New Economic Reforms of 1991 in India

Source: The Economic Times

The New Economic Reforms in India known as the LPG( Liberalisation, Privatisation, Globalisation) is a masterstroke in India’s economic revival. It is because the economy of India is getting slow as compared to other economies in the world. The situation in India at that time was not good the country has only 2 weeks of imports like money and the gold reserves of India are being kept with the IMF and World Bank. 

They have suggested to the Indian government to liberalize their economy to open for all the companies which are likely to invest in India. So, the Prime Minister of that time PV Narasimha Rao, and Finance Minister Dr. Manmohan Singh decided to bring the new economic policies to India to revive it from economic recession. This policy is called the LPG policy and it was very successful in terms of the market. 

The Indian Economy is moving from Socialistic to Capitalist. Many foreign companies are opening manufacturing plants in the country. The government has ended the policy of Licence Raj which means that private companies have no trouble doing business in India. The government is privatizing many things and at that, the shares of PSU( Public Sector Units) are 51 percent and the shares of Private Sector are 49 Percent.

 

Positive Effects of New Economic Reforms in India 

1. The Economy of India is growing rapidly and the GDP is increasing and the Employment rate in India is rising because many private sector companies are recruiting persons at a large scale for their work directly and many indirect jobs are also generating.

2. The Indian Stock Market price is at a high rate because many foreign investors are investing in the market, it is also doing before 1990 but not at this much speed. Many people become rich in this era because of the trading that is done in the market.

3. The per capita income of the people of India is increasing which they use for purchasing the product in the market, and demand for the product is increasing which benefits the manufacturing sector to produce more products and give more tax to the government which they can use for the welfare of the people. It is like a complete cycle.

Negative Effects of Economic Reforms

1. The biggest negative impact of the LPG policy is the economic discrimination between rich people and poor people. The Rich get Richer and the Poor get poorer. 

2. The social sectors like Health, Education were ignored in this reform. The Government wanted to revive the Indian economy but they ignored the public's essential sectors which they needed the most. The impact is that there is poor health and education infrastructure and the people don’t receive even basic health and education facilities.

3. Also, the agricultural sector, the urban informal sector, and forest-dependent communities were untouched by the new economic reform. There are also very strict labor laws which is a barrier to the overall development of the country.

Benefits of Indian Government by the New Reforms

The benefit of the Indian Government by the reform is the increase in the tax collection and the credit because it is a successful policy so the government credit is also there. And after another government comes into power, they also continue this policy because it is generating tax revenue for them.

There is increasing revenue in the government’s treasury and because of this new economic policy today India is the 5th largest economy and an emerging power in the world after 30 years of initiating LPG policy in the country.

Situations in India after 32 years of New Economic Reforms

There are a lot of things that have changed in India after 32 years of adopting the LPG policy. The population has increased in the overall country in the last many years. The purchasing power of the people of the country has increased as compared to the 1990s era. India is one of the Economic superpowers in today’s world and is the world’s fastest-growing economy. 

But many things have been the same in the country. There is still economic discrimination between the rich and the poor which is the same as in the 1990s. Many people do not even receive basic health and education facilities. The situation of Farmers and Labourers is getting worse, they are committing suicide because of their economic Debt. So, overall India is developing but there are still many sectors and laws which need new reforms for the welfare of the people.

Written By- Saurav Sharma