Major indicators of Economic Conditions: Contribution of various sectors in GDP

The maximum GDP contribution came from agriculture but it was carried out with minimum exposure to technology. As Indias GDP was more inclined towards agriculture it was necessary to have a technological revolution. Also to boost the contribution of other sectors it was required to have a regulated foreign exchange and hence FERA was introduced.

 Per capita income

According to the above graph, per capita income right from the year 1961-62 was increasing. But economy was closed rather than being opened. Therefore there was a scope for the investments in foreign as well as foreign investments in India. And if economy opens up there was a need of FERA as there would be trade in foreign currencies.

Imports and exports

3500 3000 2500 2000 1500 1000 500 0 IMPORT Export

From the year 1965-66 export slowly & gradually started increasing but when compared to imports, they were just a part of total imports. Therefore on one hand we were losing Foreign Reserves by increase in imports but on comparing with the exports only a handful of foreign reserves could be collected through exports. Hence there was a need of foreign reserves & to regulate/control of foreign trade/reserves a regulatory law was need of the time.

Foreign exchange reserves:

Foreign Exchange Rate

1000 800 600 400 200 0 Foreign Exchange Rate