The economic reforms in India since 1991 have had significant impacts. Liberalizing the economy removed licenses, reduced tariffs and interest rates, ended public monopolies, and allowed more foreign investment. This led to dramatic GDP growth, from $130 billion in 1992 to $5 trillion in 1996. Subsequent governments continued reforms but some populist policies slowed growth. Overall, reforms have integrated India into the global economy, increased competition, and boosted sectors like IT, but inequality has also risen, and more focus is needed on sustainability and inclusive development.

1. Economic
Reforms in India
Since 1991 and
its impact On
Economy And
Business
Tushar Singh (24)
Saloni Jalan (23)
Vaibhav Kumar Sinha (25)

2. PRE 1991 Era:
What was known as pre-liberalization India (Nehru’s socialist Economy)
– The economy was in a deep hole by 1985.
– Indian Economy suffered a Balance of Payments (payments for exports
and imports and import of goods, services and capital) crisis.
– India ran a high deficit and to had to finance those deficits borrowed from
external sources.
– Since independence, India had only been able to maintain a growth rate of
3-3.5%.
– Due to centralised economic planning model, extensive bureaucracy, red-
tapism, unnecessary regulations and trade barriers, the Indian economy
was down in the dumps.
– In 1991-92, external debt grew to 38.7% and our then PM Chandra Sekhar
pawned gold, as collateral for IMF bailout.

3. Liberalization of Indian Economy in 1991
With 3 weeks left to completely depleting the last loan from IMF, our then PM P V
Narasimha Rao announced India’s liberalization, by taking following measures (1991-96)
1. The reforms did away with Licence Raj.
2. Reduced tariffs and interest rates.
3. Ended many public monopolies.
4. Allowed automatic approval of FDI in many sectors.
5. Tax reforms of 1997.
6. Establishment of SEBI.
7. Concession from MRTP act (estd. 1970)
8. Increase in the investment limit of small industries.
9. Reduced Inflation.

4. The result of this was that the Indian economy grew to 7.5% of
GDP (from USD 130 million in 1992, to USD 5 billion, in 1996).

5. Later Reforms
The Atal Bihari Vajpayee lead government from 1998-2004 bought in
following reforms while continuing the previous ones
1. Privatising under-performing government owned business , such as,
VSNL, Maruti Udyog Ltd
2. Reduction of Taxes
3. Over all fiscal policy aimed at reducing deficits and debts
4. Increased initiatives for public works such as “Golden Quadrilateral,
Pradhan Mantri Gramin Sadak Yojna”
5. Special emphasis on SEZ’s.
6. Giving telecom spectrum to private players for quality service to
customer
7. Deregulating fuel prices.
8. Growth rate shifted to above 8% and remained there for almost a
decade.

6. UPA-1 & 2 Era reforms (2004-
2014)
– Introduced 51% FDI in retail sector and was approved in 2012 after initial
opposition.
– Direct cash Transfer:

7. The swift economical reforms led to drastic increase in the
forex during Vajpayee Era.
The high paced growth took a hit due to more populists
economical reforms or works as compared to the
previous governments. Waiving off Rs. 52,280 crores
farmers loans, huge corruptions, global economical
slow down and decline of foreign investment led to
economical slow down.
Indian Forex reserve growths during NDA and UPA-1&2 Government

8. Modi Era reforms
2014-
– FDI in insurance sector up to 49%
– Ended the central government monopoly of mining of coal
by opening up the coal industry through the passing Coal
mines(Special Provisions) Bill of 2015
– In 2016 the Modi Government pushed through the
Insolvency Resolution And Bankruptcy Code.
– And the most important reform post liberalization, GST.
– Pradhan Mantri Jan Dhan Yojana:
All figures in Corers. As of 03/08/20016

9. THE POSITIVES HAVE BEEN
It has been 25 years since that landmark event and India has come a long way since
then:
1. India is one of the world's biggest market , a population of 1.3 billion, with major global brands
vying with each other to have a foothold in India.
2. The gradual relaxation of FDI in different sectors has ushered in greater competition and thus has
increased efficiency.
3. India's trade volumes has expanded dramatically and it has access to the best global services and
brands.
4. India has become the global leader in IT/ ITES, hospitality, etc.
5. Prices of essential commodities has reduced, thus benefiting the common man. The best example
of this can be seen in the telecom sector.
6. India remained comparatively better insulated against global economic slowdowns.

10. However, not all is as rosy as the above points depict:
1. India's trade volumes have expanded but the balance of trade is often skewed against India.
2. The desire for quick economic growth have resulted in drastic degradation of natural resources.
3. Large scale violation of human rights is observed in factories and industries.
4. India is still a large time importer of finished goods, electronic items etc.
5. The inequality has increased manifold.
Way ahead:
1. Promote Make In India aggressively.
2. Diversify it's trade partners.
3. Ensure that political logjam does not impact important legislations like GST, DTC etc.
4. Ensure better regulation of industries for respecting human rights.
5. Promote sustainable development.
6. Work towards trickling down of benefits.