DISINVESTMENT PROGRAMME

• FOR GREATER PRIVATISATION OF ECONOMY LAUNCHED IN 1991-92-> WITH ANNOUNCEMENT OF NEW INDUSTRIAL POLICY.

• TARGETS WERE SET BUT GOVERNMENT FAILED TO ACHIEVE AS PER TARGET:

• EXAMPLE: TARGET IN 2002-03 12000 CR BUT ACHIEVED 3342 CR ONLY.

WAYS OF DISINVESTMENT.

• EARLIER SALE OF MINORITY STAKE LATER Yrs STRATEGIC SALES IN ADDITION TO THIS INITIAL PUBLIC OFFERINGS(IPO) AND RIGHTS OFFER.

• FACED CRITICISM WHEN DISINVEST HPCL AND BPCL SO SUSPENDED THE OPERATION.

SOME OF THE COMPANIES DISINVESTMENT.

• HOTEL CORPORATION OF INDIA LTD(3 HOTELS) 100%

• HTL LTD 74 %• CMC LTD 51 %• ETC

PRESENT DISINVESTMENT POLICY• CONTENT AND DIRECTION OF THE PRIVATISATION POLICY:

– MODERNISATION AND UPGRADATION OF PSE.– CREATION OF NEW ASSETS– GENERATION OF EMPLOYMENT– SETTING UP OF DISINVESTMENT PROCEED FUNDS(DPF)– FORMULATION OF GUIDELINES FOR DISINVESTMENT OF

NATIONAL ASSET COMPANIES– PREPARATION OF A PAPER ON THE FEASIBILITY AND

MODALITIES OF SETTING UP AN ASSET MANAGEMENT COMPANY TO HOLD, MANAGE AND DISPOSE THE RESIDUAL HOLDING OF THE GOVERNMENT IN THE COMPANIES IN WHICH GOVERNMENT EQUITY HAS BEEN DISINVESTED TO A STRATEGIC PARTNER.

• CONTENT AND DIRECTION OF THE PRIVATISATION POLICY:– MODERNISATION AND UPGRADATION OF PSE.– CREATION OF NEW ASSETS– GENERATION OF EMPLOYMENT– SETTING UP OF DISINVESTMENT PROCEED FUNDS(DPF)– FORMULATION OF GUIDELINES FOR DISINVESTMENT OF

NATIONAL ASSET COMPANIES– PREPARATION OF A PAPER ON THE FEASIBILITY AND

MODALITIES OF SETTING UP AN ASSET MANAGEMENT COMPANY TO HOLD, MANAGE AND DISPOSE THE RESIDUAL HOLDING OF THE GOVERNMENT IN THE COMPANIES IN WHICH GOVERNMENT EQUITY HAS BEEN DISINVESTED TO A STRATEGIC PARTNER.

VALUATION OF P S UNITS.

• VARIOUS METHODS AVAILABLE LIKE:– DISCOUNTED CASH FLOW– HISTORICAL COST METHOD– BALANCESHEET METHOD– COMPARABLE TRANSACTION METHOD.

UNDERVALUATION OF PSU STOCK IS A LOSS OF PUBLIC PROPERTY AND A SETBACK TO NATIONAL INTEREST.

STRATEGIC SALE METHOD

• INVOLVES AN EFFECTIVE TRANSFER OF CONTROL AND MANAGEMENT FROM GOVERNMENT TO A PRIVATE ENTITY WITH THE EXPECTATION THAT THE SURRENDER OF MANAGEMENT CONTROL WOULD FETCH A BETTER PRICE FROM THE PRIVATE PARTY IN A MATCHING PROPORTION.

• PRIVATE PARTY IS CALLED THE STRATEGIC PARTNER WHICH GENERALLY HAS EXPERIENCE IN RELATED LINES OF BUSINESS.

– BALCO, CMC, VSNL, IBP , ITDC HOTELS, MARUTI, HZLREAD PAGE 497 SURESH BEDI.

PROCEEDS TO BE UTILIZE: NOT FOR DEFICITS: IT SHOULD BE USED FOR

• RETIRING HUGE PUBLIC DEBT– REDUCE INT BURDEN OF GOV`T.

• INCREASING SOCIAL WELFARE EXP PUBLIC HEALTH, EDUCATION OR EMPLOYMENT GENERATION.

• BUILDING SOCIAL AND ECONOMIC OVERHEADS• INCREASING CAPITAL FORMATION IN AGRI• RETRAINING OF WORKERS AFFECTED IN THE PROCESS

OF PRIVATIZATION• BUILDING SAFETY NET FOR WORKERS ADVERSELY

AFFECTED BY PUBLIC SECTOR RESTRUCTURING.

• CONTAINED IN LATEST COMPETITION ACT 2002.

