The document discusses the impact of economic reforms on the Indian economy. It outlines how India implemented a system of licensing, permits, and quotas (License Raj) after independence that gave the government control over production and prices. This led to scarcity and balance of payment crises by the 1970s-1980s. In 1991, India needed an IMF bailout that required ending the License Raj. The finance minister's 1991 budget initiated economic reforms focused on liberalization, privatization, and globalization to open the economy.

1. Impact of Economic Reforms on
Indian Economy

2. • India got independence on 15 august 1947.
• The First Five Year Plan was launched in 1951
which mainly focused on the development of
the primary sector.
• Second five year plan(on 14 May 1956) - The
emphasis of this plan was on government-led
industrialization.

3. • Thus started the License-Permit-Quota Raj in
India, wherein government control was so
strong that it not only decided which company
would produce what, but also the amount of
production, as well as the price of
commodities.

4. • With the nationalization of banks in 1969 and
the Monopolies and Restrictive Trade
Practices (MRTP) Act of 1970, the License Raj
was further strengthened.
• The License Raj created a ‘scarcity economy’,
and this scarcity also applied to foreign
reserves since we practiced ‘swadeshi’.

5. • The Balance of Payment crisis arose in the
1970s and worsened towards the end of
1980s.
• The balance of payments situation came to
the verge of collapse in 1991, mainly because
the current account deficits were financed by
borrowings from abroad.

6. • India was in the need of an International
Monetary Fund (IMF) bailout. The price of the
bailout was the License Raj.
• 24 July 1991: The finance minister of India, Dr.
Manmohan Singh presented the budget.
• “LPG” – Liberalisation, Privatisation,
Globalisation

7. • India was in the need of an International
Monetary Fund (IMF) bailout. The price of the
bailout was the License Raj.
• 24 July 1991: The finance minister of India, Dr.
Manmohan Singh presented the budget.
• “LPG” – Liberalisation, Privatisation,
Globalisation