Why were reforms introduced in India?
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The economic reforms were introduced in the year 1991 in India to combat economic crisis, relating to its external debt:
- Various rules and plans introduced by the government for controlling and regulating the economy resulted in hampering the process of growth and development National income was growing at the rate of 0.8%.
- India was highly indebted country and government was not able to make repayments of loan from abroad.
- Foreign exchange reserves collapsed as import is more than the export.
- The inflation level reached 16.8% which ultimately increases the prices of essential goods.
- India took loan from IMF and World bank to the extent of 7 billion dollars. In pressure, government have to liberalise its market.
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