Module 3

ECONOMIC REFORMS
Indias economy went through several episodes of economic liberalization in the 1970s and the 1980s under Prime Minsters Indira Gandhi and, later,Rajiv Gandhi. However, these attempts at economic liberalization were half hearted,selfcontradictory, and often self-reversing in parts.

In contrast, the economic reforms launched in the 1990s (by Prime Minister P V Narasimha Rao and Dr. Manmohan Singh as his Finance Minister) were much wider and deeper and decidedly marked a U-turn in the direction of economic policy followed by India during the last forty years of centralized economic planning.

 The root cause of the twin crisis could be traced to macro-economic mismanagement throughout the 1980s as reflected in an unsustainably high fiscal deficit, in particular the revenue deficit and the monetized deficit. The central governments fiscal deficit alone peaked at 7.9 percent as a percentage of GDP in 1989-90. Foreign-exchange reserves dwindled to a low of US$2.2 billion(with less than 15 days cover against annual imports).

 Prime Minister Narasimha Rao converted the prevailing economic crisis into an opportunity to launch massive economic reforms. First, he introduced an economist (rather than a politician) into the Cabinet as Finance Minister and gave the new Minister his full support, allowing him to evolve and implement pathbreaking economic reforms. The government took two years to get over the immediate macroeconomic crisis, initially with the help of a balance of payments loan facility from the International Monetary Fund

The fundamental objective of economic reforms is to bring about rapid and sustained improvement in the quality of the people of India.
Central to this goal is the rapid growth in incomes and productive employment The only durable solution to the curse of poverty is sustained growth of incomes and employment.

Such growth requires investment: in farms, in roads, in irrigation, in industry, in power and, above all, in people.
And this investment must be productive. Successful and sustained development depends on continuing increases in the productivity of our capital, our land and our labour.

Economic Crisis in India

The new economic policy was announced in 1991 following the worst economic crisis that ever occurred in the country. Extremely low foreign exchange reserves of Rs.2400crs in early 1991 were just enough only for three week requirements Rapid increasing burden of national debt which exceed 60% of GNP in 1991

The most damaging feature of the 1991 crisis was high price level. During 1985-90, the GDP grew at average rate of 5.7% but money supply increased at 15.7% per annum. This excess liquidity led to high price rise which touched 17%

Trends in Wholesale price Index and Consumer Price Index 1989-90 1990-91 (a) WPI (1981-82 = 100) All Commodities 1. Primary articles 2. Fuel, power and light 8.1 % 3.6% 2.3% 13.5 % 18.9% 19.2% 9.6%

3. Manufactured products 11.8%

(b) CPI (1982 = 100) For Industrial workers

5.4%

13.7%

ECONOMIC REFORMS
Macroeconomic Crisis of the Early 1990--Three Aspects 1. Fiscal Imbalance 2. Fragile Balance of Payment Situation 3. Inflationary Pressures

ECONOMIC REFORMS
In response to the crisis situation of 1990-91 the government decided to introduce economic policy reforms which consisted of two distinct strands 1. Macroeconomic Stabilization 2. Structural Reforms The stabilization deals with demand management, structural reforms deal sectoral adjustments designed to tackle the problems on the supply side of the economy.

Main Objectives of Policy

(a) Reducing the government deficit to 6.5% of GDP in 1991-92 and 5% in 1992-93, with further reduction thereafter leading to containment of inflation; (b) Reduction of the current account deficit in the balance of payments to 2.7% of GDP in 1991-92 and t0 1.5% by 1995-96 as a result of export growth (c) Raising GDP growth to around 6% by mid1990s

COMPONENTS OF NEW ECONOMIC POLICY 1991 The new economic policy has four components: 1. Liberalization 2. Privatisation 3. Globalization 4. Stabilization Together called as Structural Adjustment Programme (SAP)

Model Of Economic Management in India

Pre-reform strategies Closed economy Self reliance Economic reform strategies Open economy Integrate with world markets

