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    New Economic Policy of India: R.P.Singh

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    rpsinghsikarwar
    The economic crisis of 1991 prompted major reforms to India's economy. The government approached the IMF and World Bank for a bailout loan, which required liberalizing and opening India's economy. The 1991 reforms introduced stabilization measures like controlling inflation and correcting balance of payments issues. Structural reforms focused on liberalization, privatization, and globalization. Liberalization deregulated industries, reformed taxes and foreign exchange, and opened trade. Privatization sold state assets to private investors. Globalization made India an outsourcing hub and member of the WTO to expand international trade. The reforms aimed to improve efficiency and competitiveness after years of protectionism.

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    New Economic Policy of India: R.P.Singh

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    rpsinghsikarwar
    91 views24 pages
    The economic crisis of 1991 prompted major reforms to India's economy. The government approached the IMF and World Bank for a bailout loan, which required liberalizing and opening India's economy. The 1991 reforms introduced stabilization measures like controlling inflation and correcting balance of payments issues. Structural reforms focused on liberalization, privatization, and globalization. Liberalization deregulated industries, reformed taxes and foreign exchange, and opened trade. Privatization sold state assets to private investors. Globalization made India an outsourcing hub and member of the WTO to expand international trade. The reforms aimed to improve efficiency and competitiveness after years of protectionism.

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    New Economic Policy

    Original Title

    NEP-1991

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    The economic crisis of 1991 prompted major reforms to India's economy. The government approached the IMF and World Bank for a bailout loan, which required liberalizing and opening India's economy. The 1991 reforms introduced stabilization measures like controlling inflation and correcting balance of payments issues. Structural reforms focused on liberalization, privatization, and globalization. Liberalization deregulated industries, reformed taxes and foreign exchange, and opened trade. Privatization sold state assets to private investors. Globalization made India an outsourcing hub and member of the WTO to expand international trade. The reforms aimed to improve efficiency and competitiveness after years of protectionism.

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    © All Rights Reserved
    Download as PPT, PDF, TXT or read online from Scribd
    Download as ppt, pdf, or txt
    91 views24 pages

    New Economic Policy of India: R.P.Singh

    Uploaded by

    rpsinghsikarwar
    The economic crisis of 1991 prompted major reforms to India's economy. The government approached the IMF and World Bank for a bailout loan, which required liberalizing and opening India's economy. The 1991 reforms introduced stabilization measures like controlling inflation and correcting balance of payments issues. Structural reforms focused on liberalization, privatization, and globalization. Liberalization deregulated industries, reformed taxes and foreign exchange, and opened trade. Privatization sold state assets to private investors. Globalization made India an outsourcing hub and member of the WTO to expand international trade. The reforms aimed to improve efficiency and competitiveness after years of protectionism.

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    © All Rights Reserved
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    Download as ppt, pdf, or txt
    of 24

    New economic policy of India

    R.P.Singh
    Economic
    policy:

    Economic policy refers to the actions that governments


    take in the economic field. It covers the systems for
    setting levels of taxation, government budgets, the
    money supply and interest rates as well as the labor
    market, national ownership, and many other areas of
    government interventions into the economy.
    Pre-1991 economic scenario in India:
    ● Indian economic policy after independence was influenced by the colonial (उपनिवेश
    संबंधी) experience (which was seen by Indian leaders as exploitative in nature) and by
    those leaders' exposure to Fabian socialism.
    ● Nehru, and other leaders of the independent India, sought (खोजना) an alternative to the
    extreme variations (अत्यधिक विविधताएं ) of capitalism and socialism.
    ● In this system, India would be a socialist society with a strong public sector but also with
    private property and democracy. (जनतंत्र)
    ● As part of it, India adopted a centralised planning approach.
    ● Policy tended towards protectionism (संरक्षणवाद), with a strong emphasis on import
    substitution (आयात प्रतिस्थापन), industrialisation under state monitoring, state
    intervention (राज्य का हस्तक्षेप) at the micro level in all businesses especially in labour
    and financial markets, a large public sector, business regulation.
    Drawbacks of Pre-1991 economic policy:
    1. Licence raj:
    The “Licence Raj” or “Permit Raj” was the elaborate system of licences, regulations and
    accompanying (साथ में ) red tape that were required to set up and run businesses in India
    between 1947 and 1990.
    2. Import substitution (Import substitution ):
    Import substitution industrialization (ISI) is a trade and economic policy which advocates
    replacing foreign imports with domestic production. ISI is based on the premise that a
    country should attempt to reduce its foreign dependency through the local production of
    industrialized products and was intended to promote self reliance. But this meant the
    monopoly of indian industries and lack of incentive for them to improve the quality of
    products which hampered consumer interests.
    “Before the process of reform began in 1991, the government attempted to close the Indian economy to
    the outside world. The Indian currency, the rupee, was inconvertible and high tariffs and import
    licensing prevented foreign goods reaching the market.The labyrinthine bureaucracy (पेचीदा नौकरशाही )
    often led to absurd restrictions(बेतुके प्रतिबंध)—up to 80 agencies had to be satisfied before a firm
    could be granted a licence to produce and the state would decide what was produced, how much, at
    what price and what sources of capital were used.”
    - BBC on the Pre-1991 economic policy
    New
    economic
    Policy of
    1991 -
    Architects

