Question

why were economic reforms needed in Indai (6) mark
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Answer 1

Economic Reforms refer to the fundamental changes that were launched in 1991 with the plan of liberalising the economy and for quickening its rate of economic growth. The Narasimha Rao Government, in 1991, started the economic reforms in order to rebuild internal and external faith in the Indian economy.

Answer 2

To cover the fiscal deficit, the Govt. has to raise loans and pay interest on it. Due to rise in fiscal deficit there was rise in public debt and interest. In 1991 interest liability became 36.4% of total govt. So Govt. has to resort to economic reforms.