India opted mixed economy system after independence. This system was adopted with the purpose to attain the benefits of both capitalistic and socialist economies. However, over the passage of time, the economy started hampering. The lack of sufficient management of the economy led to the adoption of a new economic policy.The New economic policy was established in the year 1991. The major component of NEP(New Economic Policy 1991) are:
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- Liberalisation
- Privatisation
- Globalisation
Below we have mentioned write main features of new economic policy 1991.
Contents in the Article
Liberalisation
The very first concept in the features of new economic policy 1991 is Liberalisation.
The liberalisation element of NEP refers to the freedom of producing units without the interruption of government. Some of the measures of liberalisation came in 1980s.In that year industrial licensing,export-import, technology development, fiscal policy and foreign investment-related measures came into action. Reform policy is then initiated in 1991. These are comprehensive. The following observations are noted before and after the reform policy.
In the preceding year of 1991 government had posed controls over private enterprises. These restrictions are regulated in the form of the industrial licensing system, price control on goods, license on imports, foreign exchange control, and curtailment of investment by big enterprises.
Due to these controls, the government experienced that several shortcomings had unfolded. These restrictions had emerged corruption, undue delays, and incompetence. Also, the growth rate had fallen rapidly and a high-cost economy came into existence.Under the liberalisation industrial sector, the financial sector and tax reforms are done.
Read : Briefly Explain the Important Areas of Liberalisation
Privatisation
Privatisation is meant by the inclusion of the private sector in the ownership of the state-owned enterprise. This implies the curtailment of government ownership from public sector enterprises. This comes into action in the following two ways:
- Direct sale of the government agency to private entrepreneurs.
- Abolition of government management and control from mixed enterprises.
The main reason why Privatisation need was felt because of the poor performance of PSUs.The privatisation spread PSUs .These PSUs gave us Navratnas.These Navratnas are the nine jewels of Indian industry.These Navratnas are listed below:
- IOC(indian Oil Corporation)
- BPCL(Bharat Petroleum Corporztion Ltd.)
- ONGC( Oil and Natrual Gas Corporation)
- BHEL(Bharat Heavy Electricals ,Ltd.)
- SAIL(Steel Authority of India Ltd.)
- IPCL(Indian Petrochemicals Corporation Ltd.)
- VSNL(Videsh Sanchar Nigam Ltd.)
- NTPC(National Thermal Power Corporation )
- HPCL(Hindustan Petroleum Corporation Ltd.)
In 2009 India the government starts Maharatna status.The PSUs who are earned with this reward are :
- Coal India Ltd.(CIL)
- Indian Oil Corporation Ltd.(IOC)
- National Thermal Power Corporation Ltd.(NTPC)
- Oil and Natrual Gas Corporation Ltd.(ONGC)
- Steel Authority of India Ltd.(SAIL)
- Bharat Heavy Electricals Ltd.(BHEL)
- Gas Athority of India Ltd.(GAIL)
- Bharat Petroleum Corporation Ltd.(BPCL)
The another status recently launched is Miniratnas.In total 75 PSUs are awarded with this title.Some of Miniratnas are BSNL(Bharat Sanchar Nigam Limited) ,Airport Authority of India Limited , and Indian Railway Catering and Tourism Corporation Limited (IRCTC).The navratnas are recited as the epicentre of growth in the Indian Economy.Intially government decides not to invest in Navratanas .But Due to political resistance it is now decided to grow them because they are the global players .And they are the main element of the growth.
Globalisation
Globalisation refers to the integration of the economy of a country to the economy of other countries. So that a smooth flow of trade and capital remains.At the international level globalisation is the process of bringing closer of world economies. Bringing closer meant that countries should be economically and socially closer. So that global growth enhances.
In economic reform, the main focus is on the integration of the Indian economy with the world economy. As a consequence, there will be unopposed import and export of goods and services, technology, and skill between India and the world. Especially, due to globalization, it is expected there will be a flow of capital and technology toward India.
Technology plays an imperative role in the enhancement of globalisation. Due to the science enhancement in the inventions of television, the telephone, internet, email, etc communication become easy. Also sharing ideas, capital, and goods has been made possible because of technology.
Globalisation is a multi-dimensional concept. The following aspects made this true:
- Due to globalization similar types of economic policies are adopted by the governments of all countries.
- Globalisation curtail the power of the state and privatization emerged.
- Due to the dominant society culture, other societies are affected. For instance blue jeans popularity all over the world and the popularity of burgers.
- Due to globalisation, the trend of nuclear families came into force. Joint families have been converted into nuclear families.
Conclusion :
Due to LPG Indian economy improves and Indian MNCs become multinational MNCs.Also, the flow of private investments increases. Due to larger imports and export inflation rate has been lowered. As every coin has two faces. Some of the bad effects are also noted in LPG. Agricultural was neglected and the growth of agriculture seems too slow. Also unemployment increases.