NEP Introduction- 1991 – Reform – LPG – P. M. – F. M.

Pre Reform Features Mixed System, Closed Economy. Restriction Policies – Industry, banking, licensing. Public Sector – Dominant - inefficiency. Complicated tax system. No free trade. High fiscal deficits. Imbalance of BOP.

Why NEP? Fiscal Deficit – Gap between Income & Exp. – Loan Fiscal Imbalance- Internal Debt of Central Gov. [GDP] 1980-81 – 33.3% 1990-91 – 49.7% Debt. Trap. BOP situation –

Inflation – Year Rate of Inflation 1980-81 6 – 7% 1990-91 10 & above]

Structural Reforms Improve the supply side of the economy Measures – Industrial Reforms Public Sector Reform & Disinvestment Trade & Capital Flows Reforms Financial Sector Reforms A. Banking Sector Reforms B. Capital Market Reforms C. Insurance Sector Reforms