Q. 13 Has the Indian governmental system responded adequately to the demands of Liberalization, Privatization and Globalisation started in 1991? What can the government do to be responsive to this important change?12.5 Answer: Due to FOREX crisis, India had to change its economic policy and adopt Liberalisation, Privatisation, Globalisation (LPG) in 1991. As the name suggests, economic and commercial policies were made liberal to allow businesses to grow. Henceforth, the attitude of government was to curtain private sector by keeping majority of areas under license. The procedures were liberalized and made open for private sectors. Privatization of governmental PSUs started in phased manner to reduce direct stake in market. Government had shaken off the responsibility of fulfilling market demand by allowing private sectors to play major role. Except few important sectors, government decided to disinvest its stake from PSUs. Globalisation was demand of time that India had missed due to inward looking, import substitution policies. Now, by LPG, India allowed foreign companies and investors by opening its market. Initially the move was slow, so domestic industries can learn from experience, to compete with
international players. It also helped in avoiding knee-jerk to Indian industries. Indian LPG has been slow, steady and constant movement that is still ongoing process. Not all PSUs have been privatized, not all required services are left on private sectors, not all licenses are done away with, and not all sectors are fully opened to investment by private and foreign companies. Government can expedite this process.
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