Critical Analysis of New Indian Economic Policy

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INTRODUCTION TO INDIAN ECONOMY The economy of India as per the GDP is the eleventh largest economy in the world and by purchasing power parity the fourth largest. Following strong economic reforms from the socialist inspired economy of Indian nation before the time of independence, the country began to develop a fast-paced economic growth, as free market principles were initiated in 1990 for international competition and foreign investment. India is an emerging economic power with a very large amount resources both natural and human resource and a growing large pool of skilled professionals. Economists predict that by 2020, India will be among the leading economies of the world. Pre independence era the average annual growth rate of…show more content…
The policy towards foreign investment was restricted to attract foreign investment especially in priority areas including critical infrastructure sectors such as power. Government also proposed to use supply management in critical commodities and accordingly Government of States, were allowed direct import of edible oils for supply to the public distribution system. Liberalization Liberalization refers to relaxation of previous govt. restrictions usually in areas of social and economic policies. Thus, when government liberalizes trade it means it has removed the tariff, subsidies and other restrictions on the flow of goods and services between countries. The removal or reduction of restrictions or barriers on the free exchange of goods between nations. This includes the removal or reduction of both tariff (duties and surcharges) and non-tariff obstacles (like licensing rules, quotas and other requirements). The easing or eradication of these restrictions is often referred to as promoting "free trade." Measures taken of liberalization • Liberalization for industrial policy • Concession from monopolies act. • Freedom for expansion and freedom to industries • Liberalization in taxation policy • Liberalization in capital market • Liberalization in banking sector Benefits • Increase the foreign investment • Increase the foreign exchange reserve • Increase in
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