Appendix - I
LPG and its
Impact on India
Liberalization, Privatization and Globalization (LPG) have become dominant forces shaping societies and economies the world over. These three processes are interrelated. Globalized economies are likely to be more privatized and liberalized economies. Rapid growth and poverty reduction in China, India, and other countries that were poor 20 years ago, has been a positive aspect of Liberalization Privatization and Globalization (LPG). India opened up the economy in the early nineties following a major crisis that led by a foreign exchange crunch that dragged the economy close to defaulting on loans. The response was a slew of Domestic and external sector policy measures partly prompted by the immediate needs and partly by the demand of the multilateral organizations. The new policy regime radically pushed forward in favor of a more open and market oriented economy. One of the major consequences of globalization, privatization and liberalization is the acceleration in Foreign Direct Investment flows. While Foreign Direct Investment has been increasing for sometime among the developed triad countries, in recent years it has spread to other parts of the world, especially to the giant emerging economies. The privatization and liberalization policies pursued by these emerging economies have created new opportunities for Foreign Direct Investment. International investors now face difficult problems such as choosing countries, evaluating risk-return relationships and assessing profitability in private and public sectors. Financial Services Sector has gained momentum since LPG and has shown major growth in the following aspects: 1) Disinvestment, PPP: In order to make the process of globalization smooth, privatization and liberalization policies are moving along as well. Under the privatization scheme, most of the public sector undertakings have been/ are being sold to private sector. Hence, PPP (Public Private...
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