DMPQ:Economic reforms of 1991 was the major landmark in Indian Economic History. Outline the reasons which forced India for economic reforms.

The  major reasons are:

  • Rise in Prices and galloping inflation. It surged from 6.7% to near about 16%
  • Increase in the Fiscal deficit. Increase in non -development expenditure.
  • Adverse Balance of payment and pressure on Balance of Payment.
  • Iran-Kuwait war led to increase in Petrol price and hence pressure on Indian Imports.
  • Adopted approach of socialism failed. Efficiency of PSU’s were dismal.
  • Fall in Foreign exchange reserve increased the vulnerability. It also created the macroeconomic instability.
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