Give arguments in favour of the Economic Reforms in 1991



The Economic Reforms are seen by some as an opportunity in terms of greater access to global markerts, high technology and increased growth rates. The assumption was that the greater participation of the private sector would stabilize the Indian economy which was on the brink of collapse in 1990. Some arguments have been given in favour of New Economic Reforms which are as follows:
(i)Inspite of heavy investments by the public sector in 1990, our domestic production increased by 4% per capita income which showed anincrease of just over 1%. It was assumed that the new economic reforms would foster greater rate of economic growth.
(ii) Reduction in fiscal deficit which had been continuously mounting has made new reforms inevitable.
(iii) The fall in tax rates, controlled supply, higher production, and other liberalization measures will bring prices under control which ham-pered the development process.
(iv) The balance of payment problem will be tackle with rising exports due to removal of trade and investment barriers.
(v) It is expected that the efficiency of industries will increase due to competition from foreign industries and it would also create a favour-able atmosphere for the development of small scale industries.