Major Policies of 1991 Reforms
THE NEW ECONOMIC POLICY
The New Economic Policy (NEP) was announced in July 1991. It consisted of a wide range of economic reforms. The main aim of the policy was to create a more competitive environment in the economy and remove the barriers to entry and growth of firms. The New Economic Policy can be broadly classified into two kinds of measures:
1. Stabilisation Measures: They refer to short-term measures which aim at:
- Correcting weaknesses of the balance of payments by maintaining sufficient foreign exchange reserves; and
- Controlling inflation by keeping the rising prices under control.
2. Structural Reform Measures: They refer to long-term measures, which aim at:
- Improving the efficiency of the economy; and
- Increasing international competitiveness by removing the rigidities in various segments of the Indian economy.
Main Policies of New Economic Policy
The government initiated a variety of policies, which fall under three heads:
- Liberalization
- Privatization
- Globalization
Liberalization, Privatisation and Globalisation or 'LPG' are the supporting pillars, on which the structure of the new economic policy of our Government has been erected and implemented since 1991.