In 1991, India launched a process of economic reforms in response to a fiscal and balance-of-payments (BoP) crisis. The reforms and the related programmes are still going on with changing emphasis and dimensions. The economic reform programme, that India launched, consisted of two categories of measures: Macroeconomic Stabilisation Measures and Structural Reform Measures.
POSITIVE IMPACTS OF ECONOMIC REFORMS ON INDIA’S ECONOMIC GROWTH
- Economic growth- While growth averaged 4.4% a year during the 1970s and 1980s, it accelerated to 5.5% during the 1990s-early 2000s, and further to 7.1% in the past one decade. The acceleration of growth is evident not just for aggregate GDP, but even more strongly for per capita GDP. The average pace of per capita growth was 5.5% a year in the last decade.
- Poverty level- The percentage of the population living below the poverty line in India decreased to 22% in 2011-12 from 45.3% in 1993-94.
- Integration with world economy- Total value of exports from India has increased to USD 294 billion in 2017-18. India is one of the largest recipients of FDI. According to the Department for Promotion of Industry and Internal Trade (DPIIT), FDI inflows in India in 2018-19 stood at USD 44.37 billion.
- Forex reserves of India has increased to a comfortable level of over USD 420 Billion (USD1.2 billion in January 1991)
- Macro- economic health indicators like fiscal deficit, current account deficit, inflation etc. has remained at a comfortable level.
- Next generation structural reforms like Insolvency and Bankruptcy Code and GST has been introduced to further propel the economic growth of India and improve ease of doing business.