TO PREVENT PRACTISES HAVING ADVERSE EFFECT ON COMPETITIONTO PROMOTE AND SUSTAIN COMPETITION IN MARKETSTO PROTECT THE INTERESTS OF CONSUMERSTO ENSURE FREEDOM OF TRADE CARRIED ON BY OTHER PARTICIPANTS IN ONE MARKET.

TO PREVENT PRACTISES HAVING ADVERSE EFFECT ON COMPETITIONTO PROMOTE AND SUSTAIN COMPETITION IN MARKETSTO PROTECT THE INTERESTS OF CONSUMERSTO ENSURE FREEDOM OF TRADE CARRIED ON BY OTHER PARTICIPANTS IN ONE MARKET.

THE ACT COVERS THE WHOLE OF INDIA EXCEPT J AND K AND REPLACES EARLIER MRTP ACT.THE ACT COVERS THE WHOLE OF INDIA EXCEPT J AND K AND REPLACES EARLIER MRTP ACT.

COMPETITION COMMISSION OF INDIA(CCI)

• TO ELIMINATE PRACTICES HAVING ADVERSE IMPACT ON COMPETITION, PROTECTING THE INTEREST OF CONSUMERS AND ENSURING FREEDOM OF TRADE CARRIED ON BY OTHER PARTICIPANTS.

WHILE DETERMINING THE EFFECT OF COMP,… UNDER THIS ACT FOLLOWING SIX FACTORS ARE TAKEN INTO

ACCOUNT.

• P S DISINVETMENT AND PRIVATISATION• OPENING UP OF NEW SECTORS TO PRIVATE

ENTERPRISE• DELICENSING• DE-RESERVATION OF SSI ITEMS• LIBERALISATION OF FDI• INFRASTRUCTURE DEREGULATION AND

FACILITATION• IMPORT COMPETITION.

IMPORT COMPETITION• REFORMS HAVE LED TO INCREASED

COMPETITION BETWEEN DOMESTIC BUT ALSO FOREIGN FIRMS.

• UNDER LIBERALISATION UNDER WTO INCREASED IN A NUMBER OF PRODUCTS FROM 24.1 BILLION $ IN 190-91 TO $ 44.9 BILLION IN 2001-02:

• IMPORTS IN CAPITAL GOODS, ELECTROIC, SMALL VALUED PRODUCTS, FOOD, CHEMICALS , IRON AND STEEL, MEDICINAL PRODUCTS, COMPUTER SOFTWARE ETC.

INFRASTRUCTURE DEREGULATION AND FACILITATION: RESULTED IN

INCREASE IN NUMBER OF FIRMS ENGAGED IN INFRASTRUCTURE PROJECTS AND RELATED SERVICES

CORPORATISATION OF A NUMBER OF PUBLIC UTILITIES AND THEIR FUNCTIONING ALONG MODERN CORPORATE LINES.

SO FOLLOWING AGENCIES ARE PLAYING IMPORTANT ROLE FOR THE SAME

IDFC(INDUSTRIAL DEVELOPMENT FINANCE CORPORATION.

STATE ELECTRICITY REGULATORY COMMISSION TELECOM REGULATORY AUTHORITY OF INDIA(TRAI) NATIONAL HIGHWAY DEVELOPMENT

PROJECT(NHDP)

LIBERALISATION OF FDI.

• FDI CONTRIBUTED TO COMPETITION AND EXISTENCE OF COMPETITIVE CONDITIONS INDUCES FDI INFLOIW AND MNC ENTRY.

1991-2002 16000 FDI PROPOSAL OF ABOUT 284812 CR WERE APPROVED, 7500 FOREIGN TECHNOLOGY AGGREEMENTS WERE APPROVED.

DE-RESERVATION OF SSI ITEMS

• RESULTED: COMPETITION NOT ONLY BETWEEN DOMESTIC AND FOREIGN FIRMS BUT ALSO SMALL AND LARGE FIRMS WITHIN DOMESTIC ECONOMY.– HOW1996-2003 100 ITEMS DERESERVED – EARLIER

WITH ONLY SSI. ABOUT 600 ITEMS ONLIST OF RESERVED

PRODUCTS NOW FREELY IMPORTABLE.

BROAD BANDING

• EXAMPLE: YOU CAN MAKE MOTORCYCLES UNDER LICENSE OF MANUFACTURING MOTORCYCLES, BUT WHEN BROAD-BANDED AS TWO WHEELER WOULD INCLUDE SCOOTERS AND MOPEDS AS WELL.– REASON: NEW FIRMS CAN ENTRE AND EXISTING

CAN EXPAND THEIR PRODUCT LINES AND BECOME MORE COMPETITIVE THROGH ECONOMIES OF SCALE(DIVERSIFICATION ECONOMIES).

