Question

What were the reasons to implement new economic policy of India?

Answer 1

The main reasons to adopt new economic policy of 1991 were the following crises which Indian economy had to face:

(i) Fiscal crisis

(ii) Rise in internal debt

(iii) Fall in growth rate of GNP

(iv) Negative growth in agriculture sector

(v) Rise in inflation rate

(vi) Shrinking of foreign trade

(vii) Fall in foreign reserve

(viii) Fall in creditworthiness of financial institutions from AAA to BBP

(ix) Pledge of gold by RBI and SBI