ECONOMIC REFORMS

SINCE 90’S

By,Parth Purohit-Durva Shastri

Agenda Introduction Major Causes Role Of Manmohan Singh Major economic reforms Significant Consequences Various Sectors Affected Conclusion

Introduction The term ‘economic reforms’

refers to policy reforms undertaken by the central govt. since 1990 to attain certain significant achievements through the main approaches which are as follows:

Stabilization Restructuring Globalization

Major Causes Increase in fiscal deficit Deficit in Balance of Payment External Borrowings Mounting Inflation Rate Failure of the public sector Industrial licensing policies Gulf Crisis

Role Of Manmohan Singh

Wide ranging tax reforms Containment of defence equipment Cuts in fertilizers subsidies (RPS) Inward oriented trade policy Exchange rate devalued

Major Economic Reforms Fiscal Reforms:

Reducing the Fiscal DeficitBanking SectorImport LicensingExport Orientation

Tax ReformsDirect TaxIndirect TaxResource Generation through Divestment

Structural Economic ReformsReorientation of Planning

Banking Reforms Changing in rate SLR and CRR Entry of Public and Private Sector in

capital market Operational Flexibility Relaxation in Licensing of Private Bank Improve standard of supervision , audit

and technology Interest rate deregulation and financial

repression.

Industrial Reform Industrial licensing Foreign Technology MRTP limit Technological Development Development of small scale industries Right of Labor Foreign Investment Self reliance

The Next Generation Reforms

Political Reforms for Good Governance Re-engineering the Role of the government Administrative and Legal Reforms Strategic Management of the Economy with a

focus on knowledgebase Fiscal Prudence Agricultural Sector Reforms Industrial Restructuring Labour Sector Reforms Foreign Trade and Outward Investment Policies Financial Sector Reforms

Significant Consequences Higher rate of growth Rapid growth of secondary and tertiary

Sectors Increase in Export and Imports Improved Balance of Payments Rise in value of Rupee Less reliance on foreign borrowings Overall development of Indian economy

Various Sectors Affected

Growth Rate

90-91 91-92 92-93 93-94 94-95 95-96 96-97 97-98 98-99 99-00

5.6

1.3

5.1

5.9

7.3 7.3

7.8

4.8

6.5

6.1

Growth Rate

Sector Wise Growth Rate

90-91 91-92 92-93 93-94 94-95 95-96 96-97 97-98 98-99 99-00

4.6

-1.1

5.4

3.9

5.3

-0.3

8.8

-1.5

5.9

0.600000000000001

7.4

-1

4.3

5.6

10.3

12.3

7.7

3.8 3.8

4.94.9

2.5

5.6

7.1

10.4

13.3

7.8 7.8 7.7

8.5

7.7

12

5.9

13.4

5.6

8.2

7

11.6

7.4

10.6

4.1

2.6

4.6

3.53.2

7.9

6.3

11.7

10.4

12.2

Agriculture Forestry & Fishing ManfacturingConstruction Electricity Trade Hotels Transport Services Public Ministration Defence

Indicators Of External Sector

Year Growth of Exports-BOP(%)

Growth of Imports-BOP(%)

Exports/ imports

(%)

90-91 9 14.4 66.2

95-96 20.3 21.6 74

00-01 21.1 4.6 78.5

2005-2006 23.4 32 67

Balance Of Payment

90-91 95-96 00-01 2005-2006

-100000

-50000

0

50000

100000

150000

200000

ExportsImportsTrade Balance

Amou

nt i

n US

$ M

illio

n

WPI Inflation Rate

Primary aarticaes Power Fuel Light Lubricants Manf. Products All comodities0

2

4

6

8

10

12

14

11.3 11.3

10.110.6

5.4

13

3.1

5.1

3.6

8.1

3.9

4.7

Series1 1991-1996 1996-2001 2001-2006

Foreign Exchange Reserves

Year Gold Foreign Currancy

80-81 370 585090-91 3496 2236

2000-2001 2725 39554

Macro economic IndicatorsIndicators 1989-90 1994-95 1999-00 2000-01 2001-02 2002-03 A. Growth of GDP (%) 5.6 6.3 6.1 4.4 5.6 4.4

B. GDP Growth by Sectors (%):            

i. Agriculture & Allied 2.7 4.9 0.3 -0.4 5.7 -3.1ii. Industry, of Which

Manufacturing 6.7 8.3 4 7.3 3.4 6.1iii. Services 6.7 6 10.1 5.6 6.8 7.1

C. Inflation Rate (WPI Index (%)) 9.1 10.4 4.8 2.5 5.2 3.2D. Current Account Balance as %

of GDP -3.1 -1.1 -0.5 -0.5 na  E. Foreign Exchange Reserves

(US $ Bn.) 3.37 19.65 35.06 39.55 51.05 69.89

F. Exchange Rates (Rs/US $) 16.6 31.4 43.33 45.51 47.69 48.44G. Rate of Growth of :            

i. Exports (%) 18.9 18.4 10.8 21 -1.6 20.4ii. Imports (%) 8.8 22.9 17.2 1.7 1.7 14.5

iii. Exports as % of GDP 6.4 9.6 9.1 10.4 9.9  

iv. Imports as % of GDP 9.3 10.5 12.4 11.8 11.6 na

H. Fiscal Deficit as % of GDP 7.9 4.7 5.4 5.6 5.9 5.5

I. Revenue Deficit as % of GDP 2.6 3.1 3.5 4.1 4.2 3.9

J. Saving Ratio as % GDP 22.3 24.9 24.1 23.4 24 na

K. Investment as % of GDP 24.9 25.4 25.2 24 23.7 na

C.R.R

1970-80 1980-90 1990-00 2000-100

2

4

6

8

10

12

CRR

Bank Rate

1950-60 1960-70 1970-80 1980-90 1990-00 2000-100

2

4

6

8

10

12

bankrate

Conclusion♦ Reforms have put the Indian economy on a

higher growth path.♦ Equally important to resolve the immediate

liquidity problem.♦ To restore the economy on the path of rapid

and healthy economic growth.

Thank you