DELICENSING: IT REDUCES ENTRY BARRIERS, ENCOURAGES THE FLOW OF PRIVATE INVESTMENT AND

ENCOURAGES COMPETITION.

• YOU DELICENSE: EARLIER – MANDATORY FOR ESTABLISHING A NEW UNIT

• EXPANDING THE CAPACITY OF AN EXISTING• CHANGING THE LOCATION OF EXISTING

SO UNDER NEW DELICENSING: NOW ONLY 5 INDUSTRIES ARE LEFT FOR REQUIREMENT OF LICENCE.

NOW ALSO INDUSTRIAL UNITS ENJOY BROAD BANDING—SO INCREAE IN COMPETITIVE ENVIRONMENT IN THE COUNTRY.

ANOTHER FACTOR LEADING TO GREATER COMPETITION.

• OPENING UP OF NEW SECTORS TO PRIVATE ENTERPRISE.– HOW: IN LAST 2 DECADES NO OF INDUSTRIES

RESERVED FOR PUBLIC SECTOR HAS BEEN GRADUALLY REDUCED.

– ONLY DEFENCE PRODUCTS– ATOMIC ENERGY– RAILWAY TRANSPORT– SPECIFIED MINERALS ARE LEFT.

DISINVESTMENT PROGRAMME

• FOR GREATER PRIVATISATION OF ECONOMY LAUNCHED IN 191-92-> WITH ANNOUNCEMENT OF NEW INDUSTRIAL POLICY.

• TARGETS WERE SET BUT GOVERNMENT FAILED TO ACHIEVE AS PER TARGET:

• EXAMPLE: TARGET IN 2002-03 12000 CR BUT ACHIEVED 3342 CR ONLY.

WAYS OF DISINVESTMENT.

• EARLIER SALE OF MINORITY STAKE LATER Yrs STRATEGIC SALES IN ADDITION TO THIS INITIAL PUBLIC OFFERINGS(IPO) AND RIGHTS OFFER.

• FACED CRITICISM WHEN DISINVEST HPCL AND BPCL SO SUSPENDED THE OPERATION.

SOME OF THE COMPANIES DISINVESTMENT.

• HOTEL CORPORATION OF INDIA LTD(3 HOTELS) 100%

• HTL LTD 74 %• CMC LTD 51 %• ETC

PRESENT DISINVESTMENT POLICY• CONTENT AND DIRECTION OF THE PRIVATISATION POLICY:

– MODERNISATION AND UPGRADATION OF PSE.– CREATION OF NEW ASSETS– GENERATION OF EMPLOYMENT– SETTING UP OF DISINVESTMENT PROCEED FUNDS(DPF)– FORMULATION OF GUIDELINES FOR DISINVESTMENT OF

NATIONAL ASSET COMPANIES– PREPARATION OF A PAPER ON THE FEASIBILITY AND

MODALITIES OF SETTING UP AN ASSET MANAGEMENT COMPANY TO HOLD, AMANGE AND DISPOSE THE RESIDUAL HOLDING OF THE GOVERNMENT IN THE COMPANIES IN WHICH GOVERNMENT EQUITY HAS BEEN DISINVESTED TO A STRATEGIC PARTNER.

• CONTENT AND DIRECTION OF THE PRIVATISATION POLICY:– MODERNISATION AND UPGRADATION OF PSE.– CREATION OF NEW ASSETS– GENERATION OF EMPLOYMENT– SETTING UP OF DISINVESTMENT PROCEED FUNDS(DPF)– FORMULATION OF GUIDELINES FOR DISINVESTMENT OF

NATIONAL ASSET COMPANIES– PREPARATION OF A PAPER ON THE FEASIBILITY AND

MODALITIES OF SETTING UP AN ASSET MANAGEMENT COMPANY TO HOLD, AMANGE AND DISPOSE THE RESIDUAL HOLDING OF THE GOVERNMENT IN THE COMPANIES IN WHICH GOVERNMENT EQUITY HAS BEEN DISINVESTED TO A STRATEGIC PARTNER.

VALUATION OF P S UNITS.

• VARIOUS METHODS AVAILABLE LIKE:– DISCOUNTED CASH FLOW– HISTORICAL COST METHOD– BALANCESHEET METHOD– COMPARABLE TRANSACTION METHOD.

UNDERVALUATION OF PSU STOCK IS A LOSS OF PUBLIC PROPERTY AND A SETBACK TO NATIONAL INTEREST.

STRATEGIC SALE METHOD

• INVOLVES AN EFFECTIVE TRANSFER OF CONTROL AND MANAGEMENT FROM GOVERNMENT TO A PRIVATE ENTITY WITH THE EXPECTATION THAT THE SURRENDER OF MANAGEMENT CONTROL WOULD FETCH A BETTER PRICE FROM THE PRIVATE PARTY IN A MATCHING PROPORTION.

