Where State intervention is necessary, these instruments will prove more effective and decisive. Most of public sector undertakings were incurring loss and their performance was quiet satisfactory. Such polices encouraged industries with high domestic resource cost. Successful and sustained development depends on continuing increases in the productivity of our capital, our land and our labour. Shift from monopoly market to competitive market Q5.
Such a society can be built if India grows as part of the world economy and not in isolation. The market became customer- oriented and many new schemes were made by companies to attract the customer. The managers cannot work independently. This multiple reasons lead to the Balance of Payment crisis. At the same time changing the structure of institutions themselves through reforms was equally important from long term point of view.
Instead, emphasis will be on controlling and regulating monopolistic, restrictive and unfair trade practices rather than making it necessary for the monopoly house to obtain prior approval of Central Government for expansion, establishment of new undertakings, merger, amalgamation and takeover and appointment of certain directors. This gradually strengthened the competition and quality of products. Zoning and Land Use Regulation and Environmental Legislation will continue to regulate industrial locations. The State also commands the bulk of the nation's savings. The Government can sell its enterprises completely to the private sector or disinvest a part of its equity capital held by it to the private sector companies or in the open market. As a result there was slow growth of export and rapid increase in imports. Privatisation : Simply speaking, privatisation means permitting the private sector to set up industries which were previously reserved for the public sector.
The 1991 economic reforms were focused primarily on the formal sector, and as a result, we have seen significant boom in those areas that were liberalized. On July 23 rd of 1991, economic reforms in India began to functions. Industrial licensing policy and procedures have also been liberalised from time to time. No industry could produce beyond that limit. Government will strengthen those public enterprises which fall in the reserved areas of operation or are in high priority areas or are generating good or reasonable profits. Now, it integrated all countries and it sees the world as a single economy. Financial Reforms: As per the recommendations of the Narasimham Committee the Government has undertaken various measures for the reform of the financial sector.
The central point of the reforms was liberalization of the economy, simplifying regulations, giving more role to the private sector and opening up of the economy to competition. Although India is possessing a large domestic market, broad based industrial and infrastructural sectors, abundant supply of cheap labour, a huge number of educated and trained manpower and adequate natural resources to attain competitiveness but the country remains far behind many other Asian countries like Singapore, Malaysia, Korea, Hong Kong, Indonesia, Taiwan and Thailand. Thus, the private firms were always under the constant threat of conversion. It aims at to augment the growth rate of sunrise industries. Foreign investment would bring attendant advantages of technology transfer, marketing expertise, introduction of modern managerial techniques and new possibilities for promotion of exports. Private sector can now set up its units in the field of iron and steel, energy, air transport, etc. In 2010, the Competition Commission has emerged as the watchdog in monitoring competitive practices in the economy.
Till 1991 Indian government was following strict policy in regard to import and foreign investment in regard to licensing of imports, tariff, restrictions, etc. The government announced a New Industrial Policy on 24 July 1991. This policy measure is expected to remove the delay and uncertainty which earlier clouded the relationships between Indian and foreign firms. Each of them is briefly explained below. Accordingly the burden of foreign debt services increased tremendously and leading to depletion of foreign exchange reserves. Government will provide enhanced support to the small-scale sector so that it flourishes in an environment of economic efficiency and continuous technological upgradation.
Economic reforms were introduced to reduce the restrictions imposed on the economy. In the above context, industrial licensing will henceforth be abolished for all industries, except those specified, irrespective of levels of investment. Under the new industrial policy, only three sectors- atomic energy, mining and railways will continue as reserved for public sector. Normally this would be considered success. Areas where security and strategic concerns predominate, will continue to be reserved for the public sector list attached as Annex I. The thrust of the New Economic Policy has been towards creating a more competitive environment in the economy as a means to improving the productivity and efficiency of the system. Rise in price:Due to rise in prices of food grains there was pressure of inflation Prior to 1991.
And this investment must be productive. In short, globalization means a Reduction of trade barriers with a view to allowing free flow of goods to and from the country. This category of public sector units accounts for almost one third of the total losses of central public enterprises. New market conditions require people with higher competence skill and training. It introduced capitalism, replacing the previously socialistic economy. It entirely changed the Indian economic structure. But it was come in to reality only in 1991.
Measures must be taken to make these enterprises more growth oriented and technically dynamic. The Industrial Policy Resolution of 1956 identified the following three categories of industries: those that would be reserved for development in public sector, those that would be permitted for development through private enterprise with or without State participation, and those in which investment initiatives would ordinarily emanate from private entrepreneurs. In the 1950s and 1960s, the principal instrument for controlling the commanding heights of the economy was investment in the capital of key industries. Modernisation: The New Economic Policy has been providing high priority to the introduction of modern techniques in production system. Under the policy of economic reforms private sector has been allowed to play a major role in respect of economic activities. It was guided by short-term and long-term objectives. Measures adopted for Privatization: i Contraction of public sector ii Disinvestment of public sector undertaking iii Selling of shares of public enterprises 3.
. Thus 8th Plan aims at raising the share of private sector investment to 55% of the total. The achievement made with regard to disinvestment of Public Sector Undertakings which started in 1991-92 with the sale of minority stakes in some public sector undertakings are given in Table 5. There shall be no bottlenecks of any kind in this process. This board was set up to promote and bring foreign investment in India.