2nd Generation Reform
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ECONOMIC REFORMS
SINCE 90’S
By,Parth Purohit-Durva Shastri
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Agenda Introduction Major Causes Role Of Manmohan Singh Major economic reforms Significant Consequences Various Sectors Affected Conclusion
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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
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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
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Role Of Manmohan Singh
Wide ranging tax reforms Containment of defence equipment Cuts in fertilizers subsidies (RPS) Inward oriented trade policy Exchange rate devalued
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Major Economic Reforms Fiscal Reforms:
Reducing the Fiscal DeficitBanking SectorImport LicensingExport Orientation
Tax ReformsDirect TaxIndirect TaxResource Generation through Divestment
Structural Economic ReformsReorientation of Planning
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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.
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Industrial Reform Industrial licensing Foreign Technology MRTP limit Technological Development Development of small scale industries Right of Labor Foreign Investment Self reliance
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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
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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
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Various Sectors Affected
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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
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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
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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
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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
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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
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Foreign Exchange Reserves
Year Gold Foreign Currancy
80-81 370 585090-91 3496 2236
2000-2001 2725 39554
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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
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C.R.R
1970-80 1980-90 1990-00 2000-100
2
4
6
8
10
12
CRR
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Bank Rate
1950-60 1960-70 1970-80 1980-90 1990-00 2000-100
2
4
6
8
10
12
bankrate
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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.
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Thank you