• PRIVATE PARTY IS CALLED THE STRATEGIC PARTNER WHICH GENERALLY HAS EXPERIENCE IN RELATED LINES OF BUSINESS.

– BALCO, CMC, VSNL, IBP , ITDC HOTELS, MARUTI, HZLREAD PAGE 497 SURESH BEDI.

PROCEEDS TO BE UTILIZE: NOT FOR DEFICITS:

• RETIRING HUGE PUBLIC DEBT– REDUCE INT BURDEN OF GOV`T.

• INCREASING SOCIAL WELFARE EXP PUBLIC HEALTH, EDUCATION OR EMPLOYMENT GENERATION.

• BUILDING SOCIAL AND ECONOMIC OVERHEADS• INCREASING CAPITAL FORMATION IN AGRI• RETRAINING OF WORKERS AFFECTED IN THE PROCESS

OF PRIVATIZATION• BUILDING SAFETY NET FOR WORKERS ADVERSELY

AFFECTED BY PUBLIC SECTOR RESTRUCTURING.

• CONTAINED IN LATEST COMPETITION ACT 2002.

TO PREVENT PRACTISES HAVING ADVERSE EFFECT ON COMPETITIONTO PROMOTE AND SUSTAIN COMPETITION IN MARKETSTO PROTECT THE INTERESTS OF CONSUMERSTO ENSURE FREEDOM OF TARDE CARRIED ON BY OTHER PARTICIPANTS IN ONE MARKET.

TO PREVENT PRACTISES HAVING ADVERSE EFFECT ON COMPETITIONTO PROMOTE AND SUSTAIN COMPETITION IN MARKETSTO PROTECT THE INTERESTS OF CONSUMERSTO ENSURE FREEDOM OF TARDE CARRIED ON BY OTHER PARTICIPANTS IN ONE MARKET.

THE ACT COVERS THE WHOLE OF INDIA EXCEPT J AND K AND REPLACES EARLIER MRTP ACT.THE ACT COVERS THE WHOLE OF INDIA EXCEPT J AND K AND REPLACES EARLIER MRTP ACT.

COMPETITION COMMISSION OF INDIA(CCI)

• TO ELIMINATE PRACTICES HAVING ADVERSE IMPACT ON COMPETITION, PROTECTING THE INTEREST OF CONSUMERS AND ENSURING FREEDOM OF TRADE CARRIED ON BY OTHER PARTICIPANTS.

WHILE DETERMINING THE EFFECT OF COMP,… UNDER THIS ACT FOLLOWING SIX FACTORS ARE TAKEN INTO

ACCOUNT.

IMPORT COMPETION• REFORMS HAVE LED TO INCRESED

COMPETITION BETWEEN DOMESTIC BUT ALSO FOREIGN FIRMS.

• UNDER LIBERALISATION UNDER WTO INCREASED IN A NUMBER OF PRODUCTS FROM 24.1 BILLION $ IN 190-91 TO $ 44.9 BILLION IN 2001-02:

• IMPORTS IN CAPITAL GOODS, ELECTROIC, SMALL VALUED PRODUCTS, FOOD, CHEMICALS , IRON AND STEEL, MEDICINAL PRODUCTS, COMPUTER SOFTWARE ETC.

INFRASTRUCTURE DEREGULATION AND FACILITATION: RESULTED IN

INCREASE IN NUMBER OF FIRMS ENGAGED IN INFRASTRUCTURE PROJECTS AND RELATED SERVICES

CORPORATISATION OF A NUMBER OF PUBLIC UTILITIES AND THEIR FUNCTIONING ALONG MODERN CORPORATE LINES.

SO FOLLOWING AGENCIES ARE PLAYING IMPORTANT ROLE FOR THE SAME

IDFC(INDUSTRIAL DEVELOPMENT FINANCE CORPORATION.

STATE ELECTRICITY REGULATORY COMMISSION TELECOM REGULATORY AUTHORITY OF INDIA(TRAI) NATIONAL HIGHWAY DEVELOPMENT

PROJECT(NHDP)

LIBERALISATION OF FDI.

• FDI CONTRIBUTED TO COMPETITION AND EXISTENCE OF COMPETITIVE CONDITIONS INDUCES FDI INFLOIW AND MNC ENTRY.

1919-2002 16000 FDI PROPOSAL OF ABOUT 284812 CR WERE APPROVED, 7500 FOREIGN TECHNOLOGY AGGREEMENTS WERE APPROVED.

DE-RESERVATION OF SSI ITEMS

• RESULTED: COMPETITION NOT ONLY BETWEEN DOMESTIC AND FOREIGN FIRMS BUT ALSO SMALL AND LARGE FIRMS WITHIN DOMESTIC ECONOMY.– HOW1996-2003 100 ITEMS DERESERVED – EARLIER

WITH ONLY SSI. ABOUT 600 ITEMS ONLIST OF RESERVED

PRODUCTS NOW FREELY IMPORTABLE.

