Question

how did 1991 played an important role for the Indian economy?

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Answer 1

Answer:

The program of economic policy reform which was put in place in 1991 has yielded amazing results, dramatically improving the quality of life in India. Trade liberalisation in India has also corresponded with a dramatic rise in inequality and associated social issues, but these are normal for a developing economy.

Answer 2

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First know these :

Before 1991:

• There was poor performance of public sector in India.
• Deficit in balance of payments
• Inflationary pressure (price level high)
• Fall in foreign exchange Reserve.
• Huge burden of debts.
• Insufficient management.

There is no other option for india to get rid out of this so ,India goes to IMF for financial help to manage the economic crisis in 1919.

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In 1991 a new economic policy was made :

Main Policies of New Economic Policy:

• Liberalization
• Privatization
• Globalization

Liberalization Involves deregulation and reduction of government control.

Objectives:

• To encourage Private Sector and MNCs
• To Introduce much more competition into economy
• To create incentives for increasing efficiency of Operations.

Privatization means transfer of ownership management and control of public sector enterprises to the entrepreneurs in the private sector.

• The government do privatization because at that time the public sector does not work efficiently.
• There was poor economic condition.
• India have to follow the rules ,terms and conditions of IMF because after that the IMF would provide loans(financial help) to India.

Globalization means I integrating (to join) the national economy with the world economy.

=>Globalization aims to create a border less World.

Some changes and policies made by Globalisation :

• New Economic Policy made FDI (foreign direct investment) was allowed upto 51%.
• Indian rupees were devalued in 1991 by estimated 20%.As, a result export increases and raised the inflow of foreign exchange.
• Indian rupees were made Partially convertible.
• The new economic policy removed all the restrictions and control on external trade.