New Economic Policy

1. New ecoNomic PolicyNew ecoNomic Policy
19911991
The proc`ess of economic reforms The proc`ess of economic reforms
was started by the government of was started by the government of
India in 1991 for taking the India in 1991 for taking the
country out of economic difficulty country out of economic difficulty
and speeding up the development and speeding up the development
of the country. The centre of of the country. The centre of
economic reform has been economic reform has been
liberalisationliberalisation, , privatisationprivatisation andand
globalisation.globalisation.

2. LIBERALISATIONLIBERALISATION
Liberalisation means to unshackle the
economy from bureaucratic cobweb to
make it more competitive.
Following are its chief feathers:
1-To do away with the necessity of having a license
for most of the industries.
2-Freedom in determining the scale of business
activities.
3-Removing restrictions for the movement of goods
and services from one place to another .
4-Freedom to fix the price of goods and services.
5-Reduction in the rate of taxes.
6-Freedom from unnecessary control over economy.
7-Simplifying import-export procedure.
8-Simplifying the process of attracting foreign capital
and technology.

3. PRIVATISATIONPRIVATISATION
In brief, privatisation means such
an economic process through which
some public sector undertaking is
brought either partially or completely
under private ownership.
Broadly speaking, establishing in
private sector instead of a public
sector is also privatisation earlier
reserved for it or transfering its
production, without depriving it, to
the. Not only this, depriving public
sector of the job of production which
was private sector also amounts to
privatisation.

4. Its chief features are given below:
1-Reducing the role of public sector and
increasing the role of private sector.
2-Reducing fiscal burden of the
government.
3-Reducing the size of the government
machinery.
4-Speeding up economic development.
5-Improving management of
enterprises.
6-Increase in government treasury.
7-Increasing competition by opening
industries reserved for the public
sector to the private sector.

5. GLOBALISATIONGLOBALISATION
Globlisation means integrating
the economy with the rest of the
world.
Following are its chief features:
1-Free flow of goods and services in all
the countries.
2-Free flow of capital in all the
countries.
3-Free flow of information and
technology in all the countries.
4-Free movement of people in all the
countries.
5-The same conflict solving technique
in all the countries.

6. Objectives of Economic ReformsObjectives of Economic Reforms
Following are the objectives of Economic
reforms:
1-Modernisation of the industrial system of the
country.
2-Encouraging private investment.
3-Atteacting foreign investment.
4-Eliminating unproductive controls.
5-Connecting India Economy with the world
economy.
6-Controlling fiscal deficits. (Fiscal deficit comes
into play when the total expenditures of the
country exceeds its total incomes.)
7-Increasing foreign exchange reserves.
8-Controlling unprofitable industrial units in the
public sector.