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Top 10 Reforms In 30 Years That Changed India
SBI Research has summarized of top 10 reforms in 30 years since 1991.
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New Industrial Policy
-With the New Industrial Policy' 1991, the Government intended to integrate the country's economy with the world economy, improving the productivity and efficiency of the public sector. To achieve this objective, prevailing government rules and restrictions were removed.
-The areas which were earlier exclusively reserved for the public sector were reduced. However, the public sector continued to hold a dominant position in five key sectors namely arms and ammunition, nuclear energy, mineral oil, rail transport and mining.
FDI & Trade Policy
-With the switch to flexible exchange rate regime, capital goods and intermediaries became freely importable as import licensing was abolished.
-India joined World Trade Organization: According to the recent estimates, India’s exports have almost doubled in less than a decade. With exports going up from $26.33 billion in 1994-1995 when India joined WTO to $51.7 billion in 2002-03.
-Quantitative restrictions on imports of manufactured consumer goods and agricultural products were fully removed from April 2001. The trade policy reforms aimed at removal of licensing procedures for imports. Import licensing was abolished except in case of hazardous and environmentally sensitive industries.
-Current account convertibility means freedom to convert rupee into dollars etc and vice versa for export and import of goods and services. Then the RBI announced in August 1993 that, effective from August 20, India has become fully convertible on the current account.
- The Securities and Exchange Board of India (SEBI) was established on 12 April 1992 and given Statutory Powers on 30 January 1992 through the SEBI Act, 1992. It is the regulatory body for securities and commodity market in India under the jurisdiction of Ministry of Finance, Government of India.
-Establishment of Pension Fund Regulatory and Development Authority and Insurance Regulatory Authority of India in 2003 and 1999 respectively.
- Introduction of GST Council. It makes recommendations to the Union and State Government on issues related to Goods and Service Tax and was introduced by the Constitution (One Hundred and First Amendment) Act, 2016.
-India’s bond markets have developed mainly in the government bond market as domestic financial institutions have been obliged to maintain a certain percentage of government securities to facilitate a smooth absorption of government bonds which had been issued to finance (monetize) the fiscal deficits.
- Clearing Corporation of India Ltd (CCIL) is a Central Counterparty (CCP) which was set up in April 2001 to provide clearing and settlement for transactions in Government securities, foreign exchange and money markets in the country.
Interest Rate Liberalisation
-Interest rates are determined by the market factors rather than being set by the regulators. Through market competition mechanisms, financial institutions are permitted to set the price interest rates autonomously.
- Reserve Bank of India deregulated interest rates on deposits, other than savings bank deposits.
-Adoption of Basel Accords. These are a series of three sequential banking regulation agreements (Basel I, II, and III) set by the Basel Committee on Bank Supervision (BCBS).
NFSA and MGNREGA
Introduced in 2006, Mahatma Gandhi National Rural Employment Guarantee Act (MGNREGA) is a demand-driven program that guarantees a minimum of 100 days of unskilled manual work for each rural household. On the other hand, NFSA aims to provide for food and nutritional security through a human life cycle approach that addresses needs of an individual from birth to senescence.
-Aadhaar is a 12 digit individual identification number issued by UIDAI (Unique identification authority of India) on behalf of Government of India. It enabled Easy hassle free access to banking, LPG, phone number, Government schemes etc.
Insolvency and Bankruptcy Code
-The Insolvency and Bankruptcy Code, 2016 is the bankruptcy law of India which seeks to consolidate the existing framework by creating a single law for insolvency and bankruptcy.
Monetary Public Committee
The Reserve Bank of India Act, 1934 was amended by Finance Act (India), 2016 to constitute MPC which will bring more transparency and accountability in fixing India's Monetary Policy.