NCERT Economy | From Class 9th to 12th | Day-19 | #upsc #upscprelims #upscpreparation #upscexam

Added: 2026-06-04

[00:06:48]Good morning.

[00:06:56]>> Yes. Let us talk about unit two.

[00:07:00]So, economic reforms since 1991.

[00:07:04]Economic reforms since 1991. When class is 9:00, you can be on time.

[00:07:13]5 minutes late.

[00:07:15]When class is on time, you should be on time.

[00:07:19]Right everyone, timing class.

[00:07:26]It's not right.

[00:07:28]I'm sorry. I'm not going to accept this.

[00:07:31]I am not interested allowing you to into the class class. See, but you know, every day I'm sorry, I'm I'm not this type.

[00:07:59]for nothing. I'm compromising a lot.

[00:08:02]It's okay. It's okay. But you should respect the teacher's time and you know the das this is not the case or I'm not going to entertain such a irregularities in the studies.

[00:08:16]Understand? Come in.

[00:08:22]Are you getting work.

[00:08:38]Don't repeat this. If you wanted to come late, don't come.

[00:08:43]Don't come. If you want to be late, don't come.

[00:08:48]Satic viate.

[00:08:52]late.

[00:09:01]You have to be on time.

[00:09:05]Hello everyone. Good morning because recent timings otherwise you change the institute.

[00:09:23]bad that I don't want clear everyone timing not regular not regular degree college too civil services exam.

[00:10:03]It's up to yours.

[00:10:06]Let us talk unit number two.

[00:10:09]Previous lecture.

[00:10:14]Previous lecture is about what?

[00:10:19]Yes, previous class is about Indian economy between 1950 to >> 90. This was the concept we have discussed in the previous lecture.

[00:10:31]So this class is a continuation of that.

[00:10:33]I think I told you this point. Indian economy before independence.

[00:10:41]Indian economy before independence we called Indian economy during colonial period. Then after this Indian economy between 1950 to 1990. This is another phase of Indian economy. And today we are going to discuss about Indian economy post LPG reforms.

[00:11:04]Indian economy post LPG reforms. So these are the three uh let us say phases of Indian economy. Indian economy during colonial period. Indian economy between 1950 to 1990. I can also use the word first seven five-year plans. Next, post LPG reforms. What about Indian economy?

[00:11:27]Sir, from colonial period to independence. Independence to post 1991 reforms. There was structural change in the Indian economy.

[00:11:38]There was structural change in the Indian economy. Look at this carefully.

[00:11:44]We have done already Indian economy during colonial period. In fact you are I think this is 11th class 11th class NCERT. First chapter is about Indian economy before 1947.

[00:11:58]Second chapter into the >> Indian economy >> Indian economy like between 1950 to 1990 and this is again post LPG reforms and NCRT law they're explaining you concept in very strategic manner.

[00:12:13]They're not directly explaining you the Indian economy in the 2026.

[00:12:19]They're talking about Indian economy exactly.

[00:12:23]What is that during British rule? Indian economy between 1950 to 1990.

[00:12:30]This is another phase and post 1991.

[00:12:34]What is Indian economy? Understanding evaluation of Indian economy. This is understanding the proper evolution of Indian economy. Then you'll understand how Indian economy began. What are the challenges during colonial time? What are the advantages of the times and how it got modified 50 to 90 and then post liberalization 50 to90 the post liberalization we also discussed about actually 1950 1990 period Indian economy this is a result of colonial rule. This is a result of colonial rule right everyone programs and policies whatever this is a result of colonial period because we faced so many challenges during colonial time.

[00:13:28]So to overcome those challenges we implemented certain programs and policies between 1950 to 1990 and whatever the Indian economy we have seen between 50 to 90 it is as a result of colonial rule.

[00:13:44]Second, in the end of 1990, there are some challenges.

[00:13:51]In the end of 1990, there were some challenges in the Indian economy like balance of payment crisis. Public sector enterprises is not performing well. Like you know there was a gulf wars, then population drastically increased, contribution of agriculture increased, industry increased, but there was a problem of unemployment.

[00:14:16]There is no proper competition in the Indian market. We have given more importance to uh what goods am there is no good competition. We give more importance to Indian goods rather than foreign goods. Because of that our exports are less, imports are more that created trade imbalance. That created trade imbalance. Government also had monopoly over certain companies. It used to restrict the private companies when to produce, how much you need to produce. Government also encouraged heavy industries followed by smallcale industries. This is what was happened between 50 to >> 90. But there were some challenges because of these challenges.

[00:15:06]1985 1990 1990 there was huge challenges to Indian economy 1985 1990 there was huge challenges to Indian economy there are challenges to Indian economy there was political instability this is like 1989 1990 this is a period called political instability in India one side political instability, another side trade imbalance, current account deficit and there was population explosion, unemployment, increase in government expenditure resulted into fiscal deficit.

