Economic Reforms (NEP 1991)

Industrial Policy, 1991 It were the industrial policies of past which had shaped the nature and structure of the Indian economy. The need of the hour was to change the nature and structure of the economy by early 1990s. The GoI decided to change the very nature of the industrial policy which will automatically lead to change in the nature and scope of the economy. And here came the New Industrial Policy of 1991. With this policy the government kickstarted the very process of reform in the economy, that is why the policy is taken more as a process than a policy . Background: India was faced with severe balance of payment crisis by June 1991. Basically, in early 1990, there were inter-connected set of events, which were growing unfavourable for the Indian economy: (i). Due to the Gulf War (1990-91), the higher oil prices were fastly depleting India's Foreign reserves. (ii). Sharp decline in the private remittances from the overseas Indian workers in the wake of the Gulf War, speciall...