Skip to main content

Economic Reforms

Economic reform means to change and adjustments in internal economic structure according to the external economic changes. Following are main economic reforms :

1. First phase economic reforms

There were many changes in international markets, organisations and production areas. India started to accept all these changes. First phase of economic reforms was started in 1985 when Rajiv Gandhi was the prime minister of India. He announced new economic policy for increasing productivity, new technology import and effective use of human resources.

2. Second phase of economic reforms

In 1991-92, govt. of narsimaharav started second phase of economic reforms for reducing fiscal deficit which was 10891 crores of rupees. Govt had to take loan of Rs. 5 billion dollars from IMF. For effective use of resources, govt. started to get foreign investment.


Before the process of reform began in 1991, the government attempted to close the Indian economy to the outside world. The Indian currency, the rupee, was inconvertible and high tariffs and import licensing prevented foreign goods reaching the market. India also operated a system of central planning for the economy, in which firms required licenses to invest and develop. The labyrinthine bureaucracy often led to absurd restrictions—up to 80 agencies had to be satisfied before a firm could be granted a licence to produce and the state would decide what was produced, how much, at what price and what sources of capital were used. The government also prevented firms from laying off workers or closing factories. The central pillar of the policy was import substitution, the belief that India needed to rely on internal markets for development, not international trade—a belief generated by a mixture of socialism and the experience of colonial exploitation. Planning and the state, rather than markets, would determine how much investment was needed in which sectors.

– BBC

3. Third phase of Economic Reforms

The Vajpayee administration continued with privatization, reduction of taxes, a sound fiscal policy aimed at reducing deficits and debts and increased initiatives for public works.

Comments

.

Popular posts from this blog

Branches of Commerce

Commerce is just like a tree. Following are its main branches.

Technological Environment

Definition of Technological Environment :-


“Technological Environment means the development in the field of technology which affects business by new inventions of productions and other improvements in techniques to perform the business
 work. "

Information Technology Act 2000

Introduction of Information Technology Act 2000

Information technology is one of the important law relating to Indian cyber laws. It had passed in Indian parliament in 2000. This act is helpful to promote business with the help of internet. It also set of rules and regulations which apply on any electronic business transaction.


Due to increasing crime in cyber space, Govt. of India understood the problems of internet user and for safeguarding the interest of internet users, this act was made.

Objective of Business Environment

Following are main objectives of business environment:
1. Knowledge of Information 
By studying the business environment, we can know the changes of business. This information is very useful for our business. Every businessman should aware current environment of business. With this, he can think the future of his business in such environment. 
2. Basis of Decisions 
One of main objective of the study of business environment that it can provide all the information which is needed for taking good decisions. Suppose, you completed your internal business environment study. With this study, you can take decision relating to purchase, sale, salary and price because you know your competitor, you know your suppliers and you know your customers. 
3. Helpful in making of Policies 
For making good business policies, we need to know and scan business through business environment. 
4. Technological Planning 
Today, technology is changing very fastly. 3 years ago, I have to search software for downloading …

Factors of Environmental Scanning

Following are the main factors of environment scanning.


1. Events

Past events of business environment is the main factor of environment scanning. For example, if Govt. has to control food prices, it has to scan every week prices of vegetables, fruits, milk and other food items. For more simplification of price rise, Govt. will calculate wholesale price index.