Import substitution strategies

State-led economic growth License dominated regime Frequent state interventions Political administered prices

Export oriented strategies

Market determined economic growth Delicensing, deregulation, debureaucratisation Selective and effective state intervention Market determined prices at large

Pre-reform strategies

Economic reform strategies

Not much concern for deficits

Development by inflationary pressure PSUs as engine of growth Dominance of PSUs

Contain all kinds of deficits

Deflationary monetary and fiscal policies Private investment as growth rate Withdrawal from the area of private interest

Philosophy of natural monopoly

Restrictions of FDI and MNCs Restrictions on currency movement State controlled interest rates State controlled credit Underdeveloped capital market

Minimise gap between public and private sector

Inducement of FDI and MNCs Liberalization of restrictions Deregulation of interest rates Credit policy reforms Reforms in capital market

Huge public sector budgetary resources (PSBR) liability on the government

High tax rates

Minimise PSBR
Tax reforms

Macroeconomic Stabilization --Demand Management

Macroeconomic stabilisation (often called just stabilization) involves returning to low and stable inflation and a sustainable fiscal and balance of payments position.
1. Control of inflation 2. Fiscal correction 3. Improving the balance of payments position

Structural Reforms
Since july 1991 comprehensive structural reforms have been undertaken to improve the supply-side of the economy. 1. Trade and capital flows reforms 2. Industrial deregulation 3. Public sector reforms and disinvestment 4. Financial sector reforms

Remarkable changes in the growth rate of Indian economy

After the crisis induced low growth of 0.9% in 1991-92, the economy responded smartly to economic reforms and recorded 6.8% in 1996-97 Industrial growth has registered around 8% per annum Exports have grown comfortably and foreign investment inflow has been exceedingly good.

 Consequently , foreign currency reserves have stock piled Price level too has been brought down to less than 8% Poverty level came down Overall increase in productivity, quality and competitiveness of Indian goods and services

Economic Reforms 1991 An Appraisal

The pace of economic reforms, though fast during the first three years, slowed down from 1994 onwards. Elections to several state assembly were held in 1994 Though economic reforms are announced by Central Government, their implementation is in the hands of state government

The Central governments fiscal deficit continues to be high and this is reflected in continuing inflationary pressure Foreign exchange front may not continue to be comfortable for all the days to come Weakness in reforms is already visible and the process of reforms is not complete even though reforms are decade old. Many area need policy changes The reforms have hit the labour hard

The Second Generation Reforms

Yet much more needs to be done to reap the full benefits of what has so far been done. This calls for the implementation of the second generation reforms. A. Exploiting the Knowledge-based Global economy B. Growing Indian Transnational Corporations C. High growth of Agriculture D. Empowering the poor

E. Human Development F. Clean Environment G. Improvements to Governance

Globalization
The IMF defines globalization as the growing interdependence of countries worldwide through increasing volume and variety of cross border transactions in goods and services and of international capital flows, and also through the more rapid and widespread diffusion of technology

Globalization of Business
Globalization is an attitude of mind- it is a mindset which views the entire world as a single market so that the corporate strategy is based on the dynamics of the global business envionment

Globalization encompasses the following: Doing, or planning to expand, business globally Giving up the distinction between the domestic market and foreign market and developing a global outlook of the business Locating the production and other physical facilities on a consideration of the global business dynamics, irrespective of national consideration

 Basing product development and production planning on the global market considerations Global sourcing of factors of production, ie raw materials, components, machinery, technology, finance ect., are obtained from the best source anywhere in the world Global interaction of organizational structure and management culture

Drivers of Globalization
International Trade (lower trade barriers and more competition) Financial flows (foreign direct investment, technology transfers / licensing, portfolio investment and debt) Communications (traditional media and internet) Technological advances in transportation, electronics, bioengineering and related fields Population mobility, especially of labour

