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 …show more content…
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 was forced to work very hard as demand was constantly on the rise but they were unable to cope up with it and this led to food scarcity.
The Gulf Oil Crisis also increased the import bill of the government and increased the production cost of many business manifold due to which many businesses shut down.
To cope up with this, India started borrowing from external agencies and at one time the interest payments reached 36.4 percent of the GDP. This made investors and the World Bank vary of India’s ability to control its fiscal deficit.
This acted as the last nail in the coffin as foreign investments dried up and this led to the formulation of the New Economic Policy in …show more content…
The capital markets of India surged and healthy trend of development came to signify India.
Increased competition from foreign companies prompted India to adopt the latest technologies or lose out to the ever demanding customers as they were introduced to a slew of foreign products. The companies developed skill based training programs for their employees in order to improve their competence.
The public sector lost its position of pride in the growth of Indian economy and exports by private sector industries came to define the growth of new age India.
The result of all this was that the Indian economy grew to 7.5% of GDP (from USD 130 million in 1992, to USD 5 billion, in 1996).
Since 1991, India 's GDP has quadrupled, its forex reserves have surged from $5.8 billion to $279 billion, and exports from $18 billion to $178 billion which is a proof that the policy was a success.
Although we are yet to eliminate problems such as Child labor, poverty, illiteracy, we are on the path of improvement and have the potential to be a manufacturing hub for businesses in the coming
The Old Economic policy was focused on protecting the domestic producers. They were restrictions on import, high import duties in order …show more content…
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 was forced to work very hard as demand was constantly on the rise but they were unable to cope up with it and this led to food scarcity.
The Gulf Oil Crisis also increased the import bill of the government and increased the production cost of many business manifold due to which many businesses shut down.
To cope up with this, India started borrowing from external agencies and at one time the interest payments reached 36.4 percent of the GDP. This made investors and the World Bank vary of India’s ability to control its fiscal deficit.
This acted as the last nail in the coffin as foreign investments dried up and this led to the formulation of the New Economic Policy in …show more content…
The capital markets of India surged and healthy trend of development came to signify India.
Increased competition from foreign companies prompted India to adopt the latest technologies or lose out to the ever demanding customers as they were introduced to a slew of foreign products. The companies developed skill based training programs for their employees in order to improve their competence.
The public sector lost its position of pride in the growth of Indian economy and exports by private sector industries came to define the growth of new age India.
The result of all this was that the Indian economy grew to 7.5% of GDP (from USD 130 million in 1992, to USD 5 billion, in 1996).
Since 1991, India 's GDP has quadrupled, its forex reserves have surged from $5.8 billion to $279 billion, and exports from $18 billion to $178 billion which is a proof that the policy was a success.
Although we are yet to eliminate problems such as Child labor, poverty, illiteracy, we are on the path of improvement and have the potential to be a manufacturing hub for businesses in the coming