FII refers to investment in Indian companies by the foreign banking and non banking institutions.

Foreign investment includes FDI and FII.

The basic problem that forced us to have a u-turn in our polices in 1991 was economic crisis relating to its external debt. By the end of June,1991 the country encountered an unprecedented economic crisis. The situation was so alarming that our reserves of foreign exchange were merely enough to pay for two weeks imports. New loan were not available. Large amounts were being withdrawn from the acounts of Non Resident Indians (NRIs). The crisis was further compounded by rising prices of essential goods. Industrial growth was scraping the bottom. Faith of international community in Indian economy was shaken. All these led the government to introduce a new set of policy measures which changed the direction of our developmental strategies.

(a) Obvious gains of privatisation:

(1) Privatisation promotes consumer's sovereignty.

(2) Privatisation results into high productivity.

(3) It promotes diversification of production.

(4) It leads to upgradation and modernisation of enterprises.

(b) Imperative losses:

(i) Weaker sections of society suffer deprivation in privatisation.

(ii) Social interest in ignored.