Levels of Globalisation
Globalisation at world level globaliastion of production and globalisation of finance Globalisation at the level of a specific country Globalisation at the level of a specific industry Globalistion at the level of a specific company

Factors influencing globalization

Dismantling of barriers to international economic transactions Over-capacity and over-production Technological advances Emerging forms of industrial organization Political factors

Globalization
The IMF defines globalization as the growing interdependence of countries worldwide through increasing volume and variety of cross border transactions in goods and services and of international capital flows, and also through the more rapid and widespread diffusion of technology

Globalization of Business
Globalization is an attitude of mind- it is a mindset which views the entire world as a single market so that the corporate strategy is based on the dynamics of the global business environment

Globalization encompasses the following: Doing, or planning to expand, business globally Giving up the distinction between the domestic market and foreign market and developing a global outlook of the business Locating the production and other physical facilities on a consideration of the global business dynamics, irrespective of national consideration

 Basing product development and production planning on the global market considerations Global sourcing of factors of production, ie raw materials, components, machinery, technology, finance ect., are obtained from the best source anywhere in the world Global interaction of organizational structure and management culture

Drivers of Globalization
International Trade (lower trade barriers and more competition) Financial flows (foreign direct investment, technology transfers / licensing, portfolio investment and debt) Communications (traditional media and internet) Technological advances in transportation, electronics, bioengineering and related fields Population mobility, especially of labour

Levels of Globalisation
Globalisation at world level globaliastion of production and globalisation of finance Globalisation at the level of a specific country Globalisation at the level of a specific industry Globalistion at the level of a specific company

Factors influencing globalization

Dismantling of barriers to international economic transactions Over-capacity and over-production Technological advances Emerging forms of industrial organization Political factors

Features Of Current Globalization

New markets New actors WTO, ASEAN, NAFTA etc., New rules and norms New tools of communication

Globalization in India
Indias economic integration with the rest of the world was very limited because of the restrictive economic policies until 1991. With the new economic policy in 1991, globalization of Indian firms are expanding their overseas business by different strategies

Steps towards globalization

Exchange rate adjustment and Rupee convertibility Import Liberalization Opening up to Foreign capital

Obstacles To Globalization
Government Policy and Procedures High Cost Poor Infrastructure Resistance to change Poor Quality Image Supply Problems Small Size

Lack of Experience Limited R & D and Marketing Research Growing Competition Trade Barriers

Effects of Globalization
Effects on the external sector Effects on the Indian Enterprise

Factors Favouring Globalization

Human Resources Wide Base Growing Entrepreneurship Growing Domestic Market Niche Market (a niche is a small segment of market ignored or not properly served by large players) Expanding Markets

Transnationalisation of World Economy NRIs Economic Liberalization Competition

GDP growth rate

the economic liberalization of 1991, India's GDP has been growing at a higher rate.

Year 2000 5.5 2001 6.0 2002 4.3

Growth (real) (%)

2003 4.3 2004 8.3

2005 6.2 2006 8.4 2007 9.2 2008 9.0 2009 7.4 2010 10.6

Features Of Current Globalization

New markets New actors WTO, ASEAN, NAFTA etc., New rules and norms New tools of communication

Globalization in India
Indias economic integration with the rest of the world was very limited because of the restrictive economic policies until 1991. With the new economic policy in 1991, globalization of Indian firms are expanding their overseas business by different strategies

Steps towards globalization

Exchange rate adjustment and Rupee convertibility Import Liberalization Opening up to Foreign capital

Obstacles To Globalization
Government Policy and Procedures High Cost Poor Infrastructure Resistance to change Poor Quality Image Supply Problems Small Size

Lack of Experience Limited R & D and Marketing Research Growing Competition Trade Barriers

Effects of Globalization
Effects on the external sector Effects on the Indian Enterprise

Factors Favouring Globalization

Human Resources Wide Base Growing Entrepreneurship Growing Domestic Market Niche Market (a niche is a small segment of market ignored or not properly served by large players) Expanding Markets

