Indian Economy

New Economic Policy

By Examguru / 29 Sep, 2023 / Download PDF

New Economic Policy

  • New Economic Policy is related to economic reforms. Its aim is to bring about reforms in production pattern, to obtain new technology and to use full capacity expeditiously and in toto.
  • The New Economic Policy was devised and implemented, for the first time in the year 1985 during the period of Prime Minister Rajiv Gandhi.
  • The second wave of new economic reforms came in the year 1991 during the period of PV. Narsimha Rao government.
  • The main reason to start new economic policy (1991) was Gulf-War and problem of balance of payment in India.
  • Three main objectives of new economic policy were— Liberalisation, Privatisation and Globalisation.
  • Main sectors of new economic reform policy, 1991 were- Fiscal Policy, Monetary Policy, Value Fixation Policy Foreign Policy, Industrial Policy, Foreign Investment Policy, Business Policy and Public Sector Policy.

Economic Reforms

  • Economic Reforms were introduced in 1991 in India First Generation Reforms were aimed at stabilisation of Indian economy and were macro level in nature it includes liberalisation and deregulation of industry financial sector reforms, taxation reforms etc. Second Generation Reforms aimed at structural changes and micro level in nature. It will include labour reforms land reforms, capital market reforms, expenditure reforms and power sector reforms etc.
  • Since economic reform, poverty has been declining from 36% in 1993 to 26% by the end of 10th plan. But as far as inequality is concerned it has increased. A World Bank Report 1999-2000 confirms this rise in inequality.
  • The New Economic Reforms Policy, by making progress from 1991 to 2005-06 has become more open, liberal and global.
  • Disinvestment means to decrease the share of government in the industries.
  • In 1996, Disinvestment Commission was constituted to review, give suggestions and make regulations on the issue of disinvestment.
  • Shri G.V. Ramkrishna was the first Chairman of Disinvestment Commission.
  • In the year 1992, National Renewal Fund was constituted for rehabilitation of displaced labourers of sick industrial units affected due to industrial modernization, technological development etc.
  • 'Navratna' is a company which is rising at world level. Toencourage these companies, the government has given them complete autonomy.
  • In the second phase of the economic reforms programme, the main aim is to eradicate poverty from the country and development at the rate of 7 to 8%.

Terminology Relating to New Economic Reforms

Privatisation:

To increase participation of private sector in the public sector companies by capital investment or by management or both or to hand over a public sector unit to a private company is called Privatisation.

Liberalisation:

Liberalisation is the process by which government control is relaxed or abolished. In this process privatisation is also included.

Globalisation:

The process of amalgamation of an economy with world economy is called Globalisation. It is signified by lower duties on import and export. By doing so, that sector will also get private capital and foreign technology.

Disinvestment:

To reduce the government's share in the public sector is called disinvestment.

More Related Articles

Highlights of Indian Economy

According to the Economic Survey 2021-22, Advance Estimates suggest that the Indian economy is expected to witness real GDP expansion of 9.2 % in 2021-22 after contracting in 2020-21. This impl

examguru by ExamGuru

Economy & Economics

Economy: It is the state of a country or region in terms of the production and consumption of goods and service and the supply of money. Types of Economy Depending upon the dominant view o

examguru by ExamGuru

Characteristics of Indian Economy

Main characteristics and various aspects of India Economy are: 1.  Agrarian Economy: Even after seven-decades of independence, agriculture plays a vital role in India’s economy. 5

examguru by ExamGuru

Agriculture and Land Development

Agriculture and Food Management The agriculture sector, which is the largest employer of workforce, accounted for a sizeable 18.8 % (2021- 22) in Gross Value Added (GVA) of the country registeri

examguru by ExamGuru

National Income

National income is the measurement of flow of services and goods in economic system. Comparison between National income with National wealth: The national wealth is the measurement of present ass

examguru by ExamGuru

Economic Planning and Development

Economic Planning is the process in which the limited natural resources are used skillfully so as to achieve the desired goals. The concept of Economic Planning in India, is derived from Russia (th

examguru by ExamGuru

Unemployment and Employment (Programmes and Schemes)

In common parlance anybody who is not gainfully employed in any productive activity is called unemployed. However, it can be of two kinds- 1. voluntary unemployed and 2. involuntary unemployed. Her

examguru by ExamGuru

Trade and Commerce

Indian Trade was extremely developed during ancient time. After the British East India Company was established in 1600, the trade between India and Britain was in India's favour till 1757. At

examguru by ExamGuru

Indian Financial System

Indian Financial System is a system in which People, Financial Institutions, Banks, Industrial Companies and the Government demand for fund and the same is supplied to them. There are two parts o

examguru by ExamGuru

Indian Fiscal System

Fiscal System: It refers to the management of revenue and capital expenditure finances by the state. Hence, fiscal system includes budgetary activities of the government that is revenue raising, bo

examguru by ExamGuru

Toppers

anil kumar
Akshay kuamr
geeta kumari
shubham