WTO had 23 member countries when it was founded as the successor organization to GATT.
The financial sector comprises of financial institutions like commercial banks, investment banks, foreign exchange market and stock exchange operations. This sector was controlled by the Reserve Bank of India(RBI). RBI had certain laws and stipulations through which it controlled the functioning of banks and the other financial sector firms. RBI decided on the amount of money that the banks can have, the interest rate for loans, the interest rates for deposits etc.
Individual and corporate taxes were reduced.
Indirect taxes levied through the commodities sold in the market were also reduced.
The reforms also simplified the procedures and compliances involved in the payment of taxes.
Simplification was done in order to encourage the tax payers to pay the taxes and the rates were lowered to lessen their burden.
Devaluation means a fall in the exchange rates of the value of the currency of a country with respect to other currencies. Devaluation of rupee was a step taken in order to bring in more inflow of foreign capital into our market.
Quantitative restrictions were the limits that the Indian government had placed on the import of goods. It implied that, before the reform, the amount of goods imported was set a limit above which goods could not be imported.
In order to tide over the crisis India agreed to the conditions and announced the New Economic Policy (NEP). NEP brought in a lot of economic reforms. The basic aim of these reforms was to provide more competition in the economy by removing the restrictions imposed on foreign imports.
RBI had certain laws and stipulations through which it controls the functioning of banks and the other financial sector firms.
The reforms have placed a limit on the expenditure in the public sectors thereby indirectly limiting the expenditure on the growth of the social sector. The tax reductions have not really increased the revenue got through taxes. The removal of tariff in order to attract foreign investments and the removal of import tariffs have an adverse impact on developmental and welfare expenditure.
Privatization helps to improve financial discipline and facilitates modernization. Along with this, private capital and managerial capabilities effectively improves the performance of the PSUs.
India is turning into an outsourcing hub attracting many multinational and smaller companies too because of the cheap labour and reasonable degree of skill and accuracy. The developed countries are opposing because their unemployment rate increases when the jobs are outsourced to developing countries like India.
India is turning into an outsourcing hub attracting many multinational and smaller companies too because of the cheap labour and reasonable degree of skill and accuracy.
The Navaratna policy was set up with the intention of providing infrastructure and direct employment to the public. Another reason is that quality end-product reaches the public at a cost which is nominal to them and companies themselves were made accountable to all stakeholders.
Globalization has brought in more facilities across countries. This has developed the telecommunication sector which has in turn helped in the development of the outsourcing industry. This again has lead to the development in the service sector.
The reforms have not really been of any use to the agricultural sector where the GDP has come down. Public investment in this sector especially in infrastructure like power, irrigation, research and roads came down during the reform period. The removal of fertilizer subsidy increased the cost of production and affected the farmers adversely. The advent of WTO meant the removal of minimum pricing and the removal of restriction of foreign goods in the Indian market. This has also badly affected the tillers because they face stiff international competition. Since export duties have been lifted, the focus has been shifted to growing cash crops for export rather than food grains, which means that the prices of food grains are under pressure.
Industrial growth during the period of reforms had retarded. This was mainly because of cheap imports, inadequate investment, poor infrastructure etc. In the globalized era, developing nations are forced to open their markets for the developed worlds and hence their domestic products get replaced by cheaper imported products. This affected the industries adversely. Globalization is creating a situation where it aids the developed nations while simultaneously putting pressure on the domestic markets of the developing nations. Industries suffer because of lack of investment into proper infrastructure.
Also, a developing nation like India does not have access to a market like that of the USA because of high non tariff barriers. Though we have removed our quantitative restrictions, the USA has not removed the import restrictions on textiles from India and China.