Question

Which among the following is related to New Economic Policy 1991 ?

• A. Import Substitution
• B. Industrial Licencing
• C. Export Promotion
• D. Tariff Barriers

Answer 1

Answer:

C. Export Promotion

The New Economic Policy (NEP) 1991

• Historical Context: The NEP was introduced in July 1991 under the leadership of Prime Minister P.V. Narasimha Rao and Finance Minister Dr. Manmohan Singh to address the severe balance of payments crisis and economic stagnation.

• Core Pillars (LPG Model): The policy is famously categorized under the LPG framework:

  • Liberalization: Removing bureaucratic controls, industrial licensing, and reducing trade restrictions to encourage private sector participation.

  • Privatization: Reducing the role of the public sector by disinvesting shares in Public Sector Undertakings (PSUs) and allowing private entry into industries previously reserved for the government.

  • Globalization: Integrating the Indian economy with the world economy by lowering import tariffs, encouraging Foreign Direct Investment (FDI), and making the Rupee convertible on the current account.

• Export Promotion: As part of the New Economic Policy, large-scale incentives were given to exports to increase foreign trade and increase foreign exchange reserves. Therefore, it is directly related to this policy.