ECONOMICS
HOLIDAY HOMEWORK
ABDUL SAMI
12 A5
19201609
Economic Reforms:
• Economic reforms or structural
adjustment is a long term multi
dimensional package of various
policies (Liberalisation,
privatisation and globalisation)
and programme for the speedy
growth, efficiency in production
and make a competitive
environment. Economic reforms
were adopted by Indian Govt. in
1991.
Factor’s responsible For
Economic reforms
1. Fall in foreign exchange reserve : as imports grew faster than
exports
2. Adverse balance of payments resulted repayment crisis
3. Mounting fiscal deficit as govt. expenditure grew faster than
revenue
4. Rise in prices, which has the negative impact on Investment.
5. Failure of public enterprises:- very low return on high Investment
6. Gulf crisis increases crude oil prices which negatively affected BOP.
7. High rate of deficit financing
8. Collapse of soviet block.
New Economic Policy:-
It refers to economic reforms introduced since 1991 to
improve the productivity and profitability of economy and
to make it globally competitive.
Measures of New Economic policy
Stabilisation measures: These are short run measures
introduced by Govt to control rise in price, adverse
balance of payment and fall in foreign ex-change reserve.
Structural adjustment: These are long run policies, aimed
at improving the efficiency of the economy and increasing
its international competiveness by removing the rigidity
in various segment of the Indian economy.
In the new economic policy 1991, Structural reforms can
be seen with respect to.
1. Liberalisation.
2. Privatisation
3. Globalisation.
Liberalisation
Liberalisation means removing all unnecessary control and restrictions like permits licences,
protectionist duties quotas etc. In other words, It may defined as loosening of govt. regulation in
a country to allow for private sector companies to operate business transactions with fewer
restrictions.
Objectives of liberalisation :-
1. To decrease debt burden of the country
2. To expand size of the market
3. To increase competition among domestic industries
4. To encourage export and import of goods and services.
Economic reforms under liberalisation.
1. Industrial sector reforms Abolition of Industrial Licensing
Contraction off Public Sector Freedom to Import capital
goods
2. Financial sector reforms.
Reducing various Ratios(SLR, CRR)
Change in role of RBI from regulator to facilitator
De-regulation of interest rates
3. Fiscal reforms/Tax reforms
4. Foreign exchange reforms
Devaluation of rupee
5. Trade and investment reforms.
Privatisation
Privatisation is the general process of involving the
private sector in the ownership or operation of a state
owned enterprises.
Policies adopted for privatisation
1. Contraction of public sector.
2. Abolish the ownership of Govt. in the management of
public enterprises.
3. Sale of shares of public enterprises.
Objectives of Privatisation:-
1. Raising funds from Disinvestment
2. Improving the financial condition of the govt.
3. Bringing healthy competition within an economy
4. Making Way for Foreign Direct Investment
Globalisation
Globalisation may be defined as a process associated with increasing openness, growing economic
interdependence and deepening economic integration in the world economy.
Policy promoting globalisation.
1. Increase in equity limit of foreign investment.
2. Partial convertibility.
3. Long term trade policy.
4. Reduction in tariff.
An Appraisal of LPG Policies
1. Increase in foreign investment.
2. Increase in foreign exchange reserves.
3. A check of inflation.
4. Increase in national income.
5. Increase in exports.
6. Consumer sovereignty.
Negative Impact:
1. Neglect of agriculture.
2. Jobless growth.
3. Increase income inequalities.
4. Adverse effect of disinvestment policy.
5. Spread of consumerism.
6. Cultural erosion.
7. Encourages economic colonialism
World Trade
Organisation(WTO)
World Trade Organisation, as an institution was
established in 1995. It replaced General Agreement on
Trade and Tariffs (GATT) which was in place since 1946.
The overriding objective of the World Trade
Organisation is to help trade flow smoothly, freely, fairly
and predictably; to meet its objective WTO performs
the following functions:-
• Administering W.T.O Trade Agreements.
• Acting as a Forum for trade negotiations.
•Settling and Handling Trade disputes
•Monitoring and reviewing national trade policies,
•Assisting the member in trade policies through technical
assistance and training programmes
•Technical assistance and training for developing
countries.
• Co-operation with other International Organisation
Thank you
