The year 1991 after 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 inauguration of the new economic policy by the then Union Finance Minister, Dr. Manmohan Singh in 1991 is as follows.
I Indian economy had to be 'brought into the arena of globalization and at the same time to make it conform to 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 a trade, foreign investment, exchange rate, industry, fiscal system, etc. effective so as 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 will be 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.