BROAD BANDING

• EXAMPLE: YOU CAN MAKE MOTORCYCLES UNDER LICENSE OF MANUFACTURING MOTORCYCLES, BUT WHEN BROAD-BANDED AS TWO WHEELER WOULD INCLUDE SCOOTERS AND MOPEDS AS WELL.– REASON: NEW FIRMS CAN ENTRE AND EXISTING

CAN EXPAND THEIR PRODUCT LINES AND BECOME MORE COMPETITIVE THROGH ECONOMIES OF SCALE(DIVERSIFICATION ECONOMIES).

DELICENSING: IT REDUCES ENTRY BARRIERS, ENCOURAGES THE FLOW OF PRIVATE INVESTMENT AND

ENCOURAGES COMPETITION.

• YOU DELICENSE: EARLIER – MANDATORY FOR ESTABLISHING A NEW UNIT

• EXPANDING THE CAPACITY OF AN EXISTING• CHANGING THE LOCATION OF EXISTING

SO UNDER NEW DELICENSING: NOW ONLY 5 INDUSTRIES ARE LEFT FOR REQUIREMENT OF LICENCE.

NOW ALSO INDUSTRIAL UNITS ENJOY BROAD BANDING—SO INCREAsE IN COMPETITIVE ENVIRONMENT IN THE COUNTRY.

ANOTHER FACTOR LEADING TO GREATER COMPETITION.

• OPENING UP OF NEW SECTORS TO PRIVATE ENTERPRISE.– HOW: IN LAST 2 DECADES NO OF INDUSTRIES

RESERVED FOR PUBLIC SECTOR HAS BEEN GRADUALLY REDUCED.

– ONLY DEFENCE PRODUCTS– ATOMIC ENERGY– RAILWAY TRANSPORT– SPECIFIED MINERALS ARE LEFT.

WORLD IS NOW SMALL PLACE TO WORK.

MORE OF NECESSITY.

NOW YOU SEE IT MORE AS A GROWTH FACTOR

YOU DESIGN POLICIES TO LINK WITH VARIOUS/ REST OF THE WORLD.

ITS UNDOUBTLY NOW A PILLAR OF ECONOMIC GROWTH

ITS NOT PURELY A ECONOMIC AND BUSINESS CONCEPT BUT MUCH MORE

PROCESS OF INTERNATIONAL INTEGRATION OF PRODUCTS, TECH, HR,CAPITAL,INFOR AND CULTURES.

AS GLOBALIZATION MOVES SO ECONOMIC, SOCIAL, POLITICAL MOVES AND INTERACTION FURTHER INCREASES.

PROCESS OF INTERNATIONAL INTEGRATION OF PRODUCTS, TECH, HR,CAPITAL,INFOR AND CULTURES.

AS GLOBALIZATION MOVES SO ECONOMIC, SOCIAL, POLITICAL MOVES AND INTERACTION FURTHER INCREASES.

WHY NEED TO GLOBALIZE?

• WORLD CONCERNS– BIO-DIVERSITY– ENVIRONMENTAL PROTECTION– POVERTY– SUSTAINABLE DEVELOPMENT– INTERNATIONAL SECURITY AND CO-OPERATION

SO REQUIRE GLOBAL ACTION RESULTS COUNTRIES COMING CLOSE TO EACH OTHER

WORLD LEVEL GLOBALISATIONWORLD LEVEL GLOBALISATION

INDICATOR/MEASURED BY:

SHARE OF WORLD Trade in world GDPFDI(FOREIGN DIRECT INVESTMENT) IN THE WORLD AS %AGE TO WORLD GDPTOTAL FOREIGN OUTPUT OF MNC AS %AGE OF WORLD GDPGLOBAL TRANSACTIONS IN F E AS PROPORTION OF WORLD GDPAGGREGATE TURNOVER IN FOREIGN EXCHANGE MARKETSTOTAL BALANCE OF PAYMENTS RECEIPTS OF ALL THE COUNTRIES OF THE WORLD AS PROPORTION OF WORLD GDP.

APART FROM ABOVE: CROSS BORDER TRANSACTION IN FINANCIAL SECURITIES, INT` COMMUNICATION, INT` TOURIST TRAFFIC, CROSS-BORDER FLOW OF HR ETC INDICATOR OF WORLD GLOBALIZATION.

APART FROM ABOVE: CROSS BORDER TRANSACTION IN FINANCIAL SECURITIES, INT` COMMUNICATION, INT` TOURIST TRAFFIC, CROSS-BORDER FLOW OF HR ETC INDICATOR OF WORLD GLOBALIZATION.

