Liberalization

Post 1991

GROUP 12
Ashuman Gupta – 74
Karan Madhoghariya – 87
Prakhar Singh – 100
Shubhro De - 112
Textile Sector
A Disaster
• Inward looking policy till 1980s
• Turning point in 1985 and liberalization policy since
1991
• Uruguay round negotiations
• Expiry of the quotas to EU, USA and Canada
• National textile policy 2000
• New FDI policy
Indian Textile Exports
Some Facts
• The organized sector contribution is about 70%
• The organized sector employs about 10 %
• Increase in employment has been largely in the
unorganized sector
• Introduction of Power loom and then Jet loom
Employment Figures (%)
Conclusion
• Motive of Liberalization
• Exports
• Technology
• Unemployment
• Handloom and SSI
• No remedial measures
• No policy for grassroots level
Banking Sector
Banking Sector
• The banking reforms were initiated in the middle of a
“current account” crisis.

• Public deficit of 10 per cent, a current account deficit

of 3 per cent, an inflation rate of 10 per cent of GDP.

• It is also triggered by a temporary oil price boom

following the Iraqi invasion of Kuwait in 1990.
Major Reforms in the Banking Sector in India, 1992–2002

2. Liberalizing Controls over Commercial Banks

• Low interest rates on loans
• Reduction in cash reserve requirements
• Abolition of the credit authorization scheme

8. Encouraging Competition
Disadvantages of Reforms
• NPA of 27 public-sector banks amounted to 24
per cent of total credit.
• 15 public-sector banks achieved net profit.
• Concentration of power in a few banks.
• Lack of innovative decision making.
• Public sector banks that perform poorly are
regularly recapitalized rather than weeded out.
• Limiting the efficiency of banks is the legal
framework, which makes it very difficult for
creditors to enforce their claims.
Performance Analysis – Competition
Source RBI

• Asset shares of public

sector banks have fallen
after reforms and those of
Indian private sector
banks have increased.
• Public sector banks still
dominant accounting for
three-fourths of industry
assets
• In recent years,
considerable increase in
the share of public sector
banks in the industry-
wide profit
Performance Analysis – G-Sec –
Market Size

• The dependence of
government on market
borrowings has increased
sharply in the 1990s
• Outstanding stocks of both
Centre and State
Government debt each
increased by about 10 times
since the initiation of
reforms

Source : RBI
 Source RBI

• From around 20 per

cent in the early 1990s,
share of net market
borrowing in financing
fiscal deficit of the
central government has
increased to 80 per cent
in recent years
• No automatic
monetisation of budget
deficit
Future Steps
• Further improvements in
– Efficiency
– NPL position
– Corporate governance norms, especially in cooperative banks
– Competition
• Consolidation of the banking system
• Bridging legal gaps
Power Sector
The first area opened for private investment:
• Electricity sector had virtually no surpluses to
make available for investment
• To astern the increase in generating capacity
• To improve the system efficiency
• To reduce power lost in transmission and distribution
from 35% to 15%
• To reduce theft of electricity.
• Overcome the corruption
Progress hindrances
• Litigation/renegotiation leading to delays

• Financial arrangements

• Obtaining clearances

• Fuel supply agreements.

Problems faced by the SEBs
• High Return on Equity.

• High capital costs of private plants.

• High tariffs.

• Unfavourable financing
Future Steps
• Independent statutory regulators have to be
established to set tariffs.
• Tariff rationalization and enforcing penalties for non-
payment of dues.
• Cost-effective cogeneration and decentralized
generation.
Agriculture Sector
• STRENGTHS • WEAKNESS
• Rich Bio-diversity •Fragmentation of land
• Arable land •Low Technology Inputs

• Climate •Unsustainable Water Management

• Strong and well dispersed •Poor Infrastructure

research and extension system •Low value addition

THREATS
•
•
• OPPORTUNITIES •Unsustainable Resource Use
• Bridgeable yield crops •Unsustainable Regional

• Exports Development
•Imports
• Agro-based Industry
• Horticulture •

• Untapped potential in the N.E.

Real Estate Sector
The Absence of Apathy
Policy History
• Land Acquisition Act, 1894
• Reforms in 1991
• Urban Land Ceiling and regulation act
• Integrated township policy
• Land Acquisition (Amendment) Bill, 2007
• Rehabilitation and Resettlement Bill, 2007
Need for More
• Growth of IT/ITES
• Growth of organized retail sector
• Need for more housing
The Growth OF FDI
Shortcomings
• Development at the cost human lives
• Unclear terms and terminology
• Uncertainties in rehabilitation
• No scope for legal recourse
• Number of people displaced
Shortage of Houses
Conclusion
• Lack of proper and clear guidelines for the displaced
• Absence of regulatory body
• Massive urbanization
• Lack of rural housing