Indian Economy · Topic 14 of 20
The 1991 crisis, LPG reforms, and the shift from planning to NITI Aayog
The Basics
A balance of payments crisis happens when a country cannot pay for imports and debts. This happens when foreign exchange reserves almost run out. India faced this crisis in 1991. By then, reserves could pay for only two weeks of imports.
Sign up free for the full concept, practice MCQs and PYQsThe Basics
The New Economic Policy of 1991 is India's package of economic reforms. It was launched on 23 July 1991 to end the crisis and reshape the economy. Its three parts are called the LPG framework: liberalisation, privatisation and globalisation.
Sign up free for the full concept, practice MCQs and PYQsThe Basics
Washington Consensus is a set of market-friendly policy ideas.
Sign up free for the full concept, practice MCQs and PYQsThe Basics
Liberalisation means government reduces control over trade, industry and finance. Markets get a bigger role instead.
Sign up free for the full concept, practice MCQs and PYQsThe Basics
Disinvestment means government sells some shares of a public company.
Sign up free for the full concept, practice MCQs and PYQsThe Basics
Globalisation means a country's trade, investment and finance link closely with the rest of the world.
Sign up free for the full concept, practice MCQs and PYQsThe Basics
Economic reforms in India did not stop in 1991. They continued in stages. Governments called these stages 'generations' of reform. Each generation solved problems the earlier one could not.
Sign up free for the full concept, practice MCQs and PYQsThe Basics
Assessing reforms means checking what really changed. We ask three questions. Did growth rise? Was it shared fairly? Which sectors gained or lost?
Sign up free for the full concept, practice MCQs and PYQsThe Basics
The Planning Commission was set up in 1950.
Sign up free for the full concept, practice MCQs and PYQsThe Basics
Indicative planning means the government only shows priority sectors for investment. It expects private players to invest there, instead of investing directly itself.
Sign up free for the full concept, practice MCQs and PYQsThe Basics
NITI Aayog is India's main policy think tank. A think tank studies problems and gives advice.
Sign up free for the full concept, practice MCQs and PYQs