Economic Measures Taken In Indian History

 

India has a robust economy compared to most countries. But it is not as if it never had any problems. The government is much reviled for their economic policies but there was a time of crisis when the government actually brought the country out of its slump.

 

In late 80's India was confronted with a grave fiscal and balance of payment crisis. To combat the critical situation Govt. of India launched an Economic Reform programmed in July 1991. The emphasis of the economic reform programmed was on attainment of macro-economic stability and shifting the Indian economy to a higher growth plan. The core of Indian's economic reform strategy has-been to dismantle the central economic control exercised during the last four decades. some of the key measures taken under the reforms policy were-(i) Controlling the fiscal deficit, (ii) Cutting and rationalizing corporate taxes and personal income tax, (iii) Abolishing industrial licensing, (iv) Encouraging foreign investment, (v) Liberalization of import rules and cutting import duties, (vi) Encouraging exports, and (vii) Deregulating the capital market.

 

Economists feel that the key aspects of the economic reforms programmed are: Economist reform has been primarily in the form of economic, liberalization with the aim of decontrol, deregulation and ushering spirit of competition. The basic objective of the economic reforms programmed has been to expose the domestic economy to external competition and give domestic consumers’ wider choices. But nothing has been done to ensure competitiveness of the domestic economy according to experts.

 

Gains expected from the economic reforms programmed are higher economic growth and higher GDP growth. The economic reform programmed has contributed substantially to higher economic growth which has brought about an improvement in the standard of living of people in general. During the first five years of reforms programmed (1992-97) GDP growth averaged 6.9 percent, the highest ever for a five year period. There has been a turnaround in macroeconomic balances. The current account deficit from 3.5% in 1991 to 1.2 % in 1996-97. The debt service ratio declined from 32.4% to 23% during the same period. External debate as a percentage of GDP came down from 37% to 25%. Fiscal deficit declined from 8.6 % in 1990-91 to 5.1% in 1996-97. And foreign reserves have increased from 1 billion dollar to 27 billion dollar by now. According to a survey the total number of persons employed in rural India increased from 268 million to 294 million during six years of economic reforms. According to our prime minister Shri Atal Bihari Vajpayee the poverty ratio had declined by 10% i.e. from 36% in 1993-1994 to 26.1% in 1999-2000. This proves that the economic reforms initiated in the nineties are beginning to achieve the desired results of poverty alleviation.

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economy , budget

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