COUNTRY LEVEL GLOBALISATIONCOUNTRY LEVEL GLOBALISATION

SEE FROM COUNTRY POINT OF VIEW THE FOLLOWING INDICATIORS.

SEE FROM COUNTRY POINT OF VIEW THE FOLLOWING INDICATIORS.

SHARE OF FOREIGN TRADE(IMP+EXP) IN NATIONAL INCOME(CALLED FOREIGN TRADE ORIENTATION)FOREIGN INVESTMENT(INWARD AND OUTWARD) AS PROPRTION OF TOTAL DOMESTIC INVESTMENT OR NATIONAL INCOME.TRANSACTIONS IN F.E. AS PROPORTION OF TOTAL VALUE OF TRANSACTIONS IN THE ECONOMY.INTERNATIONAL INVESTMENT INCOME FLOWS(IN OR OUT) AS PROPORTION OF AGGREGATE INVESTMENT INCOME(DIVIDEND + INTEREST + ROYALTY) IN THE COUNTRYEMIGRANT AND IMMIGRANT VIS A VIS TOTAL POPULATION IN THECOUNTRYINTERNATIONAL TOURISM TRAFFIC AS PROPORTION TO TOTAL POPULATION.THE SHARE OF FOREIGN OUTPUT OF DOMESTIC MULTINATIONAL + DOMESTIC OUTPUT OF FOREIGN MULTINATIONAL AS PROPORTION OF NATIONAL INCOME OF COUNTRY.

SHARE OF FOREIGN TRADE(IMP+EXP) IN NATIONAL INCOME(CALLED FOREIGN TRADE ORIENTATION)FOREIGN INVESTMENT(INWARD AND OUTWARD) AS PROPRTION OF TOTAL DOMESTIC INVESTMENT OR NATIONAL INCOME.TRANSACTIONS IN F.E. AS PROPORTION OF TOTAL VALUE OF TRANSACTIONS IN THE ECONOMY.INTERNATIONAL INVESTMENT INCOME FLOWS(IN OR OUT) AS PROPORTION OF AGGREGATE INVESTMENT INCOME(DIVIDEND + INTEREST + ROYALTY) IN THE COUNTRYEMIGRANT AND IMMIGRANT VIS A VIS TOTAL POPULATION IN THECOUNTRYINTERNATIONAL TOURISM TRAFFIC AS PROPORTION TO TOTAL POPULATION.THE SHARE OF FOREIGN OUTPUT OF DOMESTIC MULTINATIONAL + DOMESTIC OUTPUT OF FOREIGN MULTINATIONAL AS PROPORTION OF NATIONAL INCOME OF COUNTRY.

BOP(BALANCE OF PAYMENTS)

• SYSTEMATIC SUMMARY OF ALL THE INTERNATIONAL TRANSACTIONS OF ITS RESIDENTS(INCLUDING ORGANISATION ) WITH REST OF THE WORLD OVER A PARTICULAR PERIOD, USUALY 1 YEAR.

• TRANSACTION CAN WITH FOREIGN NATIONAL, ORGANISATION, GOVERNEMENT.

CONTINUEE.

• INTERNATIONAL TRANSACTION(RECEIPTS OR PAYMENTS). DIVIDED IN TO 2:

CURRENT ACCOUNT:

IN THIS TRANSACTION HAVE ONLY FLOW DIMENSION::::::::::::::: SUCH AS EXPORT AND IMPORT, REMITTANCES,DIVIDEND AND INTEREST FLOWS.

CAPITAL ACCOUNT:

IN THIS RECORDS TRANSACTIONS WHICH HAVE STOCK DIMENSION AS WELL: SUCH AS INTERNATIONAL COMMERCIAL BORROWINGS, FOREIGN LOANS, INVESTMENTS AND FOREIGN GOVERNMENT LOANS AND ALSO TRANSACTION WITH IMF .

CAPITAL ACCOUNT:

IN THIS RECORDS TRANSACTIONS WHICH HAVE STOCK DIMENSION AS WELL: SUCH AS INTERNATIONAL COMMERCIAL BORROWINGS, FOREIGN LOANS, INVESTMENTS AND FOREIGN GOVERNMENT LOANS AND ALSO TRANSACTION WITH IMF .

A BOP DEFICIT IS FINANCIED EITHER THROUGH FOREIGN BORROWINGS OR DRAWN DOWN ON COUNTRY`S F.E. RESERVES.

A BOP DEFICIT IS FINANCIED EITHER THROUGH FOREIGN BORROWINGS OR DRAWN DOWN ON COUNTRY`S F.E. RESERVES.

