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Economic Reforms in India

Prepared by :- Mansi Karandikar Abhishek Agrawal

Contents
Why economic reforms?? Factors ob!ecti"es - #eforms Foreign $n"estment % Policy #eforms Foreign &rade '(change Policy #eforms $nd)strial reforms P)blic sector reforms Financial Fiscal reforms *ocial reforms  Agric)lt)ral reform  Po"erty  +ealth 'd)cation concl)sion

Why 'conomy reforms??
,, -ackgro)nd of 'conomic reforms,, First introd)ced )nder #a!i" .andhi regime 'nd of /00/- )nprecedented crisis #eser"e of foreign e(change- 1 weeks $mport 2o 2ew 3oans a"ailable -4P- critical Faith of $nternational comm)nity shaken

Factors % 'conomic #eforms 5A6$nternational Factors 1 $nternational scenario 7 $nternational press)re   condition 5-6 8omestic Factors / $ncrease in fiscal deficit 1 8eficit in c)rrent acco)nt increase in foreign debt 7 -4P crises 9 Monitoring inflationary press)re : .nsatisfactory performance of p)blic sector < .

4b!ecti"es of 'conomic reforms 5/6$ncrease in the rate of 'conomic growth 516$ncrease in competiti"eness of ind)strial sector 576#ed)ction in Po"erty and $ne=)ality 596$ncrease in 'fficiency of p)blic sector 5:6Control o"er Fiscal deficit 5<6Promoting F8$ 5>68ecline in 8eficit of -4Ps .

$nd)strial Policy 4b!ecti"es of $nd)strial Policy-/00/ / *elf #eliance 1 *o)nd policy Framework 7 8e"elopment of *mall sector 9 Foreign $n"estment &echnology collaboration : Abolishment of Monopoly < #ightf)l #ole to P)blic sector > Protection of $nterest of 3abo)rers  .

Feat)res of $nd)strial Policy/00/ $nd)strial licensing Foreign $n"estment Foreign &echnology Policy regarding p)blic sector M#&P limit  .

ndertaking the $nitial #isk .ap 7?-4P s)pport 9?.Foreign $n"estment % Policy #eforms 2eed foreign capital in $ndia /?'(ploitation of nat)ral reso)rces 1?&echnological .

o"ernment  Foreign &echnology Agreement  Foreign $n"estment Promotion -oard 5F$P-6  Foreign $n"estment $mplementation A)thority 5F$$A6  'nhancement of Foreign '=)ity in '(isting Companies  $n"estment in /@@A '4.s B 'PCs  Foreign $n"estment in &rading companies  4pening of 3iasonB-ranch office  Foreign $n"estment in ***  .#eforms in Foreign $n"estment  F8$ Appro"al  A)tomatic appro"al by #-$  Case to case appro"al by .se of Foreign -rand 2ame  #epatriation of Foreign Capital  &a(ation .

nlisted 4.#eforms in Foreign &rade '(change Policy #eforms  Cash Compensatory *cheme 5CC*6 s)spended  #eplenishment 3icensing *cheme 5 #ep6  All e(porters entitled to ha"e )niform 5#ep6 of 7@A of 5F4-6  All s)pplementary licenses stand abolished e(cept in case of *** prod)cers of life sa"ing dr)gs  All additional licenses granted to '(port ho)se stand abolished  .3 stand abolished allowed to import thr) #ep ro)te  Ad"ance licensing for imports for e(ports remain open  All $mport licensing for capital goods raw materials ha"e been remo"ed grad)ally  Financial $nstit)tions ha"e also been allowed to trade '(im scrips  &he r)pee was e(pected to f)lly con"ertible on &rade acco)nt in 7 to : years .

Fiscal reforms *implification of ta( policy was anno)nced c)stom d)ty red)ced from //@A in /00/ to /1?:A in 1@@< '(cise is now le"ied as DA& Corporate ta( was bro)ght down to 7@A $ntrod)ction of F#-M $2 1@@9 state le"el sales ta(es to the DA& .

Financial *ector #eforms 8ereg)lation of interest rate 8ereg)lation of credit -anking sector Co-operati"e banks 8e"elopment finance instit)tions 2on.banking financial instit)tions $ns)rance sector Money market Capital market  .

8ereg)lation of interest rates -egan in *eptember /00/ Withdrawal of minim)m lending rate in 4ctober /009 hence gi"ing f)ll freedom to banks to determine lending rates for loans abo"e #s 1 lakh? Foc)s is on soft interest rate regimeE increasing operational efficiency and technological )pgradation?  .

8ereg)lation of credit -egan in mid /0F@s intensified in /00@s &o e(pand the pool of lendable reso)rcesE rationaliGation of priority sector re=)irements and rela(ation of balance sheet restrictions to impro"e the credit deli"ery system?  .

