new economic reforms of india

1. Presented by:
Annanya
Bhavana
Chaitra
Deepak
Gerin mathew
Raj kiran

2. BACKGROUND
 Present process of Economic reforms was launched in
July 1991 in India due to economic and political crisis:
Economic crisis include fall in foreign exchange
reserve, galloping inflation, large public and current
account deficit etc.
Political crisis include fall of two governments in a
short span of four months, from November 1990 to
March 1991. Also the assassination of Former Prime
Minister Rajiv Gandhi etc.
“CRISIS DRIVEN REFORMS”

3. MEANING OF ECONOMIC
REFORMS
 The term “economic reform” broadly indicates:
 Necessary structural adjustments to external events.
 Functions of country’s spending to the level parallel to
its income and thereby reducing fiscal deficits.
 This requires gradual reduction in import and increase
in export.

4. NEED OF ECONOMIC REFORMS
 Increase in Fiscal Deficit
 Increase in adverse balance of payment
 Gulf Crisis
 Fall in Foreign Exchange Reserve
 Rise in Price
 Poor performance of public sector

5. MAIN FEATURES OF ECONOMIC
REFORMS
ECONOMIC
REFORMS
LIBERALISATION
PRIVATISATION
GLOBALISATION

6. LIBERALISATION
 Means to free the economy from direct or physical
controls imposed by the government.
 Its multiple forms are:
 Delicensing
 Tax exemptions, Holidays and Concessions
 Simplification and rationalization of tax rates.
 Freedom to banks to enter insurance sectors
 Freedom to import capital goods
 Freedom to import technology

7. PRIVATISATION
 Means allowing the private sector to set up more and
more of industries that were previously reserved for
public sector.
 It can take in three forms:
 Change in ownership
 Total nationalization
 Joint venture
 Liquidation
 Workers Co-operative

8. Continued…
 Organizational Measures
 A holding company structure
 Leasing
 Operational Measures

9. Objectives of Privatisation
 To make optimum use of resources
 To earn more foreign currency
 To strengthen industrial development
ADVANTAGES
 Reduction in economic burden
 Increase in efficiency
 Encouragement of new inventions

10. Globalization
 Process associated with increasing openness, growing
economic independence.
 Reduction of trade barriers
 Free flow of capital
 Free flow of technology

11. Types of Globalization
 Globalization of markets.
 Globalization of production
 Globalization of technology
 Globalization of Investment

12. Measures taken for Globalization
 Increase in Limit of FDI
 Reducing custom duty
 Devaluation of currency
 Reduction of import duties

13. REFORMS FOR GROWTH
 Exchange Market Reforms
 Introduced in eighth five year plan in 1993
 Exchange rates were unified and trade account were
freed from foreign exchange control.
 Measures were taken to simplify foreign exchange to
enhance current account convertibility

14.  Reforms in Foreign Investment Regime
 Foreign Investment promotion Board has been
revamped to make the rules and regulation pertaining to
Foreign Investment more transparent
 Amendment of certain conditions relating to FDI, up to
100%, in single brand retail trading,
 Permitting FDI, up to 51%, in multi-brand retail trading
 Permitting FDI, up to 49%, in power exchanges

15.  Reforms in Infrastructure Sector
 Improvement in transport system through introduction
of rail based transit system in cities like Delhi, Bangalore
etc.
 Hindustan Aeronautics Limited(HAL) is India’s gigantic
aeronautical organization with many privative players
coming in.

16. Impact of Economic Reforms
 On Automobile Sector
 During 2008-12, Industry witnessed a growth rate of 20-
25%
 Export increased to 4.8 lakh units registering a growth
rate as high as 55%
 On Agricultural Sector
 Its contributes 13.7% to GDP of the country in 2012-13 in
comparison to that of 14.1% in 2011-12.

17.  On Telecommunication Sector
 Recent growth in Telecommunication has been
impressive.
 Total number of telephone connections stand at 90
million(2011).
 Private companies are expected to lay major role in its
growth.

18. PERIODS(AVERAGES) GROWTH RATE WPI INFLATION RATE
1960-61 TO 1969-70 4.0 6.3
1970-71 TO 1979-80 2.9 9.0
1980-81 TO 1990-91 5.6 8.2
1991-1992(CRISIS YEAR) 1.4 13.7
1992-93 TO 1990-00 6.3 7.2
2001-06 6.9 5.1
2008-09 6.7 8.4
A BALANCE SHEET OF ECONOMIC
REFORMS
SOURCE- Economic Survey of India
and Statistical outline of India

19.  Courtesy
 Business Environment by A.C. Fernando
 Business Environment by Justin Paul

20. Thank you