Since 1991 India has started a sort of economic revolution to exploit fully the country’s potentials to achieve higher growth. Credible reforms have been taken in industry, trade, and infrastructure, fiscal, financial and public sectors to improve efficiency, productivity and international competitiveness of Indian industries and to impart dynamism to the overall growth process. As the initial reforms take root and second-generation reforms unfold, India is emerging as one of the favourable destinations for foreign investment and a land of immense opportunity for all. India’s reforms program is characterised by the following unique features
|
Pre-Reforms Period |
Post Reforms Period |
|
|
|
|
1. Quantitative licensing on trade and industry |
1.Abolition of industrial and trade licensing |
|
2. State regulated monopolies of utilities and trade |
2.Removal of state monopolies ,privatization & divestment |
|
3. Govt control on finance and capital markets |
3.Liberalisation of financial and capital markets |
|
4.Restrictions on foreign investment and technology |
4.Liberal regime for FDI, portfolio investment, foreign technology |
|
5. Import substitution and export of primary goods |
5.Export promotion and export diversification, no import bias |
|
6.Central planning, discretionary process, high degree of bureaucracy |
6. Decentralisation, sound institutional framework, reforming civil services |
|
7.Tax concessions on exports and savings |
7. Rationalised and being phased out |
Macro adjustment policies can be broadly divided into two groups- stabilisation policies and structural reforms.
Stabilization policies:
(a) Fiscal policies
(b) Monetary and credit policies
(c) Exchange rate adjustment
(d) Tariff policy
(e) Wage-income-price policies
Structural adjustment policies
(a) Reforms in trade and external sector
(b) Reforms in industry and infrastructure
(c) Reforms in agriculture
(d) Public sector reforms
(e) Factor market reforms- land, labour and capital
(f) Administered price policy
Complete CA-CPT Course