-anking sector #ed)ction in *3# and C##E transparent g)idelines for entry and e(it of p"t? *ector banksE p)blic sector bks ha"e been allowed direct access to capital marketE reg)lated interest ha"e been simplified? &o increase financial "iability of banksE increase a)tonomyE greater entry to pri"ate sector bankingE liberaliGing capital marketsE operational fle(ibility and competition and impro"ing financial health of banks?  .

Co-operati"e banks 2o significant impro"ement has been obser"ed in either in stability or efficiency parameters #eform process started m)ch later than the commercial banking sector *tate co-operati"e and district co-operati"e banks inc)rring losses t)rned aro)nd and made some profits? .

8e"elopment financial instit)tions Policy initiati"es relate to a)dit connected lendingE loans against g)arantees e(tended by banks With a "iew to ha"e an integrated "iew of the operations of financial instit)tions and commercial banks and to pro"ide more comprehensi"e basis for the cond)ct of monetary and credit policies .

2on banking financial instit)tions Pr)dential reg)lations as prescribed for commercial banks were e(tended to 2-FCs? Penalties for non s)bmission of periodic ret)rns to #-$ as well as cancellation of certficate of registeration of 2-FCs? .

2on banking financial instit)tions Pr)dential reg)lations as prescribed for commercial banks were e(tended to 2-FCs? Penalties for non s)bmission of periodic ret)rns to #-$ as well as cancellation of certficate of registeration of 2-FCs? .

$ns)rance sector 4pening )p of ins)rance b)siness to pri"ate participation $#8A actE /000 &o deepen ins)rance penetration by enlarging cons)mer choices thro)gh prod)ct inno"ation? F8$ )p to 1<A allowed  .

Money market reforms Ceiling of /@A on call money rates imposed by $-A withdrawn in /0F0 &he 8F+$ was set )p to participate in call money market both as borrower and lender 2ew financial instr)ments s)ch as inter bank participation certificatesE certificate of depositE commercial papers and repos F)ll fledged li=)idity ad!)stment facility was introd)ced on !)ne :E 1@@@ CC$3 was set )p in 1@@1 .

8#s and 'C-s F$$s in capital market  .Capital market Co?swere gi"en freedom to price their iss)es )nder capital iss)es control act /09> 'lectronic trading system A8#s and .

P)blic sector reforms 4b!ecti"es of p)blic sector /?'ns)re rapid economic growth ind)strialiGation of the co)ntry 1?'arn ret)rn on in"estment 7?promote redistrib)tion of income and wealth 9?to create employment opport)nities :?balanced regional de"elopment <?de"? 4f small scale and ancillary ind)stries >?sa"e and earn foreign e(change for economy .

Policy initiati"es5p)blic sector6 #estr)ct)ring $ncrease in a)tonomy and performance acco)ntability Changes in management in specific enterprise &echnological )p gradation 8isin"estment and pri"atiGation .

Policy initiati"es5p)blic sector6 #estr)ct)ring $ncrease in a)tonomy and performance acco)ntability Changes in management in specific enterprise &echnological )p gradation 8isin"estment and pri"atiGation .

*ocial sector  Agriculture Partial decontrol of fertiliGer prices #emo"al of bottlenecks in agric)lt)ral marketing #ela(ation of restrictions )nder the essential commodities actE /0:: $ntrod)ction of forward trading in important commercial crops #eplacement of the re"amped p)blic distrib)tion system with targeted p)blic distrib)tion system 'stablishment of r)ral infrastr)ct)re de"elopment f)nd #eplacement of =)antitati"e control tariff  .

Po"erty 2ational food for work programme #)ral employment generation programme Hai prakash roGgar g)arantee yo!ana Hawahar gram samridhi yo!na *warna !ayanti gram swaro!gar yo!ana 2ational social assistance programme 'mployment ass)rance scheme Pradhan mantri gramodaya yo!ana   .

nemployment 2ational r)ral employment programme #)ral landless employment g)arantee programme *cheme of training r)ral yo)th for self-employment Hawahar ro!gar yo!na A faster and geographically di"ersified growth of agric)lt)re 8e"elopment of infrastr)ct)re and marketing Arrangements for agro-based acti"ities .reater attention to the needs of the small mfg sector as a ma!or so)rce of ind)strial growth #e"amping of training systems to introd)ce greater fle(ibility to labo)r market trends ..

concl)sion Ascended a higher growth path so far $ndians ha"e fo)nd a new le"el of self- confidence as respect for india has increased? Miles to go b)tIsecond generation of reforms m)st foc)s on a similar empowerment of p)blic sector ? We are in the midst of economic reforms and need to mo"e to the ne(t le"el of s)stained growth? .

8att *)ndaram #eser"e bank of $ndia -)lletine-1@@< .2iti -hasin $ndiaJs 'conomic #eforms % Di!ay HoshiE $?M?8? 3ittle $mpact of #eform process on $ndian 'conomy8r? -abita Agrawal $ndian 'conomy.#eferences 2ew $ndian 'conomy #eforms-K?3? .)ptaE +ar"inder Ka)r $ndian Financial *ector.