The document outlines India's political and economic journey from independence in 1947 to the liberalization reforms of 1991. It details major political events, economic challenges, and the introduction of policies aimed at opening the economy through liberalization, privatization, and globalization, with a particular emphasis on the impact of Manmohan Singh's reforms. The reforms significantly affected various sectors, leading to enhanced economic growth, changes in employment patterns, and a rise in service industries, although challenges such as income inequality and the legacy of small-scale industries remain.

1. INDIA IN 1990

2. Political Journey From 1947 -1991
1947 1970
1980
-
1985
1987
-1991
• Independence
• Pt. Jawaharlal
Nehru: The First
Prime Minister Of
India
• State Of
Emergency
• Oil Prices
• Civil War, Sri Lanka
• BJP In Power
• Rajiv Gandhi
Assassination
• Rise Of Political
Parties
• Invasion At
Golden Temple

3. Economic Reforms

4. Why economic reforms?
 1985 – BOP problems
 1990 – serious problem
 Central Bank refused new credit and
foreign exchange reserves had reduced
International Monetary Fund
Value of Rupee depreciating

5. Manmohan Singh-
1991 Budget
He introduced the
Manmohan Singh's 1991 Budget: the day
that changed India forever
Manmohan Singh: The man who saved
the Indian Economy in 1991
Manmohan Singh: Father of Indian
reforms
-thehindu

6. Liberalization GlobalizationPrivatization
The healing process begins…

7. Pre- Liberalization Policy
• Annual growth rate was stagnated at 3.5% - “Hindu Rate of
Growth”
• Only four or five licenses would be given for steel, power
and communications
• License Raj
• After Independence, India adhered to socialist policies.
• Rely on internal markets for development, not international trade.

8. Highlights of the LPG Policy
• ForeignTechnology Agreements
• Foreign Investment
• MRTP Act, 1969 (Amended)
• Industrial Licensing
• Deregulation
• Beginning of privatisation
• Opportunities for overseas trade
• Steps to regulate inflation
• Tax reforms
• Abolition of License -Permit Raj

9. Post liberalization Policy• Opening of the economy, making it more competitive
• It allows 100% foreign ownership
• In 2007, when India recorded its highest GDP growth rate of
9%.
• India became the second fastest growing major economy in
the world, next only to China.
• Income inequality
• For 2010, India was ranked 124th among 179 countries in
Index of Economic Freedom World Rankings.
• We have high economic development, infrastructure
development and urbanization.

10. “I do not minimise the difficulties that lie ahead on the long
and arduous journey on which we have embarked. But as
Victor Hugo once said, “no power on earth can stop an idea
whose time has come.” I suggest to this august House that the
emergence of India as a major economic power in the world
happens to be one such idea. Let the whole world hear it loud
and clear. India is now wide awake. We shall prevail. We shall
overcome.”

11. POLICY GIVEN BY GOVERNMENT IN 1990S
Trade Policy
Reforms
Foreign
Investment
Narasimham
Committee

12. TRADE POLICY REFORMS
• Main Features
Freer Imports and Exports
Rationalisation of Tariff Structure
Decanalisation
Devaluation and Convertibility of Rupee on Current Account
Trading Houses
Special Economic Zones
Agriculture Export Zones

13. FOREIGN INVESTMENT
It allowed level
playing field to
foreign players
in a number of
sectors.
Floating
exchange rate
system was
adopted.
Rupee was
made
convertible in
current account
Tax rate
applicable on
foreign
companies have
come down
progressively
FDI limits in a
number of
sectors has been
progressively
increased.
FDI investments
and returns can
now be easily
repatriated.
Initially, FDI up
to 100% was
allowed in
number of
sectors except
for sectors like
Media, Banking,
Aviation,
Insurance, Retail

14. NARASIMHAM COMMITTEE – I (1991)
Objective:
To improve the financial health of the banking sector & to look into the structure of
the banking system in India.
NARASIMHAM COMMITTEE - II (1998)
Objective:
To make the banking system stronger & look into the possibility of mergers &
acquisitions.

