The economic reforms of 1991 laid the groundwork for modern economic growth in India, impacting various sectors including macroeconomic indicators, poverty reduction, employment growth, and income inequality.

Macroeconomic Indicators

• Prior to the 1991 reforms, India’s average GDP growth rate was around 5.6%. After the reforms, the average growth rose to 7%.
• The inflation rate decreased from 17% in 1991 to 8.5% within two years post-reforms.
• The policy also helped the government reduce the fiscal deficit from 8.4% to 5.7%.
• Foreign exchange reserves increased from $1.2 billion in 1991 to about $15 billion by 1994.
• Due to the liberalization of the economy, exports nearly doubled between 1990-1991 and 1993-1994, indicating greater integration into the global economy.

Poverty And Employment

• With the growth of the open market and reduced bureaucratic hurdles for starting a business, employment significantly increased between 1991 and 2001.
• India’s affordable, English-speaking workforce attracted foreign investors.
• The IT and BPO sectors flourished, reducing unemployment and becoming the backbone of the Indian economy.

Deregulation of Industries

• Removal of licensing requirements for industries allowed for easier business expansion, leading to increased efficiency, competition, and affordable prices for consumers.
• Banks were allowed to set interest rates, and the stock market was opened up, creating greater investment opportunities.

Privatization

• The government reduced its participation in business and started privatizing public sector undertakings, reducing the number of industries reserved for the public sector from 17 to 3.
• This allowed the government to focus on better governance and more efficient utilization of the budget.