Economic Reforms = Structural Adjustment Programmes (SAP) introduced in 1991 to tackle the Balance of Payments (BoP) crisis and push India from closed to market-oriented economy.
| Indicator |
1990-91 Value |
| Forex reserve |
↓ $1.2 bn (barely 2 weeks imports) |
| Fiscal deficit |
8.4 % of GDP |
| Current a/c deficit |
3.2 % of GDP |
| Inflation |
13 % |
| IMF loan |
$7 bn (pledged 67 t gold) |
| Pillar |
Target |
Key Measures |
| I. Stabilisation |
BoP crisis |
Rupee devaluation (July 1991), IMF loan, gold pledge |
| II. Liberalisation |
Red tape |
Abolish industrial licensing, MRTP limit removed, reduce tariffs |
| III. Privatisation |
PSU inefficiency |
Disinvestment, MOU system, Navratna status |
4. Chronology – Don’t Miss These Dates
| Date |
Event |
| 24 July 1991 |
Rupee devalued by 18-20 % (first step) |
| 24 July 1991 |
New Industrial Policy (Licence Raj ends) |
| 1991-92 |
LPG Mantra coined – Liberalisation, Privatisation, Globalisation |
| 1992 |
SEBI Act → stock market regulator |
| 1992 |
FERA → FEMA (Foreign Exchange Management Act) |
| 1994 |
Current account convertibility |
| 1997-98 |
Disinvestment Ministry (Arun Shourie) |
| 1999 |
NSE & Nifty 50 launched |
| 2000 |
GST first proposed (Atal task force) |
| 2014 |
Make in India launch |
| 2016 |
GST Constitutional Amendment |
| 1 July 2017 |
GST rolled out (midnight Parliament session) |
5. Quick-Fire Tables
| Year |
Reform |
| 1991 |
Peak customs duty slashed from 150 % → 110 % |
| 1999 |
MODVAT → CENVAT |
| 2000 |
Kelkar Committee – roadmap for direct tax reform |
| 2005 |
FRBM Act – fiscal deficit target 3 % |
| 2016 |
Income Disclosure Scheme – 45 % tax |
| 2017 |
GST slabs – 0, 5, 12, 18, 28 % |
B. Disinvestment Receipts (₹ crore)
| Year |
Amount |
Highlight |
| 1991-92 |
3,038 |
First disinvestment |
| 2003-04 |
15,547 |
Maruti IPO |
| 2017-18 |
1,00,056 |
Highest ever |
| 2020-21 |
32,835 |
BPCL, LIC pipeline |
C. Forex Reserve Milestones ($ bn)
| Date |
Reserve |
Remark |
| June 1991 |
1.2 |
Crisis level |
| March 2004 |
100 |
First 100 |
| March 2021 |
579 |
All-time high |
| Oct 2023 |
586 |
Latest |
6. One-Liner Facts (Last-Minute Revision)
- 1991 reforms inspired by IMF’s Structural Adjustment Loan.
- Manmohan Singh – Finance Minister, presented 1991-92 Budget.
- “No licence required except 6 industries” – 1991 policy.
- MRTP Act 1969 → MRTP limit ₹100 cr removed in 1991.
- Hindustan Motors Contessa – first car produced after delicensing.
- SEZ Policy 2000 – export hub, China-model.
- Narasimham Committee – 1991 & 1998 banking reforms.
- Basel-III norms implemented 2013-19.
- Insolvency & Bankruptcy Code 2016 – 180-day resolution.
- Demonetisation 2016 – part of parallel-economy reform.
15+ MCQs for Railway Exams
1. Who was the Prime Minister when economic reforms were launched in 1991?
**Answer:** P. V. Narasimha Rao
2. The first step of 1991 reforms was:
**Answer:** Devaluation of rupee on 24 July 1991
3. Maximum customs duty in India before 1991 was:
**Answer:** 150 %
4. Which committee recommended banking sector reforms in 1991?
**Answer:** Narasimham Committee-I
5. The MRTP limit of ₹100 cr was removed by which amendment?
**Answer:** MRTP Amendment Act 1991
6. FERA was replaced by FEMA in the year:
**Answer:** 1999 (effective 2000)
7. First disinvestment of PSU shares took place in:
**Answer:** 1991-92
8. The GST was launched on:
**Answer:** 1 July 2017
9. Which of the following is NOT a GST slab?
**Answer:** 30 %
10. The FRBM Act mandates fiscal deficit target of:
**Answer:** 3 % of GDP
11. Who headed the 13th Finance Commission that supported GST?
**Answer:** Dr. Vijay Kelkar
12. The “Navratna” status was first given in:
**Answer:** 1997
13. India’s forex reserve crossed $500 bn for the first time in:
**Answer:** June 2020
14. The Insolvency & Bankruptcy Code was passed in:
**Answer:** 2016
15. Which sector was first opened to private investment in 1991 reforms?
**Answer:** Civil aviation (air taxi operators)
16. The peak GST rate on luxury goods is:
**Answer:** 28 % + cess
17. The gold pledged in 1991 was shipped to:
**Answer:** Bank of England & Union Bank of Switzerland
Last-minute mantra:
24-7-1991 → Devalue, 24-7-1991 → Delicense, LPG → Liberalise, Privatise, Globalise!
BETA
