Objectives of Economic Reforms or New Economic Policy

1] To create a more comprehensive environment in the economy as a means to improve the efficiency of resource use, stimulate industrial activities and increase international competitiveness of Indian industrial production in respect of quality and price.

2] To increase the rate of growth of the economy and put the economy back on path of substantial development.
During the first 50 years of planning, GDP grew at a rate of about 3.6% pa and PCI@ 1.4% pa. Growth rate of PCI in India was lower as compared to most developing nations of the world.
The objective of economic reforms is to bring about higher growth of GDP and PCI as reached by other developing nations.

3] To improve the performance and rationalize the scope of the public sector and increase efficiency of the public sector.
Privatisation was promoted in order to reduce the burden on the exchequer.

4] To reform and modernize the financial and agricultural sector so that they can serve the needs of the economy more effectively.

5] To control inflation by increasing supply of goods –The RBI used qualitative and quantitative measures to restore supply of money to the economy. This measure successfully checked the increase in prices.

6] To improve the quality of human capital by expanding the social sector.

7] To reduce the fiscal imbalance through fiscal reforms
To control fiscal deficit by reducing unproductive expenditure of the government. Also effort was made to increase government revenue through VAT and by increasing the tax base.

8] To expand employment opportunities and to utilize cheap labour fruitfully

9] To reduce poverty and increase standard of living of masses through better use of resources and more employment opportunities.

10] To increase the domestic and foreign demand of Indian goods. The economy also welcomed foreign investments and foreign technology.

11] To utilize foreign investment, latest technology, marketing and management expertise etc in order to make Indian industry more competitive in the world marketing

12] To improve the balance of payment position- In 1991 the Indian rupee devalued by almost 20% that has helped to increase our exports. Our exports increased rapidly, as a result of our stock of foreign exchange reserves improved substantially.

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