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Fiscal Reforms
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- Fiscal Discipline - The government set the target of bringing down fiscal deficit to 3-4% in the medium- term.
- It set the target of bringing the fiscal deficit target of 1992-93 to 5%, down from 6.2% in the previous year.
- Rationalising government spending - Through major cuts in subsidies and non- planned expenditures.
- Thus, the government announced major tax reforms to boost its tax revenue.
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Trade Policy Reforms
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- Rupee Devaluation - Rupee was devalued 18% to make Indian exports competitive.
- Import reforms – Import restrictions for exporters were reduced.
- Import of capital goods was allowed without the need of government permission.
- Export reforms - Exports trading houses were allowed to have 51% foreign equity.
- The government rationalised tariff structure and removed of quantitative restrictions on imports.
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Monetary Policy Reforms
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- Banking reforms – Setting of interest rates by lenders were deregulated, new private bank licences issued.
- Public listing of banks and moving to a new framework of recognition of accounts and introduction of capital adequacy norms recommended by Narasimham committee.
- Tighter policies - Tighter monetary and credit policy was envisaged to contain the current account deficit and to reduce non-discretionary imports.
- Introduced new monetary tools – 364-day T-bills, 10 and 15-year securities were introduced for the government to borrow from the market.
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Industrial Policy Reforms
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- Licensing reforms – Industrial licensing was abolished for all industries except 18 environmentally-risky sectors
- Amended Monopolies & Restrictive Trade Practices - MRTP Act was repealed to eliminate the need for prior approval for capacity expansion by companies.
- Increased Private role– Greater private sector participation was allowed in core and basic industries.
- Decreased Government control – Number of industries reserved for the public sector was reduced to 8 from 17.
- Small-scale enterprises were allowed to sell 44% equity to large companies.
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FDI Policy reforms
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- The limit for foreign equity holding raised from 40% to 51% in priority sector industries
- Foreign Investment Promotion Board was established to streamline the process of approval of FDI.
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Telecom Policy reforms
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- Introduced a unified access licensing regime for telecom services across the country in his tenure as PM between 2004-14.
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