Positive outcomes of 1991 reforms
The following points illustrate various achievements that 1991 reforms brought for India. 1.
Indian economy has touched a higher growth plateau of over 7% long-term average annual GDP growth rate. 2.
Domestic savings has increased noticeably that has enabled domestic investment to increase significantly. Improvements in corporate profitability have contributed towards the increase in domestic savings in the post-reforms period. 3.
India has somewhat tamed inflation post reform period till 2008-09. 4.
Drastic reduction in Non-Performing Asset level of the bank (NPA) and significant improvement in Capital-to-Risk adjusted Asset Ratio (CRAR) of the banks 5.
In external sectors, merchandise exports, FOREX reserves and trade with outside world has increased to a greater extent. 6.
Poverty level has come down from 36% to around 27% as of 2004-05.
Fiscal reforms: Government gradually brought down various taxes like personal income tax, corporate tax, service tax, excise duties and custom duties along with considerable simplification of respective tax systems. 2.
Monetary policy reforms: Automatic monetization was eliminated. The statutory pre-emption of the lendable resources of banks was reduced by gradual reduction of SLR and CRR of the banks by the central bank of India, RBI (Reserve Bank of India). 3.
External sector reforms: The following are some of the major trade related reforms under taken in 1991. •
Devaluation of Indian currency by 22% against US Dollar in 1991. •
Introduction of dual exchange rate system in February 1992 •
Quantitative restrictions were removed.
Participation in a number of regional and bi-lateral trade agreements. •
Full convertibility of current account of BoP along with limited capital account convertibility
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