The status of India's public debt after 1991 economic reforms. - MAINS QUESTION - DAILY CURRENT AFFAIR QUESTIONS AND ANSWERS

Friday, August 28, 2020

The status of India's public debt after 1991 economic reforms.

The year of 1991 after the independence proved a milestone in India's economic history. Earlier, the country was going through a severe economic crisis and this crisis forced the policymakers of India to implement the new economic policy. The situation created by the crisis prompted the government to formulate policies aimed at bringing price stabilization and structural reforms. Stabilization policies were aimed at correcting weaknesses, thereby fixing fiscal deficit and reverse the balance of payments. Structural reforms had bypassed rigid rules, due to which reforms were also implemented in various sectors of the Indian economy and as a result of these policies, today India could also help a world-class institution like International Monetary Fund.

Main objectives of the new economic policy of 1991

The main objective behind the implementation of the new economic policy by Union Finance Minister, Dr. Manmohan Singh in 1991 are as follows: 

I Indian economy had to be 'brought into the arena of globalization and at the same time make it according to the market trends.

II bring down inflation and remove payment imbalance

III. Increase the economic growth rate and create adequate foreign exchange reserves.

IV. Along with achieving economic stabilization, all kinds of unnecessary restrictions had to be shifted to a market-friendly economy.

V. Removal of restrictions was to allow the international flow of goods, services, capital, human resources, and technology.

VI. The involvement of private companies in all sectors of the economy was to be increased. That is why the number of areas reserved for the government has been reduced to 3.

At the beginning of mid-1991, the Government of India made some radical changes in its policies to make trade, foreign investment, exchange rate, industry, fiscal system, etc. effective to speed up the edge of the economy.

The main objective of the new economic policy was to improve productivity and efficiency while creating a more competitive environment towards an instrument.

Under this liberalization policy, all commercial banks were made free to determine the rate of interest. They will not have any obligation to accept the rates of interest set by the Reserve Bank of India as provisions have also been made.

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