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Articles: Business | Economic reforms in India
- Mr. T.R.Sridhar Prasad. Uppalapati.
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These are only some changes which we can observe in the Indian society after the implementation of new economic policy - 91.
After Independence, India opted for a mixed economic system in which both private and public sector play a role in producing goods and services to satisfy the human wants. India also adopted the planning system from erstwhile USSR. But these policies did not help much the 'welfare state'(India), in achieving some of the planned targets. Thus by 1991, India faced the following economic problems, 1.Very high inflation, 2.Very high balance of payment problem, 3.Very high unemployment problem etc. 4.Some public sector units were running under losses, due to over staffing, lack of proper budgets, due to mis management. 5.Meagre Forex resources etc.
Adding fuel to the problems the Gulf war(1990-91) was responsible for severe increase in the prices of most of the essential commodities, as the international oil prices soared to a new high. The gulf war also contributed to the severe balance of payments crisis as India still depends on imported oil. The imported oil meets 70% of Indian oil requirements. The restrictive policies of the government and red tapism also contributed to very high corruption in Indian socity. These economic problems are responsible for the initiation of new economi policy - 1991, popularly known as the new economic reforms.
Economic reforms include three major aspects viz, Liberalisation, Privatisation and Globalisation. Globalisation means 'having minimum possible restrictions in economic relations with other nations', this includes the free movement of capital(investments, both FDI, foreign direct investments and FII, foreign institutional investments),Ideas, Goods, Technology, People/labour etc. Earlier there were restricted policies in India but now it's a liberalised era, under the restricted policy entrepreneurs had to wait for many months or even years to start their ventures and to produce goods and services.
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