explain the features of new economic policy 1991
Answers
The new economic policy has made provision for liberalizing the economy against unnecessary controls and regulations. Here the liberalisation simply indicates liberating the trade and industry from unwanted restrictions. In order to liberalise the economy and to bring transparency in the policy, the New Industrial Policy, 1991 has abolished the system of industrial licensing for all industrial undertaking, irrespective of the level of investment, except for a short list of 18 industries related to security and strategic concern, social reasons, hazardous chemicals and overriding environmental concerns and items of elitist consumption.
seven important features of new economic policies under economic reforms, i.e., (1) Liberalisation, (2) Privatisation, (3) Globalisation of the Economy, (4) New Public Sector Policy, (5) Modernisation, (6) Financial Reforms, and (7) Fiscal Reforms.
Globalisation of the economy offers both challenges and opportunities to the developing countries.
The Industrial Policy has undertaken the following four major policy decisions in respect of public sector:
(i) Reduction in the list of industries reserved for the public sector from 17 to 8 and introducing selective competition in the reserved areas.
These include:
(i) Reduction in liquidity ratio,
(ii) Abolition of direct credit programmes,
(iii) Free determination of interest rates
In order to achieve the target the Government has introduced various controls over public expenditure and took initiative to raise its both tax and non-tax revenue.