced.

5.       It widens the gap between rich and poor results in increasing inequality of income.

 

FINDINGS:

1.       There are various pros and cons of liberalization, privatization and globalization (LPG) concept .

2.       The positive effects of liberalization, privatization and globalization (LPG) is greater than the negative effects.

3.       The new industrial policy (NIP) helps in the growth of various industries and economy of our country.

4.       The economic reform of the country brings various new positive changes in the world economy and business.

 

CONCLUSION:

The LPG increases the role of private sector simultaneously decrease the role of public sector enterprises.  By adopting LPG , the growth of Indian economy takes places in all aspects. This paper basically deals with the understanding of LPG concept. Also to find out what are the positive and negative effect of LPG to the world business and economies. Also helps in greater understanding of how the LPG is playing a vital role to boast the Indian economy It leads to the greater understanding of FDI , NIP and economy etc. LPG is a need of economy and to overcome the economic crisis of the country.

 

REFERENCES:

1.        Kitey S. Swapnil and Yadav Deepak Kumar International Journal of Advance Research in Computer Science and Management Studies (Volume 3 June 2015).

2.        Thappa Hanuman N ,International Journal for Creative Research Thought (Volume 6 April 2018).

3.        Dr.Sinha V.C. Business Environment Sanjay Bhawan SBPD Publishing House Edition (2018).

4.        Some important websites

 

 

 

 

 

Received on 08.03.2019         Modified on 12.04.2019

Accepted on 03.05.2019      ©AandV Publications All right reserved