Question

3. What were the main Industrial reforms that were introduced in 1991?
Discuss.​

Answer 1

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thє índuѕtríαl pσlícч rєfσrmѕ ínítíαtєd ín thє índuѕtríαl ѕєctσr ѕíncє 1991 íncludєd rєmσvαl σf єntrч вαrríєr, rєductíσn σf αrєαѕ rєѕєrvєd єхcluѕívєlч fσr puвlíc ѕєctσr, rαtíσnαlíѕαtíσn σf αpprσαch tσwαrdѕ mσnσpσlíѕtíc αnd rєѕtríctívє prαctícєѕ, líвєrαlíѕαtíσn σf ínvєѕtmєnt pσlícч, αnd fαr rєαchíng líвєrαlíѕαtíσn....❤

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Answer 2

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The 1991 economic crisis, essentially a balance of payments problem, is generally seen as the overriding factor that led to the dismantling of the licence/quota raj, but that is only partly true. The lacunae of the industrial and trade policies were well documented both within and outside the government. Contrary to the perception of reforms being foisted on the government by the International Monetary Fund (IMF), these reforms were entirely “made in India".

The New Industrial Policy saw the light of day in 1991 for a variety of reasons. Industries were struggling, but the government’s budgetary constraints in 1991 meant it could not provide funds for investment in industrial activity, either directly or through banks.

However, such was the nature of the crisis that it did not make industrial reforms inevitable. The funding squeeze was temporary, after all. The government could have kicked the reform question into the long grass and still have rode out the crisis. The IMF had been pretty generous with its lending terms the previous time India had gone banging on its doors in 1981. Status quo could still have ruled.

But as the saying goes, there is nothing like a crisis to concentrate the mind—it provided an urgency to revamp the Indian economic architecture, and cover for politically difficult decisions. As in most things, luck played a crucial part. The providential promotion of a bureaucrat and a strategic ministerial portfolio allocation made sure that bureaucratic and political inertia could be overcome. Here’s how it all came together.