Design and strategy of economic

reforms

By- Megha Garg

Unit-2 (Part 2)
➢ Economic Reforms during 1990s to the present times
❖Because of the Soviet Union and the problems in balance of payment accounts
of the nation, the country had faced economic crisis and the International
Monetary Fund (IMF) asked for the bailout loan for help.
❖ In order to get rid of the situation, that time Finance Minister, Manmohan
Singh had started the liberalized economic reforms in the year 1991 and it is
considered to be the major milestones in Indian economic reform history as it
changed the market and financial scenario of the nation.
❖As per the program of liberalization, (FDI) foreign direct investment was called
up and initiated, public monopolies created by the public sector undertakings
were stopped; service and tertiary sectors were developed and enhanced.
❖Foreign investments were encouraged or called up in different sectors and
there has been a good growth and development in the standard of living of the
people, per capital income (PCI) and Gross Domestic Product (GDP).
❖In order to get rid of the present situation, the Indian government has taken
various decisions e.g. making strong the banking and tertiary sectors, increasing
the quantity and quality of exports and lots more.
Globalization
Globalization is the process of integrating the various economies of the world
without creating any barriers in the flow of goods and services, technology,
capital and labor/human capital. It involves four components:
a) Reduction of trade barriers in the form of custom
duties/quotas/quantitative restrictions so as to permit free flow of goods and
services in different economies.
b) Creation of an environment in which free flow of capital (or investment) can
take place between nation states.
c) Creation of an enabling environment for the free flow of technology; and
d) From the viewpoint of developing countries, creation of an environment in
which free flow of labor or human resources can take place among different
countries of the world.
Essentially, globalization is an extension of the process of liberalization in the
international domain. It therefore signifies internationalization plus
liberalization.
➢ 1991-A New Wave of Economic Reforms