Essay about The Economy 's Growth Of The Indian Economy

760 Words Aug 19th, 2015 4 Pages
Till 1991, the Indian business was in a rather sorry state of affairs. The private sector was not allowed to prosper and was kept under strict regulatory control. The public sector was expected to play a major part in the economic growth of the country but it was found to be lacking as various problems plagued the system. Red tapism, corruption, bureaucracy, etc all threatened to destroy the Indian economy’s growth. This led to an economic crisis in India in 1991 as foreign exchange reserves dipped. Banks were unwilling to give loans to new people and cash outflow from India started occurring at a rapid rate.
The Old Economic policy was focused on protecting the domestic producers. They were restrictions on import, high import duties in order to ensure that the foreign rival firms were kept out and Indian firms could cater to the domestic demand. The main aim was to promote exports due to which concessions and lower tax rates were granted to them. However, the government failed to acknowledge that certain industries require essential ingredients. Thus, the growth of these industries and the corresponding sector suffered due to lack of raw materials at competitive prices.
Production licensing was a major issue for the industries as Government permit was required to quantify what to produce and how much to produce. This made starting up of a new industry a long and painful process owing to red tapism and corruption which stalled the process for years.
The agriculture sector…

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