    P.V.Narasimha Rao
    Dr.Manmohan Singh
    Prime Minister
    1991 economic crisis:
    ● By 1985, India had started having balance of payments problems. This is
    due to more expenditure by the government whereas the income
    generated was less. In addition there was huge disparities(असमानताओं)
    between income and expenditure.
    ● By the end of 1990, it was in a serious economic crisis. The government
    was close to default(अभाव), its central bank had refused new credit
    ● In 1991, India met with an economic crisis - relating to external debt. The
    government was not able to make repayments on its borrowings from
    abroad.
    ● The foreign exchange reserves, which we maintain to import petroleum
    and other important items, dropped to levels that were not sufficient to last
    even a fortnight(पखवाड़ा).
    ● The crisis was further compounded by rising prices of essential goods.
    Advent(आगमन) of IMF and World Bank:
    ● India approached the International Bank for
    Reconstruction and Development(IBRD), commonly
    known as World Bank and the International Monetary
    Fund(IMF) for help.
    ● India received 7 billion dollars as loan from these
    agencies to solve the crisis(संकट).
    ● It had to pledge 20 tonnes of gold to Union Bank of
    Switzerland and 47 tonnes to Bank of England as
    part of the deal with the International Monetary Fund
    (IMF)
    ● In addition, as part of the bailout(खैरात), IMF expected
    India to liberalise and open up the economy and
    remove trade restrictions between India and other
    countries.
    Cartoon criticising that IMF pressurized India to adopt New Economic
    Policy
    “There is no time to lose. Neither the Government nor the economy can live beyond
    its means year after year. The room for manoeuvre, to live on borrowed money or
    time, does not exist any more…. We need to expand the scope and the area for the
    operation of market forces.”

    खोने के लिए कोई समय नहीं है । साल दर साल न तो सरकार और न ही


    अर्थव्यवस्था अपने साधनों से आगे रह सकती है । पैंतरे बाज़ी के लिए,
    उधार पैसे या समय पर रहने के लिए, कोई और मौजद ू नहीं है …। हमें
    बाजार की ताकतों के संचालन के लिए क्षेत्र और क्षेत्र का विस्तार करने
    की आवश्यकता है । ”

    —
    Dr.Manmohan Singh.
    Budget Speech, July 24, 1991.

    (Before proposing the reforms)


    1991 Economic reforms

    Structural reforms Stabilisation measures

    Privatisation Liberalisation Globalisation

    Deregulation Financial sector Tax reforms ForEx reforms Trade policy

    अविनियमन
    Stabilisation measures:
    ● These are short term measures aimed at solving the immediate cause
    - the 1991 economic crisis.
    ● These included correcting the weakness which resulted in the balance
    of payments crisis and steps to bring the inflation under control.
    Structural measures:
    ● These are long term measures aimed at improving the efficiency of the
    economy and increasing its international competitiveness by removing
    the rigidities in various segments of the indian economy.
    ● These reforms fall under three leads:
    1. Liberalisation
    2. Privatisation
    3. Globalisation
    Liberalisation:
    Liberalisation was done in various sectors in the following ways:
    1. Deregulation of industrial sectors :
    Industrial licensing was abolished (समाप्त करना)for all but product categories - alcohol,
    cigarettes, hazardous chemicals, drugs, explosives etc.,
    Many industries which are reserved for public sector in have now been “dereserved”.
    Only railways, defence equipment, atomic power generation have been reserved with
    the public sector.
    Market has been allowed to determine the prices.
    2. Financial sector reforms :
    Reduce the role of RBI from regulator to facilitator of financial sector.
    These reforms led to the establishment of private banks.
    FDI in banks was raised to 50%.
    But certain managerial aspects have been retained with the RBI, to safeguard the
    interests of the account holders.
    3. Tax reforms :
    ● Corporate tax, which was very high earlier has been gradually
    reduced.
    ● The tax procedures have been simplified and the rates also have been
    lowered.
    1973-74 - Eleven tax slabs, with rates from 10 to 85 per cent. 1990-91 -
    In five Budgets between 1991-96, FM Manmohan Singh reduces IT
    slabs to three (20, 30 and 40 per cent).

