Indian economy since 1991

By:
M. Hema sri
G.S.R.K.Raju
R. kiran Kumar
V. Mohan kedar
K. Anjaneyulu
J.Gowtham
INDIAN ECONOMY SINCE
1991
In July 1991, the India’s prime
minister [P.V.Narasimha Rao]
and the ministers of
finance[Manmohan Singh]
and Commerce
[P.Chidambaram] announced
the formulation of the most
radical program of economic
liberalisation in independent
India’s history.
ECONOMIC POLICY
In July 1991, New economic policy was announced to get
the country out of the crises. In this policy main emphasis
on liberalisation, privatisation & globalisation.
The main characteristics/features of new Economic Policy 1991 are:
• Delicencing
• Entry to Private Sector
• Disinvestment.
• Liberalisation of Foreign Policy
• Liberalisation in Technical Area
• Setting up of Foreign Investment Promotion Board (FIPB)
• Setting up of Small Scale Industries.
Branches of economic policy

ECONOMIC
POLICY

LIBERALISATION PRIVATISATION GLOBALISATION

liberalization:
liberalization is the lessening of government regulations and restrictions
in an economy in exchange for greater participation by private entities.

Privatisation :
The transfer of ownership, property or business from the
government to the private sector is termed privatization.

Globalization:
Globalisation means the interaction of the domestic economy
with the rest of the world with regard to foreign investment,
trade, production and financial matters
Impact of Changes in Economic Policy on the
Business or Effects of Liberalisation and
Globalisation:

• Increasing Competition
• More Demanding Customers
• Rapidly Changing Technological Environment
• Necessity for Change
• Need for Developing Human Resources
• Market Orientation
• Export a Matter of Survival
ECONOMIC PLANNING
Economic Planning is a term used to describe the long-term plans of
government to co-ordinate and develop the economy with efficient
use of resources.

objectives:
• Economic Development
• Increase Employment
• Self-sufficient
• Economic stability
• Social welfare and services
• Regional Development
• Comprehensive Development
• To reduce Economic Inequalities
• Social Justice
• Increase in standards of living
FIVE YEAR PLANS OF INDIA SINCE 1991:

• Eight five year plan(1992-97)

• Nine five year plan(1997-2002)
• Tenth five year plan(2002-07)
• Eleventh five year plan(2007-12)
• Twelfth five year plan(2012-17)
Agriculture
• INTRODUCTION
• Agriculture plays an important role in the process of
economic development
• Beside providing food it releases labour, provides saving,
contributes to market of industrial goods and earns
foreign exchange
• Agriculture was the main source of national income and
occupation at the time of independence
• Agriculture and allied activities contributed nearly 50% of
India's national income
Types of crops:
• Food grains – Rice, wheat, maize, millets, pulses.
• Commercial crops- cotton, jute, sugarcane, tobacco.
• Plantation crops- tea, coffee, coconut, rubber
• horticulture- fruits and vegetables
Agricultural policy
In this section we try to trace out the principle government policies for
promoting agricultural development.
Agriculture policy followed during this period can be distinguished in
four phases
• 1st phase considered from 1947 to mid 60’s
• 2nd phase from mid 60’s to 1980
• 3rd phase from 1980 to 1981
• 4th phase from 1991/92 onwards
FINAL THOUGHT
• In conclusion we can say that Indian economy performed well
after 1991
• But currently Indian economy is going through another
turbulent phase
• The main imbalances then- Fiscal deficit and Current account
deficit are reckoning again
• Current account deficit in 2012 is 4% compared to 3% of 1991
• Fiscal deficit is 6% in 2012 as compared to 8% in 1991
INDUSTRIES
The objectives of New Industrial
Policy are as follows
• Liberalising the industry from the regulatory devices
such as licenses and control.
• Enhancing support to the small scale sector.
• Increasing competitiveness of industries for the
benefit of the common man.
• Ensuring running of public enterprises on business
lines and thus cutting their losses.
• Providing more incentives for industrialisation of the
backward areas, and
• Ensuring rapid industrial development in a
competitive environment.
Features:
•

• Liberalized Industrial Licensing Policy

• Deregulation of the industrial sector
• Public sector policy (de reservation and reform of PSEs)
• Abolition of MRTP Act (Monopoly and Restrictive Trade Practices
Act)
• Foreign investment policy and foreign technology policy.
• Creation of Productive Capacity
CRITICAL EVALUATON OF NEW INDUSTRIAL
POLICY 1991:
• It leads to Free market economy from the planned economy
• At present We have mixed economy with greater orientation
towards a free market and private sector due to policy
• Industrial Policy from 1991 laying greater emphasis on liberalization
and privatization
• Foreign exchange reserves increased due to policy
• Inflation Rate (which was measured by WPI in 1991) had been
brought down from 14% to 4.5 in 1997-98
• GDP at factor cost which was 5.6 in1981-82 to 1990-91 rose to 6.1
in1992-93 to 2000-01 but industrial growth rate decrease from 7.1
to 6.4
Advantages :
Increase in production
Increase in competition
Increase in efficiency of public sector
Increase in exports
Reduction in economic burden on government
Balanced regional development
More significance given to small industries
Monetary Policy
(1990-2010)
MACRO ECONOMICS