15. EFFECT

16. FREE TRADE
POLICY
• Free trade is a policy
followed by some
international markets in
which countries'
governments do not
restrict imports from, or
exports to, other countries
SECTOR
DISTRIBUTION OF
GDP
• Employment elasticity is
the growth
of employment relative to
growth of Economy.
Reforms of 1991 is a shift in
era in Indian economic
realm. Post Liberalization
the major change occurred
is the shift in population
from agriculture to
Manufacturing and Services
EMPLOYMENT
ELASTICITY

17. MIGRATION TO
CITY STARTED
• This make possible transfer
of real time human labor
across the nation even
human is not there.
DEVELOPMENT
OF IT
• india’s annual average
growth rate from 1990 –
2010 has been 6.6 % which
is
almost double than pre
reforms era. GDP growth
rate surpassed 5% mark in
early 1980’s. This made
impact of 1990’s reforms
on growth unclear
• Some believe that 1980’s
reforms were precursor to
LPG reforms. Other things
apart, it is clear that 1980
reforms led to crash of
economy in 1991, which wa
remedied by LPG reforms
which were quite more
comprehensive. It was IMF
loan which gave government
to adjust its economy.

18. IMPACT ON SMALL
SCALE IN INDIA
• This impact shall be studied right
from the beginning of
colonization in 18th century.
Colonization can be considered as
1st wave of globalization. In pre
colonization era, India’s textiles
and handicraft was renowned
worldwide and was backbone of
Indian economy. With coming of
industrial revolution along with
foreign rule in India, Indian
economy suffered a major setback
and much of its indigenous small
scale cottage Industry was
destroyed.
• After independence,
government attempted to
revive small scale sector by
reserving items exclusively
for it to manufacture. With
liberalization list of reserved
items was substantially
curtailed and many new
sectors were thrown open to
big players.
• Small scale industry however exists and
still remains backbone of Indian
Economy. It contributes to major
portion of exports and private sector
employment. Results are mixed, many
erstwhile Small scale industries got
bigger and better. But overall value
addition, product innovation and
technology adoption remains dismal
and they exist only on back of
government support. Their products
are contested by cheaper imports from
China. Policies of government toward
SSI were covered in previous article
access here and here

19. IMPACT ON
AGRICULTURE
• share of agriculture in
domestic economy has
declined to about 15%.
However, people
dependent upon
agriculture are still around
55%. Cropping patterns has
undergone a huge change,
but impact of liberalization
can’t be properly assessed.

20. IMPACT ON
SERVICES SECTOR
• Software, BPO, KPO, LPO
industry boom in India has
helped India to absorb a big
chunk of demographic dividend,
which otherwise could have
wasted.
• Exports of these services
constitute big part of India’s
foreign Exchange earnings. In
fact, the only three years India
had Current Account surplus, I.e.
2000-2002, was on back of this
export only.
• Private Banks such as ICICI, HDFC,
Yes Bank and also foreign banks,
raised standards of Indian Banking
Industry
• Here too IT is on path of bringing
banking revolution.
• New government schemes like
Pradhan Mantri Jan dhan Yojana
aims to achieve their targets by
using Adhaar Card. Having said
this, Public Sector Banks still
remain major lender in the
country.
• These markets has thrown
open wide array of
associated services such as
Investment Banking, Asset
Management, Underwriting
services, Hedging advice
etc. These collectively
employ lakhs of people all
over India.

21. EFFECTS OF INDUSTRIAL
AND TRADE REFORMS
• After Industrial Reform
 Import and Export rose sharply.
 Consumption of goods accelerated.
 In Budget 1989 ,it was shown that Industrial Reform raised the taxes and
proposed around $340 million job creation package.
• After Trade Reform
 FDI went up by 49% equity.
 Income tax rate reduced from 56% to 40% and corporate tax from 57% to 46%.
 Rupee was devalued by 24%
 According to 1994 survey,
• Only 15% of population had idea what liberalization
meant.
• What Indian saw at village level was rising in price and
reduce in subsidies.

22. EFFECTS OF
REFORM
 Television
 Entries of STAR TV, ZEE TV, SUN TV and STAR SPORTS
 Reform in Airlines
 Entry of East West airlines
 Banking sector
 In 1994, ICICI and UTI(Axis) entered.
 Telephone Sector
People waited years to get there first telephone before but, By mid 1990s
there were cellphone operators and a few years later phone companies
were begging you to buy their stuff.
The period from 1991-1994 was
probably the most glorious time
periods in recent Indian history.