Transnationalisation of World Economy NRIs Economic Liberalization Competition

Globalization and its impact on Indian economy

 Globalization means free movement of capital, goods, technology, ideas and people. Any globalization that omits the last one is partial and non sustainable ---- Branko Milanovic

Globalization and its impact on India

Globalization is the process of integrating various economies of the world without creating hindrances in the free flow of goods and services, technology, capital and even labour or human capital. The term globalization has therefore four parameters: 1. Reduction of trade barriers to permit free flow of goods and services among nation-states; 2. Creation of environment in which free flow of capital can take place among nation-states; 3. Creation of environment, permitting free flow of technology; and 4. From the point of view of developing countries, creation of environment in which free movement of labour can take place in different countries in the world Thus basically globalization signifies a process of industrialization plus liberalization

In nutshell , globalization is considered as the engine of growth, $technical advancement, raising productivity, enlarging employment and bringing about poverty reduction along with modernization

1. Increase of imports far greater than increase in exports YEAR Exports Imports Total Trade Net Current External trade market price) ( as percentage of GDP at balance invisible account debt
balance

1990-91 1995-96
2000-01 2001-02 2002-03 2003-04 2004-05 2005-06 2006-07 2007-08 2008-09 2009-10

5.8 9.1
9.9 9.4 10.6 11.1 12.2 13 14 14.1 15.4 14.4

8.8 12.3
12.6 11.8 12.7 13.3 17.1 19.5 20.9 21.9 25.1 23.1

14.6 21.4
22.5 21.2 23.3 24.4 29.3 32.5 34.9 36 40.5 37.5

-3 -3.2
-2.7 -2.4 -2.1 -2.2 -4.9 -6.5 -6.9 -7.8 -9.7 -8.7

-.1 1.6
2.1 3.1 3.4 4.6 4.5 5.2 5.8 6.3 7.4 6.4

-3.1 -1.7
-.6 +.7 +1.3 +2.3 -0.4 -1.1 -1.1 -1.4 -2.4 -3.1

28.7 27
23.3 21.2 20.3 17.8 18.5 17.2 17.9 19.0 20.5 20.1

2. Foreign Investment Flows Foreign investment takes two forms foreign direct investment (FDI) and foreign portfolio investment (FPI) FDI helps to increase the productive capacity of the economy , while FPI a more speculative nature and is thus volatile There exist a gap between approved FDI and actual inflows. If globalization has to make an impact and prove its efficiency , the gap has to be reduced FDI inflows and outflows: Whereas the Government of India has been initiating measures to attract FDI inflows into India, certain Indian firms have been undertaking investment projects in other countries. This has resulted in FDI outflows. Thus Net FDI inflow = FDI inflows FDI outflows

FDI INFLOWS AND OUTFLOWS IN INDIA Figures in brackets are percentage of FDI inflows
YEAR INFLOWS (1) 1,676 (100.0) 2,633 (100.0) 2,168 (100.0) 2,319 (100.0) OUTFLOWS (2) 96 (5.7) 47 (1.8) 80(3.7) 509 (21.9)

US$ million
NET FDI INFLOWS (3 = 2-1) 1,580 (94.3) 2,586 (98.2) 2,088 (96.3) 1,810 (78.1)

1992-97 * 1998 1999 2000

2001
2002 2003 2007

3,403 (100.0)
3,449 (100.0) 4,269 (100.0) 25,122 (100.0)

1,397 (41.0)
1,107 (32.1) 913 (21..4) 17,281 (68.8)

2,006 (58.9)
2,342 (67.9) 3,356(78.6) 7,841 (31.2)

2008
2009

40,418 (100.0)
34,613 (100.0)

18,499 (45.8)
14,897 (43.0)

21,919 (54.2)
19,716 (57.0)

 The consequence of the larger FDI outflows after 2000 has been a sizable reduction in net FDI inflows. Ultimately , it is the net FDI inflow which increases the rate of investment and the productivity of the Indian economy. Beside this, FDI investment is used to nullify the comparative cost advantage, more especially cheap labour as well as raw materials by transferring production processes to developing economies. FDI inflows are not all growth-oriented as advocated by proglobalizers lobby, a big part of the inflows is used to destroy the comparative cost advantage of developing countries. The MNCs undertake outsourcing and insist on Just-In- Time delivery and thereby enhance their profits from the production processes established in developing countries.

