Since independence, India followed the mixed

economy.
India has been able to achieve growth in savings,
diversified industrial sector, ensured food security etc.
In 1991, India met with economic crisis and govt.
was not able to make repayments on its borrowings
from abroad and foreign exchange reserves.
All this led the govt. to introduce a new set of policy
measures which changed the direction of our
developmental strategies.
 The origin of financial crisis can be traced from the inefficient
management of the Indian economy in 1980s
 For implementing various policies, the govt. generates funds such as taxation.
 When expenditure is more than income, the government borrows to finance
the deficit from banks and from people within the country and from
international institution.
 At times,our foreign exchange, borrowed and international financial
institutions,was spent on meeting consumption needs.
 India approached International bank for reconstruction and development
(IBRD)
 India agreed to the conditions of world bank and announced new economic
policy.
 The set of policies were classified into two groups namely stabilization
measures and the structural reform measure.
It was introduced in
 Industrial licensing,
 Export import policy,
 Fiscal policy,
 Financial sector,
 Foreign exchange market etc.
to put an end to various restrictions and open up
various sectors of economy.
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sm a l l c e f i x a t ion.
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t r i a l l i c e n s .
Indus o l ,e l e c t r on i c s e t c
s l i k e a l c o h
product s w h i c h a r e now
e o n l y i n d u str i e l w a y ,
Th a r e r a i
f o r p u b l i c sector
r e s e rved
defence etc.
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 These were concerned with the
reforms in Government’s taxation
and public expenditures policies
known as fiscal policies.
 There are two types of taxes:-
 Direct-consist of taxes on incomes
of individuals as well as profits of
business enterprises.
 Indirect-taxes levied on
commodities to facilitate common
national market for goods and
commodities.
 In 1991,as an immediate
to resolve the balance of
payment crisis, the rupee
was devalued against foreign
currencies.
 It led to increase in the
inflow of foreign exchange.
 Now,more often markets
determined exchange rates
based on the demand and
supply of foreign exchange.
 Its aim was to promote the efficiency of local
industries and the adoption of modern
tech.
 India was following a regime of quantitative
restrictions by imposing high tariffs.
 It aimed at :-
 Dismantling of quantitative restrictions on
imports and exports.
 Reduction of tariff rates.
 Removal of licensing procedures for imports.
 Import licensing was abolished in case of
hazardous goods.
 Export duties have been removed to increase
the competitive positions of goods.
 It implies shedding of the ownership of a govt. owned
enterprise.
 Govt. companies can be converted into private companies
in two ways :-
 By withdrawal of govt. from ownership and management of
public sector companies.
 By outright sale of public sector companies.
 Privatization of PSU by selling off part of the equity of
PSUS to the public is known as disinvestments.
 Its main aim was to improve financial discipline and
facilitate modernization.
In economics, growth of an economy is measured
by the gross domestic product(GDP).
GDP has increased from 5.6%during 1980-1991 to
6.4% during 1992-2001.
The opening up of the economy has led to the
increase in foreign direct investment and foreign
exchange reserves.
Foreign direct investment has increased from
about 100million US$ to 150 billion US$.
India is seen as a successful exporter of auto parts,
IT software and textiles in reform period.
Public investment in agriculture sector especially in
infrastructure, which includes irrigation, power, roads, etc has
been reduced in the reform period.
Removal of subsidy has led to increase in the cost of production,
which has affected small & marginal farmers.
This sector has been experiencing a no. of policy changes such as
reduction in import duties on agricultural products, removal of
minimum support price, etc.
There has been a shift from production for domestic market
towards production for domestic market towards production for
the export market focusing on cash crops in lieu of production of
food grains.
 Decreased demand of industrial goods
due to cheap imports, inadequate
investment, etc led to decrease in the
industrial growth.
 Cheaper imports have replaced the
demand for domestic goods.
 The infrastructure facilities, including
power supply etc, has remained
inadequate due to lack of investment.
 Moreover, a developing country like
India still does not have access to
developed countries market because of
high non-tariff barriers.
The PSEs made a significant contribution to industrial
production, 100 per cent in lignite, over 80 per cent
in coal, crude oil and zinc, almost 50 per cent in
aluminium and over 30 per cent in finished steel.
In terms of profitability, the PSEs showed diverse
patterns. In 2000-01, 122 enterprises made a profit
with the top 10 among them - giants such as the Oil
and Natural Gas Corporation (ONGC), the National
Thermal Power Corporation (NTPC), the Indian Oil
Corporation (IOC) and the Videsh Sanchar Nigam
Limited (VSNL) - accounting for close to 70 per cent of
the total net profit of Rs.19,604 crores.
Every aspect has a prose and a pon.Similarly,
globalization is an opportunity in terms of greater
access to global market,higher technology
etc.Whereas on the other side it has widened
economic disparities among nations and people.
It has increased income and quality and
consumptions of only high income groups like
real estate,IT,rather than vital sector like
agriculture.