OTHER INDICATORS ARE:

• WORLD PRICE INDEX AND HOME PRICE INDEX• LEADING WORLD STOCK PRICE INDICES AND

HOME STOCK PRICE INDEX.• WORLD GROWTH RATE VIA VIS HOME

COUNTRY GROWTH RATE.• VARIATIONS IN F.E OF WORLD CURRENCIES

VIS VIS HOME CURRIENCY.ALSO SEE WORLD LEVEL MACRO- INDICATORS EFFECT HOME

MARCO INDICATORS.

INDUSTRY LEVEL GLOBALISATION: INDICATORS

MNC`S:: BETTER PLACED

INDUSTRY EXPORTS PLUS IMPORTS AS PROPORTION OF INDUSTRY OUT PUT

FOREIGN INVESTMENT IN THE INDUSTRY + FOREIGN INVESTMENT BY FIRMS OF THE INDUSTRY AS PROPORTION TO TOTAL INVESTMENT IN THE INDUSTRY.

TOTAL FOREIGN EXCHANGE TRANSACTIONS CONDUCTED BY THE FIRMS IN THE INDUSTRY AS PROPORTION OF TOTAL TRANSACTIONS OF THE INDUSTRY.

TOTAL FOREIGN OUTPUT AS PROPORTION OF TOTAL OUTPUT(DOMESTIC + FOREIGN) OF THE FIRMS IN THE INDUSTRY.

INVESTMENT INCOME RECEIVED FROM ABROAD AND REPATRIATED AS A PROPORTION OF TOTAL DIVIDEND PLUS INTEREST PAID BY THE FIRMS IN THE INDUSTRY TO DOMESTIC AND FOREIGN ENTITIES.

WITHIN A COUNTRY SPECIFIC INDUSTRIES OPERATE GLOBALLYWITHIN A COUNTRY SPECIFIC INDUSTRIES OPERATE GLOBALLY

FIRM LEVEL GLOBALISATION

• WITHIN INDUSTRIAL SEGMENTS INDIVIDUAL FIRMS OPERATE GLOBALLY.

• THEY HAVE– HIGH LEVEL OF TECHNOLOGY DEVELOPMENT– STRONG COMPETITIVE ADVANTAGES– INTERNATIONAL OUTSOURCING CONNECTIONS– ACCESS TO FOREIGN MARKETS.

CONTINUE..

INDIAN MEASURES FOR GLOBALIZATION.INDIAN MEASURES FOR GLOBALIZATION.TRADE LIBERALIZATION: REDUCTION OF IMPORT TARIFFSREMOVAL OF QUANTITATIVE RESTRICTIONSLIBERALISATION: EASY NORMS FOR MNC ENTRY AND FDILIBERALISATION OF F.E. MANAGEMENT REGIMEGREATER FREEDOM TO FIIs IN MONEY AND CAPITAL MARKETSCONVERTIBILITY: RUPEE IN F.E AND VICE VERSA ON CUREENT ACCOUNT TRANSACTIONS FOREIGN TRANSACTION RELATED TO TRADE OG GOODS AND SERVICES, SHORT TERM BANKING AND CREDIT FACILITIES.

STRENGTHENING OF TRADE INFRASTRUCTURE INCLUDING PORT.WIDENING,DEEPENING AND STREAMLINING OF FOREIGN EXCHANGE MARKET

INCENTIVES AND POLICIES TO ATTARCT NRI FUND AND INVESTMENT

GREATER FREEDOM TO CORPORATE ORGANIZATION TO RAISE FUNDS DIRECTLY FROM ABROAD.

TRADE LIBERALIZATION: REDUCTION OF IMPORT TARIFFSREMOVAL OF QUANTITATIVE RESTRICTIONSLIBERALISATION: EASY NORMS FOR MNC ENTRY AND FDILIBERALISATION OF F.E. MANAGEMENT REGIMEGREATER FREEDOM TO FIIs IN MONEY AND CAPITAL MARKETSCONVERTIBILITY: RUPEE IN F.E AND VICE VERSA ON CUREENT ACCOUNT TRANSACTIONS FOREIGN TRANSACTION RELATED TO TRADE OG GOODS AND SERVICES, SHORT TERM BANKING AND CREDIT FACILITIES.

STRENGTHENING OF TRADE INFRASTRUCTURE INCLUDING PORT.WIDENING,DEEPENING AND STREAMLINING OF FOREIGN EXCHANGE MARKET

INCENTIVES AND POLICIES TO ATTARCT NRI FUND AND INVESTMENT

GREATER FREEDOM TO CORPORATE ORGANIZATION TO RAISE FUNDS DIRECTLY FROM ABROAD.

