why were economic reform introduce in india
Answers
Answer:
The economic reforms were introduced in 1991 to overcome the economic crisis related to the external debt and many other factors like -
1. The national income was growing at a very slow rate of 0.8%
2. India was highly indebted and the government was unable to make repayment of loans taken from abroad.
3. Imports were more than exports, there was balance of payment deficit and the foreign exchange reserves collapsed.
4. Inflation level was quite high and so even the prices of essential goods were increased.
5. India was indebted to IMF and World Bank up to the extent of 7 billion dollars
Explanation:
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Answer:
In 1991, economic reforms were introduced in India because 1991 was the year of crisis for the Indian economy. It is clear from the following facts:
Explanation:
(a) . Fiscal deficit was more than 7.5%.
(b) Inflation reached the height of 16.8%.
(c) Balance of payment crisis was to the extent of 10,000 crores.
(d) India was highly indebted country. It was paying 30,000 crores interest charges per year.
(e) Foreign exchanges reserves were only 1.8 billion dollars which were sufficient for three weeks.
(f) India sold large amount of gold to Bank of England.
(g) India applied for the loan from World Bank and IMF to the extent of 7 billion dollars.
(h) National income was growing at the rate of 0.8%
(i) Deficit financing was around 3%.
(j) Trade relation with Soviet block had broken down.
(k) Remmittances from non-residence Indians stopped due to war in Arab countries.
(l) Price of petroleum products was very high.