New Economic Policy 1991 The proc`ess of economic reforms was started by the government of India in 1991 for taking the country out of economic difficulty and speeding up the development of the country. The centre of economic reform has been liberalisation , privatisation and globalisation.
Liberalisation means to unshackle the economy from bureaucratic cobweb to make it more competitive.
Following are its chief feathers:
1-To do away with the necessity of having a license for most of the industries.
2-Freedom in determining the scale of business activities.
3-Removing restrictions for the movement of goods and services from one place to another .
4-Freedom to fix the price of goods and services.
5-Reduction in the rate of taxes.
6-Freedom from unnecessary control over economy.
7-Simplifying import-export procedure.
8-Simplifying the process of attracting foreign capital and technology.
In brief, privatisation means such an economic process through which some public sector undertaking is brought either partially or completely under private ownership.
Broadly speaking, establishing in private sector instead of a public sector is also privatisation earlier reserved for it or transfering its production, without depriving it, to the. Not only this, depriving public sector of the job of production which was private sector also amounts to privatisation.
Its chief features are given below:
1-Reducing the role of public sector and increasing the role of private sector.
2-Reducing fiscal burden of the government.
3-Reducing the size of the government machinery.
4-Speeding up economic development.
5-Improving management of enterprises.
6-Increase in government treasury.
7-Increasing competition by opening industries reserved for the public sector to the private sector.
Globlisation means integrating the economy with the rest of the world.
Following are its chief features:
1-Free flow of goods and services in all the countries.
2-Free flow of capital in all the countries.
3-Free flow of information and technology in all the countries.
4-Free movement of people in all the countries.
5-The same conflict solving technique in all the countries.
Objectives of Economic Reforms
Following are the objectives of Economic reforms:
1-Modernisation of the industrial system of the country.
2-Encouraging private investment.
3-Atteacting foreign investment.
4-Eliminating unproductive controls.
5-Connecting India Economy with the world economy.
6-Controlling fiscal deficits. (Fiscal deficit comes into play when the total expenditures of the country exceeds its total incomes.)
7-Increasing foreign exchange reserves.
8-Controlling unprofitable industrial units in the public sector.