short note on economic reforms
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Economic Reforms in India
It was during Narasimha Rao’s government in 1991, that India met with the economic crisis which occurred due to its external debt. Due to debt, the government was not able to make the payments for the borrowings it had made from the foreign countries.
As a result, the government had to adopt new measures to reform the conditions of the Indian economy. There were many programs and initiatives introduced primarily consisted of liberalization, privatization, and globalization.
The Crisis of 1991 and the Reforms
The crisis of 1991 happened largely due to inefficient management of the economy of India in the 1980s. The revenues that government was generating were not enough to meet the ever increasing expenses. Thus, the government had to borrow to pay for the debts and thus was caught in a term called debt-trap. Debt-trap is the deficit that occurs due to an increase in government expenses in comparison to the government’s revenue.
economic reforms in India
Due to the failure of earlier economic policies till 1990 there was a need for need for new economic policies. The situation was worsening as India had foreign reserves which could last only for the next two weeks. There was a shortage of new loans and Indian people living abroad (NRIs) were withdrawing money in large amounts.
There was a little confidence for international investors towards the Indian economy. These points will highlight the need for a new economic policy in India. Crisis in Gulf countries, increase in fiscal deficit, prices rising, the worse balance of payments, public sector units (PSUs) performing badly, and many more.
The Emergence of New Reforms
India approached the world and international monetary fund for loan and received $7 million to manage their crisis. As a result to this, international firms and agencies expected that India will open up the door in the country by removing various restrictions majorly on private sector and thereby removing the trade restrictions between India and the other foreign countries.
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Write short note economicReform
Microeconomic reform - Wikipedia "Economic reform" usually refers to deregulation, or at times to reduction in the size of government, to remove distortions caused by regulations or the presence of government, rather than new or increased regulations or government programs to reduce distortions caused by market failure.