3. Employment, Flexibility and Impact on Labour: World Commission on social Dimension of Globalization states for the world as a whole the latest estimates show that open unemployment has increased over the last decade to about 188 million in 2003 Employment situation in India during the era of Globalization: The employment situation in India has worsened in the era of globalization. The rate of growth of employment which was 2.04% during 1983-94 declined to low level of 0.98 in 1994-2000. This was a consequence of a negative growth rate of employment in agriculture. The neglect of agriculture and shedding excess load in the employment of public sectors by imposing continuous ban on recruitment and not filling up even the positions vacated by retirement of public sector employers

 Globalization pushed workers from the organized sector to unorganized sectors. Globalization increased the process of informalization of the economy. The problems of unemployment, casualization, lower wages, part-time jobs, less or no security in jobs have manifested themselves in a much greater degree. The bargaining power of trade unions has been considerably reduced and they are to accept concession bargaining instead of collective bargaining
Mandays lost strikes lockout 1976 and 1990 54.9% 45.1% 1991 and 2000 39.2% 60.8%

Inequality and Poverty: ILO Report (2004) states income inequality has increased in some industrialized countries, reflected in an increase in the share of capital in national income as well as an increase in wage inequality between mid-1980s and the mid 1990s Poverty declined from 36% in 1993-94 to 26.1 in 1999-2000 but significant increase in rural-urban inequalities at all India level Slowing down of the process of Poverty Reduction: The growth rate of GDP was higher in 1990s than in 1980s. The paradox of higher growth of GDP and lower rate of poverty reduction is the direct result of unequal distribution of rich and marginalized section of the population. The main reason for the slow decline in poverty reduction is geographical pattern of growth promoted by policies of LPG.

Double Standards of Developed Countries: Developed countries demand so many concession and reductions in tariffs from developing countries, but are they encouraging free flow of trade, capital and technology across states ; or they using globalization to their advantage? Feminization of labour in low wage jobs: Since majority of women are working in the informal sector, they are most affected by the forces of free trade and are driven into low-end jobs. By exploiting home-based workers, the employers are able to reduce their costs to the minimum. The unfair treatment of women labour which has been caused by globalization calls for remedial actions

Goal of full employment and decent work sidelined under Globalization: ILO has been pleading for the promotion of opportunities for men and women to obtain decent and productive work in conditions of freedom, equality, security and human dignity Weakening of the welfare state in favour of markets: Pressure by MNCs, the IMF and World Bank forced government to take decision about privatization of public enterprise , opening of FDI in several sectors such as retail trade, consumer goods hurting small and medium enterprise leading to closure and resultant unemployment Globalization has led to more insecurity for workers, increased militancy of employers against workers and enhanced the phenomenon of lock outs

Failed to provide infrastructural facilities to rural areas Globalization bypassed the agricultural sector 60% of population Powerful MNCs replaced public monopolies to private monopolies D. Narashima Reddy in his presidential address to Indian Society of Labour Economics (2004) concluded that markets have a place but the task is to place the markets in their place. Markets should not be allowed to destroy the social fabric, which even the state cannot reconstruct easily. Markets need to be regulated in order to prevent them from causing social disruption. The task of ensuring decent work in third world is a task of restoring the state its rightful place in development

Industrial Policy - 1991

Industrial policy has so dominantly determined the pattern and direction of development of the economy Industrial policy indicated the respective roles of the public, private, joint and cooperative sectors; small, medium and large scale industries and the national priorities and the economic development strategy.

