1991 is an year that holds a significant landmark in the economic history of post - Independent India. India went through a rigorous economic catastrophe prompted by a grave balance of payments state. The predicament was converted into a prospect to pioneer some essential changes in the content and loom to economic policy. The retort to the catastrophe was to put in place a set of policies intended at stabilization & structural reform. While the stabilization policies were intended at correcting the flaws that had developed on the economic & the balance of payments fronts, the structural restructurings sought to eliminate the rigidities that had penetrated into different segments of Indian economy.
The structural reforms pioneered in the early 1990s largely covered the areas of industrial licensing, foreign investment, foreign trade, exchange rate management & financial sector. Amendments in foreign trade policy focused on plummeting the tariff rates & dismantling quantitative controls over imports. The tariff rates have been fetched down in stages. Some watchfulness in this regard had become indispensable to facilitate the Indian industries set up behind high shielding tariff walls to regulate to the changed situation. The plunge of New Economic Policy has been towards generating a more spirited milieu in the economy as a means to progressing the efficiency and competence of the system.
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