Globalisation and Economic Reforms
Globalisation is the process where a country opens its doors to the rest of the world. It involves the free flow of goods, services, capital, and even people across borders. Before 1991, India had a very closed economy. This was known as the 'License Raj' because businesses needed many government permissions to operate. In 1991, India faced a severe Balance of Payments (BoP) crisis.
Concepts (3)
Disinvestment is a part of Privatisation. It happens when the government sells its ownership (shares) in Public Sector Undertakings (PSUs) like Air India or LIC.
Disinvestment is a part of Privatisation. It happens when the government sells its ownership (shares) in Public Sector Undertakings (PSUs) like Air India or LIC. The goal is to reduce the government's burden of running businesses and to raise money for social welfare schemes like education and health.
This is a situation where a country's total payments to the world are much higher than its total receipts from the world. In 1991, India did not have enough US Dollars to pay for its imports.
This is a situation where a country's total payments to the world are much higher than its total receipts from the world. In 1991, India did not have enough US Dollars to pay for its imports. The government had to pledge its gold to the International Monetary Fund (IMF) to get a loan. This crisis forced India to start the 1991 economic reforms.
FDI is when a company from another country invests directly in India. This could be by setting up a new factory or buying a local company. Unlike a simple loan, FDI brings in new technology and management skills.
FDI is when a company from another country invests directly in India. This could be by setting up a new factory or buying a local company. Unlike a simple loan, FDI brings in new technology and management skills. For example, when Suzuki invested in Maruti to build cars in India, it was a form of FDI.
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