INDUSTRIAL POLICY UP TO 1991

RESERVATION OF INDUSTRIES DOMINANCE OF PUBLIC SECTOR ENTRY AND GROWTH RESTRICTIONS RESTRICTIONS ON FOREIGN CAPITAL AND TECHNOLOGY

THE NEW INDUSRIAL POLICY

The Industrial Policy announced on July 24, 1991, which heralded the economic reforms in India, has enormously expanded the scope of the private sector by opening up most of the industries for the private sector and substantially dismantling the entry and growth restrictions. The industrial policy reforms have reduced the industrial licensing requirement, removed restrictions on investment and expansion, and facilitated easy access to foreign technology and foreign direct investment.

Objectives
Self-reliance to build on the many sided gains already made Encouragement to Indian entrepreneurship , promotion of productivity and employment generation Development of indigenous technology through greater investment in R&D and bringing in new technology to help Indian manufacturing units attain world standards. Increasing the competitiveness for the benefit of the common man

 Incentives for the industrialisation of back ward areas Enhanced support to the small scale sector Ensure running of public sector undertakings (PSUs) on business lines and cut their losses. Protect the interests of workers Abolish the monopoly of any sector in any field of manufacturing except on strategic or security grounds To link indian economy to the global market so that we acquire the ability to pay for imports, and to make us less dependent on aid

Initiatives of policies relating to the following areas:

Industrial Licensing Foreign Investment

Foreign Technology Agreements

Public Sector Policy MRTP Act

SMALL SCALE INDUSTRIES

The village and small industries (VSI) sector in India consists of a very wide spectrum of industries categorised under small, tiny and cottage segments The VSI sector consists , broadly of: Traditional cottage and household industries ( viz., handloom, khadi and village industries, sericulture, handicrafts ) Modern small-scale industries including tiny units and power looms

Importance of SSI in India: 95% of the industrial units 40% of output in manufacturing sectors 35% of total exports Employment of about 18 million people

Role & Performance of cottage &SSI in Indian Economy

1. Expansion of SSI sector and its share in industrial output 2. Employment generation 3. Efficiency of SSI industries 4. Equitable distribution of National income 5. Mobilisation of capital & entrepreneurial skill 6. Regional dispersal of industries 7. Less industrial disputes 8. Contribution to exports

PROMOTIONAL MEASURES
Number of measures have been taken by the governments, central and state, to protect this sector from the onslaught of the large sector and to promote its growth. 1. Reservation of products 2. Reservation and Preference in Government Procurement 3. Infrastructural and Institutional support(DIC, KVIC) 4. Machinery on Hire Purchase (NSIC) 5. Marketing Assistance(SIDO, KVIC etc) 6. Financial Assistance

.contd
7. Training ( EDII) 8. Supply of raw materials

 Industrial Estate programme EPZs / SEZs Industrial parks Integrated Infrastructural Development Scheme Cluster development Industrial Growth Centres Schemes

INSTITUTIONAL SUPPORT STRUCTURE

Women Entrepreneurs State industrial policies Khadi and Village Industries Ancillary Industries

Industrial sickness
Causes of sickness Preventive and curative measures

 According to Companies Act, 2002 "`Sick Industrial Company' means an industrial company which has i) The Accumulated losses in any financial year equal to 50 per cent or more of its average net worth during four years immediately preceding such financial year; or ii) Failed to repay its debts within any three consecutive quarters on demand made in writing for its repayment by a creditor or creditors of such company."

