Economic Reforms Project

Editor's Notes

• #5: Objectives were to: Strengthen economic growth which should translate into improving socioeconomic conditions of the poor Thus reduction in poverty levels.
• #6: The most common features of all the reforms in all sectors has been Minimize government intervention in business sector a& allow market forces to determine the prices Focusing the role of government in providing basic facilities like: education, health, sanitation and basic infrastructure Considerably reduce the role of government in directing the allocation of resources and production of the economy Open up the internal economy to foreign competition Induce competition by allowing private sector to play a great role.
• #7: macro reforms can be divided into fiscal policy, monetary policy, (c) trade policy, and exchange rate management.
• #8: Complex tax system Maximum marginal personal income tax rates were high High corporate tax rate High levels of domestic excise duties & customs tariffs, with a myriad of rates for different commodities a number of special provisions for exemption of different kinds of income and commodities avoidance and evasion was naturally high
• #9: personal IT & corporate tax rates gradually been brought down to 30 per cent considerable simplification customs duties brought down from an average of 110 per cent in 1991 (with highs over 400 percent) to a non agricultural peak of 12.5 per cent in 2006. massive simplification of the excise tax structure to achieve a “central” rate (CENVAT) of 16 per cent (apart from a few exceptions like food products, textiles and some optical fibres that attract lower tax rates).
• #10: Excise, which is levied at the manufacturing stage, is now essentially levied as a VAT (Value Added Tax) so that cascading is avoided. the service tax has been introduced in order to tax the whole economy more fairly and to reduce the excessive burden on one sector, the manufacturing sector. the fiscal reform process spanning both the central and state governments has been truly wide ranging
• #11: Independence of monetary policy and Central bank has been restored.
• #12: 7-8(average) per cent during the first forty five years fallen to around 5 per cent(average) in the recent period since the late 1990s
• #13: Devaluation of exchange rate in 1991 move of the exchange rate regime towards a market determined one The trade regime has undergone massive change removal of quantitative restrictions along with rationalisation of the tariff structure. tariff has been reduced from around 400 per cent to 12.5 per cent for non agriculture products. Tariff reform for agriculture products has been constrained by the intransigence of developed countries in reducing their farm subsidies. current account is now open along with limited capital account convertibility. The exchange rate regime focuses on management of volatility without a fixed rate target and the underlying demand and supply conditions determine the exchange rate movements in an orderly way.
• #17: India Infrastructure Report recommendations implemented infrastructure investment had to be raised and suggested introduction of the private sector in infrastructure which had been restricted earlier. necessitated wide ranging reforms including new legislations and formation of regulatory authorities. formation of the Telecom Regulatory Authority of India (TRAI), telecom is indeed a success story. The major reforms in roadways were: imposition of a fuel cess to finance highway construction; the commissioning of the National Highway Development Project and PMGSY (Prime Minister's Gram Sadak Yojana or the Rural Roads Programme).
• #18: India Infrastructure Report recommendations implemented infrastructure investment had to be raised and suggested introduction of the private sector in infrastructure which had been restricted earlier. necessitated wide ranging reforms including new legislations and formation of regulatory authorities. formation of the Telecom Regulatory Authority of India (TRAI), telecom is indeed a success story. The major reforms in roadways were: imposition of a fuel cess to finance highway construction; the commissioning of the National Highway Development Project and PMGSY (Prime Minister's Gram Sadak Yojana or the Rural Roads Programme).
• #21: There is no doubt, however, that agricultural development needs much more focused attention in order to revive the somewhat stagnating agricultural economy.