Question

ECONOMIC policy before 1990 ?


15 marks question

Answer 1

Answer:

Before the process of reform began in 1991, the government attempted to close the Indian economy to the outside world. The Indian currency, the rupee, was inconvertible and high tariffs and import licensing prevented foreign goods reaching the market.

Explanation:

The economic reforms of the 1990s swept away the oppressive licensing controls on industry and foreign trade, allowed the market to determine the exchange rate, drastically reduced protective customs tariffs, opened up to foreign investment, modernised the stock markets, freed interest rates, strengthened the banking ..

In this New Economic Policy P. V. Narasimha Rao government reduced the import duties, opened reserved sector for the private players, devalued the Indian currency to increase the export. This is also known as the LPG Model of growth.

The poverty ratio in rural areas and in urban areas declined. There was an increase in air travel and expansion in the civil aviation sector due to reforms. In order to promote competition, the government adopted the Open Skies Policy (through which private players were allowed into aviation sector) in 1991.

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