Causes of sickness in small scale industry

The different types of industrial sickness in Small Scale Industry (SSI) fall under two important categories. They are as follows: Internal causes for sickness We can say pertaining to the factors which are within the control of management. This sickness arises due to internal disorder in the areas justified as following: a) Lack of Finance: This including weak equity base, poor utilization of assets, inefficient working capital management, absence of costing & pricing, absence of planning and budgeting and inappropriate utilization or diversion of funds. b) Bad Production Policies : The another very important reason for sickness is wrong selection of site which is related to production, inappropriate plant & machinery, bad maintenance of Plant & Machinery, lack of quality control, lack of standard research & development and so on.

 c) Marketing and Sickness : This is another part which always affects the health of any sector as well as SSI. This including wrong demand forecasting, selection of inappropriate product mix, absence of product planning, wrong market research methods, and bad sales promotions.
d) Inappropriate Personnel Management: The another internal reason for the sickness of SSIs is inappropriate personnel management policies which includes bad wages and salary administration, bad labour relations, lack of behavioural approach causes dissatisfaction among the employees and workers. e) Ineffective Corporate Management: Another reason for the sickness of SSIs is ineffective or bad corporate management which includes improper corporate planning, lack of integrity in top management, lack of coordination and control etc.

External causes for sickness a) Personnel Constraint: The first for most important reason for the sickness of small scale industries are non availability of skilled labour or manpower wages disparity in similar industry and general labour invested in the area. b) Marketing Constraints: The second cause for the sickness is related to marketing. The sickness arrives due to liberal licensing policies, restrain of purchase by bulk purchasers, changes in global marketing scenario, excessive tax policies by govt. and market recession. c) Production Constraints: This is another reason for the sickness which comes under external cause of sickness. This arises due to shortage of raw material, shortage of power, fuel and high prices, import-export restrictions. d) Finance Constraints: The another external cause for the sickness of SSIs is lack of finance. This arises due to credit restrains policy, delay in disbursement of loan by govt.

Consequences of Industrial Sickness

Setback to employment prospect Fear of industrial unrest Wastage of resources Adverse impact on related units Adverse effect on investors and entrepreneurs Losses to banks and financial institutions Loss of revenue to Government

EXIT Policy
The action plan entails closure of sick units, both in public and private sectors. Exit policy refers to the policy regarding the retrenchment of the surplus manpower resulting from restructuring of industrial units or the workers becoming unemployed by the closure of sick units.

Need for EXIT Policy

Surplus manpower is a major problem of many industrial units in India. In a competitive system demands cost efficiency improvement and cost reduction There is no economic and social justification for continuation of sick units The closure of unviable sick units are not allowed , the whole economy would become sick in due course Technological developments which increase productive efficiency are affecting employment in many organisations all over the world.

 According to Sudipto Mundle , 2.4 million surplus manpower in the industrial sector in India Business today estimated tat 1.8 million of the total of over 10 million government staff, including administrative staff and workers in departmental undertakings( like railways, telecom etc) was excess NATIONAL RENEWAL FUND An important step taken by Central Government to benefit workers affected by industrial restructuring, modernisation or closure of the unit was the establishment of NRF which was operationalised in 1992 Objectives : 1. To provide assistance to cover the cost of retraining and redeployment of employees arising as a result of modernisation and technological upgradation

2. To provide funds for compensation to employees affected by restructuring or closure of industrial units, both in public and private sectors 3. To provide funds for employment generation schemes in the organised and unorganised sectors to provide social safety net for labour

EXIM POLICY

Trade Policy in India

Since independence the number of changes has been took place in all most all sectors of the Indian economy. As far as foreign trade is concerned ,India has adopted an inward-oriented restrictive trade policy till 1960"s. Since 1960"s, India has adopted the import substitution policy, however the liberalisation era was started in 1970"s, but it is a mild in nature, in the late 1980"s and early 1990"s the drastic changes have been took place under the

Trade Policy in India

Indian economy has shifted towards the globalisation and our economy is linked with world economy. During 1950-1951 to 20112012 the Govt, of India have been implemented number of foreign trade policies, these policies have brought a tremendous changes in Indians foreign trade. As far as foreign trade policy is concerned number of changes have been took place during the planning period i.e. 1951-1952

