Economic Reforms 1991
Economy Advanced · 1991 के आर्थिक सुधार · 19 facts
1991 Economic Crisis: India's foreign exchange reserves fell to just $1.2 billion (enough for only 2 weeks of imports); India had to pledge 47 tonnes of gold.
Gold pledging 1991: India pledged 47 tonnes of gold to Bank of England and Union Bank of Switzerland to raise $600 million emergency loan.
Dr. Manmohan Singh: Finance Minister under PM P.V. Narasimha Rao in 1991; architect of India's economic liberalization reforms.
LPG Reforms: Liberalisation (reduce government control), Privatisation (sell PSU stakes, disinvestment), Globalisation (open India to world trade and investment).
License Raj: Before 1991, every major business decision needed government license; caused delays, corruption, inefficiency; Industrial Policy 1991 dismantled it.
Industrial Policy 1991: Reduced industrial licensing; only defence, atomic energy, and railway reserved for public sector; allowed FDI up to 51% in many sectors.
FERA replaced by FEMA: FERA 1973 (criminal, presumption of guilt) replaced by FEMA 1999 (civil law, presumption of innocence); more business-friendly.
Rupee devaluation 1991: Rupee devalued in two steps (July 1-3, 1991) by about 18-19%; made Indian exports competitive; reduced trade deficit.
SEBI strengthened: SEBI (Securities and Exchange Board of India) given statutory powers in 1992 to regulate capital markets; replaced Controller of Capital Issues.
WTO membership 1995: India signed GATT Uruguay Round; became founding member of WTO on January 1, 1995; agreed to reduce tariffs and open markets.
IT Boom post-1991: Liberalization of telecom and software industry led to IT services boom; India's software exports grew from $150 million (1991) to $200 billion+ (2023).
Telecom Revolution: Licensing of private telecom companies in 1990s; mobile revolution in 2000s; India now has world's cheapest mobile data.
Disinvestment programme: Started 1991-92; government sold minority stakes in PSUs; LIC, ONGC, SBI remain majority government-owned.
NABARD established 1982 (precedes reforms but became important): National Bank for Agriculture and Rural Development; refinances rural credit.
India's growth after 1991: GDP growth accelerated from ~4% ('Hindu rate of growth') to 6-7% in 1990s and 8-9% in 2000s.
Narasimham Committee (1991): Recommended banking sector reforms; reduce CRR/SLR, deregulate interest rates, strengthen supervision; led to NPA recognition norms.
FRBM Act 2003: Fiscal discipline measure post-1991 reforms; mandates 3% fiscal deficit target; Revenue deficit elimination; Medium Term Fiscal Policy Statement.
Special Economic Zones (SEZ) Act 2005: Post-reform initiative; duty-free zones for export-oriented manufacturing; FDI-friendly; over 200 SEZs operational in India.
Right to Information Act 2005: Though not directly economic, reduced corruption and increased transparency — key outcomes of 1991 reform era governance improvements.