TRENDS OF INDIAN ECONOMY AFTER
NEW ECONOMIC POLICY
NEW ECONOMY POLICY OF INDIA WAS LAUNCHED IN THE YEAR 1991, ON 24TH JULY UNDER THE LEADERSHIP OF P.V. NARASIMHA RAO.
IN 1991 MANMOHAN SINGH AS FINANCE MINISTER, FREED INDIA FROM THE LICENSE Raj, source of slow economy growth and corruption in the indiaN ECONOMY FOR DECADE. HE LIBERALISED THE INDIAN ECONOMY, ALLOwING IT TO SPEED UP DEVELOPMENT DRAMATICALLY. THE GOVERNMENT REDUCE THE IMPORT DUTIES, OPEN RESERVED SECTORS FOR THE PRIVATE PLAYERS DEVALUED THE INDIAN CURRENCY TO INCREASE THE EXPORT. THIS IS ALSO KNOWN AS THE LPG MODEL OF the GROWTH.
THE NEW ECONOMY POLICY INCLUDED STANDARD STRUCTURAL ADJUSTMENTS MEASUERS INCLUDING THE DEVALUEATION OF THE RUPEE, INCREASE IN INTREST RATES, REDUCTION IN PUBLIC INVESTMENTS AND EXPENDITURE, REDUCTION IN THE PUBLIC SECTOR, ETC.
THE THRUST OF THE NEW ECONOMIC POLICY HAS BEEN TOWARDS CREATING A MORE COMPETATIVE ENVIRONMENT IN THE ECONOMY AS A MEANS OF IMPROVING A PRODUCTIVITY AND EFFICIENCY OF THE SYSTEM. THIS WAS TO BE ACHIEVED BY REMOVING THE BARRIERS TO ENTRY AND RESTRICTON ON THE GROWTH OF FIRMS. IT INTRODUCED A MEASURE OF STABILITY TO THE ECONOMY.
MAIN OBJECTIVES BEHIND THE NEW ECONOMY POLICY 1991 ARE:
- TO PLUNGE THE INDIAN ECONOMY INTO THE ARENA OF GLOPBALISATION AND TO GIVE IT A NEW THRUST ON MARKEGT ORIENTATION.
- IT TENDED TO BRING DOWN THE RATE OF INFLATION.
- IT ALSO TENDED TO MOVE TOWARDS HIGHER ECONOMIC GROwTH RATE AND TO BUILD SUFFICENT FOREIGN EXCHANGE RESERVES.
- IT WANTED TO ACHIEVE ECONOMIC STABILAZAION AND TO CONVERT THE ECONOMY INTO A MARKET ECONOMY BY REMOVING ALL KINDS OF UNNECESARRY RISTRICTIONS.
- IT WANTED TO PERMIT THE INTERNATIONAL FLOW OF GOODS, SERVICES, CAPITAL HUMAN RESOURCES AND TECHNOLOGY, WITHOUT ANY RESTRICTIONS.
- IT WANTED TO INCREASE THE PARTICIPATION OF PRIVATE PLAYERS IN THE ALL SECTORS OF THE ECONOMY.
- IT ENSURES WELLFARE AS ALSO SKILLS AND FACILITiES TO THE WORKERS TO UNABLE THEM TO FACE NEW TECHNOLOGIES.
- IT ALSO HELPS IN CONTROLING MONOPOLESTIC POWER.
- TO ACHIEVE SELF RELIANCE.
THE NEW ECONOMY POLICY 1991 BRINGS THE POSITIVE IMPACT OF THE ECONOMY AS:
- GLOBALISATION CREATES GREATER OPPORTUNITIES FOR FIRMS IN LESS INDUSTRIALISED CoUNTRIES TO TAP INTO MORE AND LARGER MARKETS AROUND THE WORLD.
- BUSINESS LOCATED IN DEVELOPING COUNTRIES HAVE MORE ACCESS TO CAPITAL FLOWS, TECHNOLOGIES,HUMAN CAPITAL, CHEAPER IMPORTS AMD LARGER EXPORT MARKETS.
- LIBEFRALISTAION HAS INHANCED THE FLOW OF CAPITAL BY MAKING IT AFFORDABLE FOR BUSINESS TO REACH THE CAPITAL FROM INVESTORS AND TAKE A PROFITABLE PROJECT.
- THE INVESTORS WILL BE BENEFITTED BY INVESTING A PORTION OF THEIR BUSINESS INTO A DIVERSIFYING ASSET CLASS.
- PRIVATEISATION SURELY IS ADVANTAGES FOR THE GROWTH AND SUSTAINABILITY OF STATE OWNED COMPANIES
- IT HELPS THE PROFIT MAKING PUBLIC SECTOR UNITS TO MODERNIZE AND DIVERSIFY THEIR BUSINESS.
- IT ALSO REDUCED POLITCAL INFLUENCE ON DECISION MAKING OF MANAGERS.
THE THRUST OF THE NEW ECONOMY POLICY 1991 HAS BEEN TOWARD CREATING A MORE COMPETATIVE ENVIRONMENT IN THE ECONOMY AS A MEANS TO IMPROVING THE PRODUCTIVITY AND EFFICIENCY OF THE SYSTEM.
– AARUSHI SAXENA BBA, 2ND YEAR TIAS
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