Trade Policy of GOI

Solution of the balance of payments problems of a country depends considerably on the policies it adopts in the important sector and export sector. Classification of periods in India: 1) pre- reform period ( prior to 1990) 2) The post reform period (after 1990)

New Trade Policy- The Reform Period

FEATURES Free imports and exports Rationalisation of tariff structure Decanalisation Convertibility of rupee on current account Trading house Special Economic Zones EOU scheme Agriculture Export Zones

contd
Market acess intitative schemes Focus on service exports Concessions and exemptions

Foreign Trade Policy (2004-2009)

The new Foreign Trade takes an integrated view of the overall development of Indias foreign trade and goes beyond the traditional focus on pure exports. Trade is not an end in itself, but a means to economic growth and traditional development. The primary purpose is not the mere earning of foreign exchange, but the stimulation of greater economic activity.

Objectives of FTP 2004-09

1. To double our percentage share of global merchandise trade within the next five years and 2. To act as an effective instrument of economic growth by giving thrust to employment generation

Strategy of FTP 2004-09

1. Un lacking of controls and creating an atmosphere of trust and transparency in dealing with business 2. Simplifying procedures and bringing down transaction costs. 3. Neutralising incidence of all levels and duties on imports used in export products 4. Facilitating development of India as a global hub for manufacturing, trading and services

contd
5. Identifying and nurturing special focus areas which would generate additional employment opportunities, particularly in semi-urban and rural areas 6. Facilitating technological and infrastructural upgradation of all the sectors of the Indian economy, especially through import of capital goods and equipment 7. Avoiding inverted duty structures and ensuring that domestic sectors are not

contd
8. Reviatilising the Board of Trade by redefining its role, and inducing into it experts on trade policy 9. Upgrading the infrastructural network related to the entire foreign trade chain, to international standards

Main Features of FTP 2004-09

Doubling share of global merchandise Five thrust sector served from India to be built as a brand New categories of star houses Target Plus scheme Setting up of Free Trade and Warehousing Zones (FTWZs) Sops for EOUs Reducing Transactional costs and simplifying procedures Focus on Infrastructure Development Other Measures

MODULE 5

INFRASTRUCTURAL DEVELOPMENT IN INDIAN ECONOMY Development of Infrastructure is a sine qua non of economic development. Industrial progress depends on the development of power and electricity generation, transport and communications.

1. Sources of energy in India

I ) Sources of energy a. Power or electricity Electricity Act 2003 sources of power b. Coal c. Oil and Gas d. Atomic energy e. Non Conventional Energy Sources Biogas Solar energy Wind power II ) Energy Crisis III) Energy Strategy Energy resources and their exploitation Energy Conservation and Management of oil . Energy strategy for the future . Strategies for achieving energy security

2. TRANSPORT SYSTEM IN INDIA

1. Problems and Issues in Railway Development 2. Road Development 3. Water Transport 4. Air Transport 5. Communications

2. Natural Resource Management Resources are generally defined as all those things available in mans physical environment on which he depends for the satisfaction of some want or other. NATURAL RESOURCES AND ECONOMIC DEVELOPMENT The classical economists had interpreted development or under development of particular regions in terms of availability of natural resources. a) Land resources b) Water resource and National policy c) Forest resource and Government policy d) Mineral resources and Government Policy e) Ecological Imbalance and its causes and remedies

3. Environment and Sustainable Development

Sustainable development can be achieved only if the environment is covered and improved. Therefore, a development path is sustainable if only if the capital assets remains constant or rises over time

A) GROWTH AND ENVIRONMENTAL DEGRADATION: 1. Water pollution 2. Air pollution 3. Soil degradation 4. Deforestation 5. Loss of Biodiversity 6. Atmospheric changes green house effect and ozone depletion

. cotd

B) THE BURDEN OF POPULATION ON ENVIRONMENT: - Rural population and environment Urban Population and environment

C) ENVIRONMENT AS A NECESSITY AND LUXURY: D) THE GLOBAL CONCERNS