Liberalization in India started during 1991-92.Before this period of time the country did not experienced any big economic crisis. But the year 1991-92 turned out to be exceptionally difficult for the country's economy. The country was facing serious problems of foreign exchange and was on the brink of default. The inflation rate rose to it's peak at 16.7% in August 1991.Growth of real GDP (Gross Domestic Product) decelerated sharply.
The Government which took the office in June, 1991,responded to this crisis situation . In doing so they had to formulate certain new policies and at the same time make changes to some existing policies. The new economic policy (NEP) set up at that point of time are known as policies of liberalization and the change itself is known as liberalization
Discussing anything about liberalization automatically draws our attention towards the financial sector and thereby towards the banking sector of the economy concerned. This is so because this sector is directly associated with the economy. Any change in the economic parameters automatically gets reflected in this sector.
Hence, I choose the banking sector of India to compare between the public sector and the private sector ,.
Over the years after independence, the banking sector in India was primarily dominated by the state banks. They played a significant role in the development process of the c9ountry's economy. The period 1969-1990,witnessed rapid branch expansion and adequate flow of credits to all sectors. The mid eighties saw the commercial banks to consolidate the gains of expansion .At this point of time 90% of the banks were in public sector, being closely regulated in all respect.
But till 1990-91 India has not faced any major economical crisis. Though during 1990-91 there was pressure in the external sector, with the current account deficit and external debt servicing reaching large proportions .At this point of time an overall change in the economic policies were introduced.
The banking sector reforms undertaken in the year 1992,basically aimed at ensuring safety and soundness of financial institutions and at the same time make the banking system strong, efficient, functionally diverse and competitive. The reforms included measures for arresting the decline in productivity, increase in efficiency and profitability. Further it was recognized that the Indian banking sector should be in tune with the international standards. With liberalization the operation of foreign banks and the other private banks in India increased considerably. In order to visualize the effect of liberalization on the banking sector in India I have chosen two of the big players in today's banking industry. One is the State bank of India, a major public sector unit, and the other one is the ICICI bank, a major private sector unit.
State Bank of India
(Public Sector Undertaking)
(Private Sector Undertaking)
To make a comparative analysis of trend of productivity of these two sectors which have been taken into account particularly after the liberalization of Indian economy.
NATURE OF CHANGES IN INDIAN BUSINESS ENVIRONMENT AFTER ECONOMIC PLAN TRENDS OF PRIVATE SECTOR (Banking), PUBLIC SECTOR (Banking) UNDERTAKINGS IN INDIAN ECONOMY BEHAVIOUR OF THESE UNDERTAKING AFTER NEW ECONOMY POLICY SINCE 1991
For the following Companies:
State Bank of India
THE ECONOMY OF INDIA
The economy of India is the fourth-largest in the world as measured by purchasing power parity (PPP), with a GDP of US $3.36 trillion. When measured in USD exchange-rate terms, it is the tenth largest in the world, with a GDP of US $691.87 billion (2004). India was the second fastest growing major economy in the world, with a GDP growth rate of 8.1% at the end of the first quarter of 2005–2006. However, India's huge population results in a relatively low per...