Indian Economy
General Knowledge

Economic Reforms

Economic Reforms

» Economic Reforms were introduced in 1991 in India. First Generation Reforms were aimed at stabilisation of Indian economy and were macro level in nature. It includes liberalisation and deregulation of industry, financial sector reforms, taxation reforms etc. Second Generation Reforms aimed at structural changes and are micro level in nature. It will include labour reforms, land reforms, capital market reforms, expenditure reforms and power sector reforms etc.
» Since economic reform, poverty has been declining from 36% in 1993 to 26% by the end of 10th plan. But as far as inequality is concerned it has increased. A World Bank Report 1999-2000 confirms this rise in inequality.
» The New Economic Reforms Policy, by making progress from 1991 to 2005-06 has become more open, liberal and global.
» Disinvestment means to decrease the share of government in the industries.
» In 1996, Disinvestment Commission was constituted to review, give suggestions and make regulations on the issue of disinvestment.
» Shri G.V. Ramkrishna was the first Chairman of Disinvestment Commission.
» In the year l992, National Renewal Fund was constituted for rehabilitation of displaced labourers of sick industrial units affected due to industrial modernization, technological development etc.
» "Navratna" is a company which is rising at world level. To encourage these companies, the government has given them complete autonomy.
» In the second phase of economic reforms programme, the main aim is to eradicate poverty from the country and development at the rate of 7 to 8%.

Some Important Terminology Relating to the New Economic Reforms Policy

» Privatisation : To increase participation of private sector in the public sector companies by capital investment or by management or both or to hand over a public sector unit to a private company is called Privatisation.

» Liberalisation : Liberalisation is the process by which government control is relaxed or abolished. In this process privatisation is also included.

» Globalisation : The process of amalgamation of an economy with world- economy is called Globalisation. It is signified by lower duties on import and export. By doing so, that sector will also get private capital and foreign technology.

» Disinvestment : To reduce the government share in the public sector is called disinvestment.