Structural ReformsImprove the supply side of the economy

Measures – 1.Industrial Reforms2.Public Sector Reform & Disinvestment 3.Trade & Capital Flows Reforms4.Financial Sector Reforms A. Banking Sector Reforms B. Capital Market Reforms C. Insurance Sector Reforms

1.Industrial Reforms Industrial Policies from 1951- 1985 Resulted - > Rising unemployment > Rural – Urban disparities > Industrial sicknessA. Abolition of Industrial Licensing- Very few industries under

compulsory licensing

2. Permitted foreign investment & foreign technology- FDI – 51% to 100%

3. Reduced the role of public sector- Railway transport

4. Removal of MRTP limit- Monopoly & Restrictive Trade Practices Act. - New Competition Act

2. Public Sector Reform & Disinvestment-A. Partial disinvestment of equity

B. Investment from the market

C. Financial & operational powers to Navratna Companies

3. Trade & Capital Flows Reforms To meet the BOP crisis- A. Liberalization of imports - import controls were abolished B. Reduction in tariff structure - import duty was reduced C. Promotion of exports - incentives provided to exporters D. Change in exchange rate policy

E. Current account convertibility - Trade account & Current account - Good for exporters, importers, studies abroad, travel, medical expenses F. Liberalized Capital inflows - Form of FDI & FIIs - FIIs – Primary, secondary markets