MACRO
ECONOMICS

MONETARY
FISCAL POLICY
POLICY
Monetary Policy

Monetary policy is the Macro Economic Policy laid down by the

central bank. It involves management of money supply and
interest rate and is the demand side economic policy used by the
government of a country to achieve macroeconomic objectives
like inflation, consumption, growth and liquidity
Money Supply:
The total stock of money circulating in an
economy is the money supply. The circulating
money involves the currency, printed notes,
money in the deposit accounts and in the form
of other liquid assets
Inflation:
Inflation is a quantitative measure of the rate at
which the average price level of selected goods
and services in an economy increases over a
period of time.
25 Monetory Policy(1990-2010)

20 20
19.6
18.9

16.7 16.6
16 16.2

15 15.3
14.4
13.3
13 13
12.4 12.3
11.8 11.8
11.2
10.2 10.4
10 10
9
8.5 8.7
8.2 8.2 8.4

7.1
6.25 6
5.3 5.2 5.4 5.2
5 5 5.1
4.7
4.4
4.1 4
3.3

M3 Inflation
PUBLIC FINANCE
CONCEPTS OF PUBLIC
FINANCE

Public Expenditure
Public Revenue
Public Debt
Financial Administration
BUDGET DEFICIT
The annual budget of Government (in India) indicates three types
of deficits, namely

Revenue deficit
Fiscal deficit, and
Primary deficit.
POLICIES UNDER PUBLIC
FINANCE
Monetary Policy
Fiscal Policy
GROWTH AND STRUCTURE OF
INDIAS TRADE SINCE 1991
Foreign trade has one of the significant determinants of economic
development in country.

IT CONSISTS :
• Inward and Out ward movement of goods and services.
• Inflow and Outflow of foreign exchange

OBJECTIVES:
• Examine growth of exports and imports in India during post-reform
period.
• To explore the share of exports and imports in GDP.
• To analyse the changes that has occurred in the composition and
direction of India’s export and imports during the post reform
period.
Growth of Exports in India
during
Variable Bo B1 R2 CGR

Primary products 5.24 0.075 0.94 18.85

Manufactured 6.33 0.106 0.99 27.64

Products
Petroleum Products 1.65 0.254 0.73 79.47

Others 1.82 0.189 0.95 54.53

Total exports 6.629 0.109 0.98 28052

BALANCE OF PAYMENTS
Balance of payments of a country is a systematic record of all
economic transactions between the residents of a country and the
rest of the world carried out in a specified period of time
Balance of
payments

Current account
Capital account

Merchandise
Private
Non-Monetary
Gold
Official
Invisibles
Banking
 India’s Balance Of Payment situation
since:1991:some indicators
Indicator 1992-93 1993-94 1995-96 2000-01 01-02 02-03 04-05 06-07

Current A/c -1.7 -0.4 -1.7 -0.6 0.7 1.3 -0.4 -1.1
balance(as % of
GDP)
Import cover of 4.9 8.6 6.0 8.8 11.5 14.2 14.3 12.5
foreign exchange
reserves(no. of
months)
Import, dollar 15.4 10.0 21.6 4.6 2.8 14.5 48.6 21.4
values(Annual
growth rate)
Export, dollar 3.3 20.2 20.3 21.1 -1.6 20.3 28.5 22.6
values(Annual
growth rate)
GLOBALISATION:
• Globalisation can be defined, simply as the expansion of
economic activities across political boundaries of nation

Characteristics of globalisation:
• Rapid growth in international financial transactions
• The emergence of global markets
• Fast growth in trade, especially among multinational
corporation

Effects on:
• External Sector
• Indian Enterprises
FERA AND FEMA
Foreign Exchange Foreign Exchange
Regulation MANAGEMENT
Act(1973) ACT(DEC 29,1999)
OBJECTIVES: OBJECTIVES:
• To regulate certain • To help RBI in
payments maintaining exchange
• To regulate dealings in rate stability
foreign exchange and • To conserve precious
securities foreign exchange
• To regulate import and • To prevent /regulate
export of currency foreign business in india
• To regulate employment • To facilitate external
of foreign nationals trade and payment
GATT AND WTO
General Agreements On
Tariffs And Trade (30 OCT World Trade
1947) Organisation(1 JAN 1995)
OBJECTIVES: OBJECTIVES:
• To raise the standard of • To improve the standard of
living of people in the
living of the people member countries
• To tap the use of • To ensure full employment
resources of the world and broad increase in
fully effective demand
• To enlarge production and
• To expand overall trade of goods
production capacity and • To increase the trade of
international trade services
CONCLUSION
• Service sector is largest contribution in GDP of India
• Agriculture sector is having significant contribution in
country’s economy.
• Industrial sector is contributing less than its capabilities and it
can be increased by setting manufacturing industries for
sustainable economic development.