Mayank Bhatt IPM01038 Section-A

SBIE Assignment

Comparing the pre and post-1991 reforms India

Pre:
● India was mainly following the socialist ideology post-independence
● PErformance of the industrial sector was controlled and governed by heavy regulations
with little privatisation which primarily allowed state ownership.
● Businesses could not expand under License Raj.

Post:
● As a result of the 1991 crisis, the then Finance Minister Dr. Manmohan Singh
implemented the start of liberalisation of the Indian economy.
● Businesses were free to expand.
● Resulted in increased FDI and access to foreign technology
● The reforms also gave way for the stock markets to flourish more with the establishment
of SEBI.

The 1991 reforms encouraged the development of the financial industries by allowing the
establishment and growth of private sector banks. In addition to allowing banks more freedom in
banking decisions like lending, the reforms also paved the path for the creation of SEBI.

Trade unions fared well on the job market. Small businesses were no longer required to pay the
minimum wage and had less constraints on layoffs and closures. Some factions, including the
Congress, had rebelled against these reforms. Although the majority of business organisations
supported the reforms, many were afraid of global competition. The execution of the reforms
was undoubtedly hampered in some way by this.

However, there were numerous global examples which backed such reforms and measures and
the growth we are seeing today is a direct result of those decisions taken in the 90s.