    4. Foreign exchange reforms:


    ●The rupee was “devalued” against foreign currencies which led to
    an increase in inflow of foreign exchange.
    ●Market has been allowed to determine the foreign exchange rates.
    Trade and investment policy reforms :
    5.
    ● Dismantling (ध्वस्त) of quantitative restrictions on imports.
    ● Reduction of tariff rates(taxes on imports)
    ● Removal of licensing procedures for imports except in case of
    hazardous(खतरनाक) and environmentally sensitive products
    ● Quantitative restriction on imports was also fully decreased later.
    ● Export duties have been removed to promote exports.
    Privatisation:
    ● Privatisation means the transfer of assets from public sector to private
    sector.
    ● Privatisation helps in improving financial discipline and to facilitate
    modernisation (आधनि ु कीकरण).
    ● Privatisation helps in strong inflow of FDIs
    ● Disinvestment (विनिवेश ): Privatisation of public sector enterprises by
    selling off part of the equity of PSEs to the public is called
    Disinvestment.
    ● Criticism:
    1.Assets of PSUs has been undervalued(कम आंकना)
    2.The money from disinvestments were diverted to meet the shortage
    in the government revenue rather than in creating new assets.
    Globalisation:
    ● Globalisation:
    Globalisation is the process of international integration arising from the
    interchange of world views, products, ideas and mutual sharing, and other
    aspects of culture.
    ● Outsourcing:
    In Outsourcing, a company hires regular service from external sources,
    which was hitherto(अब तक) provided internally. It is an outcome of
    globalisation. Thanks to new economic policy, India became a major
    source for outsourcing jobs. Eg: BPO, banking services etc.,
    ● World Trade Organisation(WTO):
    WTO was established to administer all multilateral trade agreements by
    providing equal opportunities to all countries in the international market for
    trading purposes. India has been an active member of WTO, which aims
    to enlarge trade between countries.
    “ 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.”

    उन्होंने कहा, “मैं उन कठिनाइयों को कम नहीं करता, जो उस लंबी और कठिन यात्रा पर आगे बढ़ती हैं, जिस पर हम
    आगे बढ़े हैं। लेकिन जैसा कि विक्टर ह्यूगो ने एक बार कहा था, "पथ् ृ वी पर कोई भी शक्ति एक विचार को रोक नहीं
    सकती है जिसका समय आ गया है "। मैं इस संवर्धित सदन को सुझाव दे ता हूं कि विश्व में एक प्रमुख आर्थिक शक्ति
    के रूप में भारत का उदय एक ऐसा विचार है । परू ी दनिु या को इसे जोर से और स्पष्ट सन ु ने दें । भारत अब व्यापक
    जागत
    ृ है । हम प्रबल रहें गे। हम होंगे कामयाब।"—
    Dr.Manmohan Singh.
    Budget Speech,
    July 24, 1991
    (After proposing the reforms)
    Assessment of Economic reforms:

    Increase in Foreign Exchange


    reserves
    Growth of GDP
    in India
    Growth of FDIs in India Criticism over FDI
    Share of GDP over various sectors

    ●This graphs show that the New economic policy helped in the
    development of service sector but was unable to develop both
    agricultural and industrial sectors.
    The cartoon criticising that the New economic Policy was unable to reduce the inequalities and
    in curbing poverty and unemployment.
    THANK YOU
    Fabian Society :-
    The Fabian Society is a British socialist organisation whose purpose is to advance
    the principles of democratic socialism via gradualist and reformist effort in
    democracies, rather than by revolutionary overthrow.

    फै बियनवाद, समाजवादी आंदोलन और सिद्धांत जो फै बियन सोसाइटी की गतिविधियों से उभरा, जिसे 1884 में लंदन में स्थापित किया गया
    था। 1880 के दशक में ब्रिटिश समाजवादी सिद्धांत में फै बियनवाद प्रमुख हो गया। फै बिन का नाम क्विं टस फै बियस मैक्सिमस वेरुकोसस से
    निकला है, जो रोमन सेना के द्वितीय पुनिक युद्ध के दौरान हैनिबल के खिलाफ देरी की रणनीति के लिए प्रसिद्ध है। प्रारंभिक फै बियंस ने
    मार्क्सवाद के क्रांतिकारी सिद्धांतों को खारिज कर दिया, समाजवादी समाज के क्रमिक संक्रमण के बजाय सिफारिश की। सबसे प्रभावशाली
    प्रारंभिक फै बियन सिद्धांतकारों में जॉर्ज बर्नार्ड शॉ और ग्राहम वालेस के साथ-साथ सिडनी और बीट्रिस वेब शामिल थे, जो आंदोलन में प्रमुख
    विचारक बने रहेंगे। 20 वीं शताब्दी में अन्य प्रमुख फै बियन विचारकों में शिक्षाविद हेरोल्ड लास्की और जी.डी.एच. कोल (दोनों कभी-कभी
    मुख्यधारा के फै बियंस की तुलना में कहीं अधिक कट्टरपंथी थे) और साथ ही लेबर पार्टी के राजनेताओं और कार्यकर्ताओं जैसे आर.एच.एस.
    क्रॉसमैन, रॉय जेनकिं स, इयान मिकार्डो, डेनिस हीले और मार्गरेट कोल। फे बियन सोसाइटी उदारवादी ब्रिटिश समाजवादियों के लिए एक थिंक
    टैंक के रूप में 21 वीं सदी में बच गई।

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