CBSE Class 12 - Business Studies - Business Environment - GOI Economic Policy Changes Since 1991 (#cbseNotes)

Business Environment -
GOI Economic Policy Changes Since 1991

Question: Explain the changes initiated by the government of India since 1991?

Answer: Following changes have been observed since 1991:
⒈ New industrial policy
⒉ New trade policy
⒊ Fiscal reforms
⒋ Monetary reforms
⒌ Capital market reforms


1. New industrial policy
A. Government has begun disinvesting in public sector undertaking
B. There are new schemes to attract foreign direct investment (FDI).
C. There is promoting clearance of foreign investment proposals.
D. Tax concession is given to units in special economic zones (sezs).
E. There is broadband facility in telecom sector
E. Abolition of industrial registrations scheme.



2. New trade policy
A. there is liberalization of import policy.
B. deemed exports are entitled to special import license,
C. there are greater concession to export organized unit(EOU) and unit in export promotion zones(EPZ).
D. credited is now less expensive and many imports are duty free.
E. simplification of procedures related to export promotion.
F. removal of export quotas and reduction in import duties.


3. Fiscal reforms
A. measures have been taken to bring down fiscal deficit
B. tax reforms have been entitled to increase revenue in tax complacence.
C. reduction in direct and indirect taxes.
E. decreases in subsidies.


4. Monetary reforms 
A. phased reduction of statutory liquidity ratio(SLR).
B. private sectors banks allowed to set up new branches.
C. banks have now been allowed to access capital market for raising capital.
d. Permission for disinvestment (up to 49% of total equity).


5. Capital market reforms
a. ceiling on rate of interest on debenture and bonds abolished.
b. FIIs can access capital markets.
c. private sector can set up mutual funds.
d. bonus issues have been made more liberal.
e. security and exchange board of India(SEBI) has been made a statutory body.