INTERNATIONAL MONETARY FUND:IMF

• REASONS:– WORLD WAR 1 AND 2– ECONOMIC RIVARLY AMONG DIFFERENT NATIONS• SO NEED FOR COMMON INTERNATIONAL FORUM

– FOR ACHIEVING ECONOMIC COOPERATION– PROMOTING INTERNATIONAL TRADE– PROVIDING HELP TO NEEDY NATIONS

IMF WAS FORMED: IN 1944 AT BRETTON WOODS IN AMERICA.44 REPRESENTS OF COUNRIES PARTICIPATED.:

THUS CAME 2 INSTITUTIONS: FOR ECONOMIC DEVELOPMENT OF ALL COUNTRIESTHUS CAME 2 INSTITUTIONS: FOR ECONOMIC DEVELOPMENT OF ALL COUNTRIES

1. INTERNATIONALMONETARY FUND2. INTERNATIONAL BANK FOR RECONTRUCTION AND

DEVELOPMENT/WORLD BANK

IMF FOUNDED ON 27 TH DEC,1945.

OBJECTIVE: A. SOLVING THE PROBLEM OF BALANCE GROWTH OF WORLD TARDE B. INTERNATIONAL MONETARY CO-OPERATION C. BALANCE OF MEMBER COUNTRIES D. MAINTAIN EQUILIBRIUM

OBJECTIVES OF IMF

TO PROMOTE INTERNATIONAL MONETARY COOPERATION

TO MAINTAIN STABILITY IN EXCHANGE RATE

TO ABOLISH EXCHANGE RESTRICTIONS

TO PROVIDE AID TO MEMBER DURING EMERGENCY

TO HELP IN PROFITABLE INVESTMENT OF CAPITAL

TO PROMOTE BALANCED ECONOMIC DEVELOPMENT

TO PREVENT SPREADING OF FINANCIAL CRISIS

TO REDUCE DISEQUILIBRIUM IN BOP

MAIN FUNCTIONS OF IMFMAIN FUNCTIONS OF IMF

PURCHASE AND SALE OF FOREIGN CURRENCY

BANK OF CENTRAL BANKS

TECHNICAL ASIISTANCE

IMPART TRAINING

FACILITIES DURING EMERGENCY

INCREASE INTERNATIONAL LIQUIDITY

DETERMINING EXCHANGE RATE FOR EVERY MEMBER COUNTRY

POVERTY REDUCTION

RESEARCH FUNCTIONS

SPECIAL LENDING FACILITIES

BUFFER STOCK FINANCING ( FOR MAINTAING RESERVE STOCK) MAINLY

FOR FOODGRAINS

STRUCTURAL ADJUSTMENT FACILITY(S.A.F): UNDER THIS SCHEME

CONCESSIONAL LOANS ARE PROVIDED BY IMF TO LEAST DEVELOPED MEMBERS

NATIONS FOR MEETING DEFICIT IN BOP. UNDER THIS RATE OF FINANCE IS

BETWEEN .5% TO 1%.

DIFFERENCE BETWEEN

IMF• OVERSEES THE MONETARY

SYSTEM OF THE WORLD.• PROMOTES EXCHANGE

RELATIONS AND STABILITY AMONG ITS MEMBER COUNTRIES.

• ADDS TO THE CURRENCY RESERVES OF ITS MEMBER COUNTRIES THROUGH ALLOCATION OF SPECIAL DRAWING RIGHTS(SDRs)

WORLD BANK• PROMOTES ECONOMIC

DEVELOPMENT IN UNDERDEVELOPED COUNTRIES.

• HELPS UNDERDEVELOPED COUNTRIES BY PROVIDING LONG-TERM FINANCING FOR DEVELOPMENT PROJECTS.

CONTINUE……

• ASSITS ALL ITS MEMBERS COUNTRIES THAT ARE IN TEMPORARY BALANCE OF PAYMENT DIFFICULTIES BY PROVIDING THEM SHORT TO MEDIUM TERM CREDIT.

• ENCOURAGES PRIVATE ENTERPRISES IN DEVELOPING COUNTRIES THROUGH INTERNATIONAL FINANCE COORPORATION(IFC) WHICH IS SUBPART OF THE IMF.

CONTINUE..

• FINANCIAL RESOURCES COME FROM THE FIXED QUOTA SUBSCRIPTION OF ITS MEMBER COUNTRIES.

• HAS ABOUT FULLY PAID IN QUOTAS TOTALLING $215 BILLION

• HAS TOTAL STAFF OF 2300 FROM 185 COUNTRIES

• PROVIDE SPECIAL FINANCE TO POOR COUNTRIES THAT HAVE PER CAPITA GROSS NATIONAL PRODUCT(GNP) LESS THAN $ 865 A TEAR.

• FINANCIAL RESOURCES ARE ACQUIRED BY BORROWING ON THE INTERNATIONAL BOND MARKET.

CONTINUE…

• HAS AUTHORISED CAPITAL OF $ 184 BILLION OF WHICH MEMBER PAY 10%.

• HAS STAFF OF 7000 FROM 185 COUNTRIES.