Introduction

In this article you will know about " The New Economic Policy 1991: Its Features, Objectives And Impact ". The New Economic policy 1991 of India was launched under the leadership of P. V Narasimha Rao. The Indian government introduced the new economic policy in 1991 as a major step toward economic reforms. The policy was designed to reduce restrictions on the economy scenario. In this New economic policy government reduced the import duties, opened reserved sector for the private players, devalued the Indian currency to increase the export. The main aim of the policy was to create a more competitive environment in the economy and remove the barriers to entry and growth of firms. 
Former Prime Minister Manmohan Singh is considered to be the father of New Economic policy (NEP) of India. Manmohan Singh introduced the NEP on July 24,1991.



Features of "The Economic policy 1991"-

  • The new economic policy emphasized liberalisation, privatisation and globalisation. 
  • The policy focused on increasing international market competitiveness by allowing the entry of foreign companies. 
  • The policy reduced control and reservation by the government in different sectors and allowed more participation of private company companies to help in growth and Profitability. 
  • It featured liberalised trade and investment policies that focused on exports, industrial deregulation, disinvestment, and public sector changes, as well as capital and financial sector reforms.
  • The policy focused on Liberalisation, Privatisation and Globalisation. 

Objective of " The New Economic Policy 1991 "-

  • The goal of the NEP 1991 was to reduce inflation rates and build up adequate reserves of foreign money to increase its economic growth rate. 
  • It aimed at economic stabilisation and a market economy by eliminating all types of unnecessary regulations. 
  • The major aim is to plunge the Indian Economy into the 'Globalisation' arena and provide it with a new direction in the market. 
The goal of policy is to provide a stable economic environment that is conductive to fostering strong and sustainable economic growth, on which the creation of jobs, wealth and improved living standards.

Read more:central Bank (Reserve Bank of India) https://theeducationtheory.blogspot.com/2023/08/central-bank-reserve-bank-of-india-its.html?m=1

The main policies of "New Economic policy 1991 "-

The government initiated a variety of policies which fall under three heads-

1. Liberalisation
2.Privatisation
3.Globalisation

Liberalisation

Liberalisation means removal of entry and growth restrictions on the private sector. Liberalisation involves deregulation and reduction of government controls and greater autonomy ( freedom) of private investment, to make economy more competitive. Under this process, business is given free hand and is allowed to run on commercial lines. 
The purpose of liberalisation was:
  • To unlock the economic potential of the country by encouraging private sector and multinational corporations to invest and expand. 
  • To introduce much more competition into the economy and creating incentives for increasing efficiency of operations. 
The economic reforms taken by the government under liberalisation include the following:-
  1. Industrial Sector Reforms
  2. Financial Sector Reforms
  3. Tax Reforms
  4. Foreign Exchange Reforms
  5. Trade and Investment Policy Reforms

Privatisation

Privatisation means transfer of ownership, management and control op public sector enterprises to the entrepreneurs in the private sector. 
Privatisation implies greater role of the private sector in the economic activities of the country. Privatisation can be done in two ways:-
  1. Transfer of ownership and management of public sector companies from the government to the private sector. 
  2. Privatisation of the public sector undertakings (PSU) by selling off part of the equity of PSUs to the public. This process is known as disinvestment. 
The purpose of privatisation was mainly to improve financial discipline and facilitate modernisation. 


Globalisation

Globalisation means integrating the national economy with the world economy through removal of barriers on international trade and capital movements. 
  • Globalisation is the outcome of the policies of liberalisation and privatisation. 
  • Globalisation is generally understood to mean integration of the economy of the country with the world economy. 
  • However, it is a complex phenomenon. It is an outcome of the set of various policies that aim to transform the world toward greater interdependence and integration. 
  • It involves creation of networks and activities transcending economic, social and geographical boundaries. In short, globalisation aims to create a borderless world.