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Central Govt Schemes. Indian History bits -competitive exams pdf. Only four or five licences would be given for steel, electrical power and communications.
Licence owners built up huge powerful empires. A huge private sector emerged.
State-owned enterprises made large losses. Income Tax Department and Customs Department became efficient in checking tax evasion. Infrastructure investment was poor because of the public sector monopoly.
Licence Raj established the "irresponsible, self-perpetuating bureaucracy that still exists throughout much of the country" and corruption flourished under this system. Narasimha Rao government — The assassination of prime minister Indira Gandhi in , and later of her son Rajiv Gandhi in , crushed international investor confidence on the economy that was eventually pushed to the brink by the early s. As of , India still had a fixed exchange rate system, where the rupee was pegged to the value of a basket of currencies of major trading partners.
India started having balance of payments problems since , and by the end of , it was in a serious economic crisis. Most of the economic reforms were forced upon India as a part of the IMF bailout.
A Balance of Payments crisis in pushed the country to near bankruptcy. In return for an IMF bailout, gold was transferred to London as collateral, the rupee devalued and economic reforms were forced upon India. That low point was the catalyst required to transform the economy through badly needed reforms to unshackle the economy. Controls started to be dismantled, tariffs, duties and taxes progressively lowered, state monopolies broken, the economy was opened to trade and investment, private sector enterprise and competition were encouraged and globalisation was slowly embraced.
The reforms process continues today and is accepted by all political parties, but the speed is often held hostage by coalition politics and vested interests. The BJP-led National Democratic Alliance Coalition began privatising under-performing government owned business including hotels, VSNL, Maruti Suzuki, and airports, and began reduction of taxes, an overall fiscal policy aimed at reducing deficits and debts and increased initiatives for public works.
The United Front government attempted a progressive budget that encouraged reforms, but the Asian financial crisis and political instability created economic stagnation. But due to pressure from fellow coalition parties and the opposition, the decision was rolled back. However, it was approved in December In service sectors where government regulation has been eased significantly or is less burdensome—such as communications, insurance, asset management and information technology—output has grown rapidly, with exports of information technology enabled services particularly strong.
In those infrastructure sectors which have been opened to competition, such as telecoms and civil aviation, the private sector has proven to be extremely effective and growth has been phenomenal. His prescription to speed up economic progress included solution of all outstanding problems with the West Cold War related and then opening gates for FDI investment.
By , the West would consider investment in India, should the conditions permit.
By the end of Vajpayee's term as prime minister, a framework for the foreign investment had been established. The new incoming government of Dr.
Manmohan Singh in is further strengthening the required infrastructure to welcome the FDI. Today, fascination with India is translating into active consideration of India as a destination for FDI.
It has displaced US to the third position. This is a great leap forward. India was at the 15th position, only a few years back.