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  • Liberalisation-Freedom On Imports and Exports Without Any Government Restrictions

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    Dinakar T
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    The document summarizes India's economic reforms in 1991. It explains that the reforms were introduced due to issues like poor public sector performance, balance of payment deficits, inflation, and high debt levels. As part of receiving loans from the IMF and World Bank, India had to liberalize the private sector, reduce the government's role, and remove trade restrictions. The key aspects of the 1991 New Economic Policy included stabilization measures to control inflation and structural reforms to improve efficiency. The reforms focused on liberalization, privatization, and globalization through industrial, financial, tax, foreign exchange, trade and other policy changes. While the reforms had benefits, they also received some criticisms around issues like unemployment and neglect of agriculture.

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    LPG

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    The document summarizes India's economic reforms in 1991. It explains that the reforms were introduced due to issues like poor public sector performance, balance of payment deficits, inflation, and high debt levels. As part of receiving loans from the IMF and World Bank, India had to liberalize the private sector, reduce the government's role, and remove trade restrictions. The key aspects of the 1991 New Economic Policy included stabilization measures to control inflation and structural reforms to improve efficiency. The reforms focused on liberalization, privatization, and globalization through industrial, financial, tax, foreign exchange, trade and other policy changes. While the reforms had benefits, they also received some criticisms around issues like unemployment and neglect of agriculture.

    Copyright:

    © All Rights Reserved
    Download as PDF, TXT or read online from Scribd
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    5 views3 pages

    Liberalisation-Freedom On Imports and Exports Without Any Government Restrictions

    Uploaded by

    Dinakar T
    The document summarizes India's economic reforms in 1991. It explains that the reforms were introduced due to issues like poor public sector performance, balance of payment deficits, inflation, and high debt levels. As part of receiving loans from the IMF and World Bank, India had to liberalize the private sector, reduce the government's role, and remove trade restrictions. The key aspects of the 1991 New Economic Policy included stabilization measures to control inflation and structural reforms to improve efficiency. The reforms focused on liberalization, privatization, and globalization through industrial, financial, tax, foreign exchange, trade and other policy changes. While the reforms had benefits, they also received some criticisms around issues like unemployment and neglect of agriculture.

    Copyright:

    © All Rights Reserved
    Download as PDF, TXT or read online from Scribd
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    of 3

    LPG

    Reason for Economic Reforms:


    . Poor Performance of Public Sector
    . Deficit in Balance of Payment(BOP)
    . Inflationary Pressures
    . Fall in Foreign Exchange Reserves
    . Huge Burden of Debts
    . Inefficient Management

    International bank for reconstruction and Development (IBRD) and World Bank and
    International Monetary Fund(IMF)

    India availed $7 billion dollars from these agencies as loan.

    For Loan India had to stick to certain conditions


    Removing Restrictions on Private Sector

    Reducing the role of Govt. in many areas

    Removing Trade Restrictions

    New Economic Policy (1991)


    Stabilisation Measures Structural Reforms
    Short Term Measures Long term Measures
    Correcting Weakness of the BOP by Improving efficiency of the economy
    maintaining sufficient Forex
    Controlling inflation by keeping the Increase in international
    rising prices under control competitiveness by removing rigidities
    Main Policies of The New Economic Policy (NEP) 1991
    Liberalisation

    Privatisation

    Globalisation

    Liberalisation- Freedom on Imports and Exports without any Government Restrictions


    6
    Industrial Sector Reforms
    5
    Financial Sector Reforms
    4
    Tax Reforms
    3
    Foreign Exchange Reforms
    2
    Trade and Investment Policy Reforms
    1
    3
    2
    1
    Industrial Sector Reforms
    . Reduction in Industrial Licensing
    . Decrease in role of Public Sector
    . De-Reservations of Small scale Industries
    . Monopolies and Restrictive Trade Practices Act

    Financial Sector Reforms


    . Changing role of RBI from that of a regulator to Facilitator
    . Origin of Private Banks
    . Increase in Limit of Foreign Investments to 51%
    . Ease in Expansion Process ( Freedom to setup new branches)

    Tax Reforms
    . Reduction in Taxes
    . Reforms in Indirect Taxes
    . Simplification of Process

    Foreign Exchange Reforms


    . Devaluation of Rupee
    . Market Determination of Exchange Rate

    Trade and Investment Policy Reforms


    . Removal of Quantitative restrictions on imports and exports
    . Removal of Export Duties
    . Reduction in Import Duties
    . Relaxation in Import Licensing System

    Privatisation-Transfer of Ownership, Management and control of Public sector enterprises to


    Entrepreneurs of Private Sector
    Privatisation can be done in 2 ways
    . Transfer of Ownership
    . Disinvestment of the PSU’s

    Globalisation:Integrating the national economy with the world economy through removal of
    barriers on international trade.
    Globalisation aims to create a border less world

    . NEP gave automatic permissions to FDI up to 51% to a specified list of high technology
    and high investment priority industries
    . Automatic permission is provided in high priority industries upto 1Cr
    . Indian Currency Devalued
    . Indian rupee was made partially convertible
    . New 5 Year export import policy
    . Custom duty modified or Certain Extent

    Positive and Negative Traits of Globalisation

    +ve
    Greater access to Global Markets

    Advanced Technology

    Large industries in developing countries to become important players in international


    arena

    Skilled people can increase their earnings by utilising their skills


    -ve
    Benefits of Globalisation Accrue More to the Developed Countries

    Increases economic Disparities

    Domestic companies face stiff Competition

    Arguments in Favour of Economic Reforms


    . Increase in rate of Economic Growth
    . Inflow of Foreign Investment
    . Rise in Forex Reserve
    . Control on Inflation
    . Rise in Exports
    . Increase in Role of Private Sector

    Criticisms over Economic Reforms


    . Growing Unemployment
    . Neglect of Agriculture(Reduction of Public Investment,Removal of subsidy,liberalisation
    and reduction in import duties,shift towards Cash crops)
    . Low Level of Industrial Growth
    . Ineffective Disinvestment Policy
    . Ineffective Tax Policy
    . Spread of Consumerism

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