[00:15:53]Increase in government expenditure resulted into fiscal deficit. These are the challenges. The two Indian economic policy is also big challenge because we followed semi-closed economy not allowing foreign companies to invest in India not allowing more imports from other countries hence there is no uh there is no competition for Indian goods hence the quality matters prices are increasing right because of these challenges Indian economy forced to a structural change because Because of the challenges created 1950 to 1990, Indian economy was forced to have structural changes.

[00:16:38]Because of these forces in the year of 1991, Indian economy or government of India has adopted a structural reforms structural reforms in Indian economic system.

[00:16:56]1985 until 1980 there were so many challenges there were sick industries sick industries in >> loss making industries are known as sick industries but government of India is not going to shutting down them because when we shut down them that create lot of unemployment that will be a political pressure on the government so government cannot shut down the loss making industries at the same time they are unable to run them in losses this is a complicated situ situation we were in between 1985 to 1990.

[00:17:31]So because of these reasons in the year of 1991 the government of India made what? Structural reforms in Indian economic system. The structural reforms in Indian economic system. The structural reforms are introduced by our prime minister during 1991. His name is PV Narim Mharav and followed by Finance Minister Man Moan Singh.

[00:18:03]Finance Minister Man Moan Singh 1991.

[00:18:07]Okay everyone, 1991 Prime Minister PV Narim Mharu and Finance Minister was Man Moan Singh. Both are very uh you know credible leaders for India. Both are very very credible leaders.

[00:18:22]So during their government they were forced by World Bank and IMF.

[00:18:30]They were forced by World Bank and IMF.

[00:18:33]Indirectly I can use they were forced by developed countries because you know World Bank and IMF were majorly regulated by developed countries. World Bank and IMF were majorly controlled by who?

[00:18:48]>> Developed countries.

[00:18:49]>> Developed countries. Developed countries always wanted access to Indian market because after independence Indian government followed semi-closed economy which means we are not open to everyone because we imposed many tariffs and >> quotas tariffs and quotas we imposed and we are not open to all the markets around the world. We are not open to all the markets around the world. when we're not open to all the markets around the world but they know very well India is a biggest market India is the biggest platform that have natural resources human capital but everybody wanted to access India but India is not allowing them by imposing tariff and quotas and if one or the other way since independence other countries that is developed countries wanted to have access to Indian market right >> that is a long-term dream that We need to access Indian market because a huge population, HUGE LANDMASS, MORE natural resources. We can have better returns from Indian market once we have access to it. But India says we are socialist.

[00:20:02]We are >> socialist. We are not open to everyone.

[00:20:05]We are not open to everyone. Our priority is domestic production not >> foreign >> foreign goods because one of our goal is self reliance. Ghunda what are the four goals of fiveyear plans >> growth modernization self-reliance >> equity do you remember that we are self-reliant so we give more importance to >> domestic >> domestic goods rather than foreign goods and meaning 1950 to 1990 is the period where Indian economy or Indian economic system Indian economic policy was so rigid so rigid means difficult difficult licensing system.

[00:20:47]>> Yes sir.

[00:20:48]>> Yeah.

[00:20:48]>> Yes sir. Indian economy is strongly regulating >> foreign companies, private companies.

[00:20:54]They have to work under the guidelines given by the government not at their will and wish.

[00:21:01]Yes sir. Yes sir.

[00:21:08]I'll tell you what to do but try to connect to the class first.

[00:21:18]But running.

[00:21:22]Is that clear everyone?

[00:21:51]I feel proud they have seen their my students dedication.

[00:21:57]Kindly understand my pain. Please can you don't treat me as your enemy.

[00:22:05]I need your results otherwise.

[00:22:10]See, I lost everything in my life. I don't have anything to lose in my life.

[00:22:20]Students, that's the one thing I wanted for your betterment. But I want anything. I need your results.

[00:22:35]Right.

[00:22:42]Are you getting but I wanted results?

[00:22:49]Why I'm connecting all this?

[00:22:52]Because conceptual clarity we can write five to six questions that is where clear everyone so let's talk so 1990 economy was not open to everyone but developed countries wanted to access Indian market but India not given a chance for them to access because what is India's worry if I give a chance to them they can colonize India it become neo colonization India was already under colonial rule for more than 200 years we don't want to be under colon again new colonial rule by controlling India's economic system that is the fear India had during the time. Hence our economy is closed. We have so many restrictions.

[00:23:55]Everything is done by government. Role of private is minimal. Just do whatever we are allow you to do not more than that. If you do that industry will be shut down.

[00:24:07]But the 1990 population the government of India not performing well because of internal famines internal wars internal disturbances political unstabilities because of our socialistic economic structure because of our semi-closed economy we're unable to perform well these all situations fueled by Gulf Wars 1990 Gulf Wars 1990 because of all these reasons India was forced to open its market for world because of all the situations happened between 1950 to 1990. India was forced to open Indian market to the world. But India forced means India introduced LP reforms on advice of >> World Bank and IMF.

[00:24:59]>> World Bank and IMF. Who was there behind World Bank and IMF? developed countries because World Bank and IMF are mostly regulated by developed countries because they are the largest stakeholders. They are the large stakeholders like America is developed country, Russia is developed country, China, UK, France, am I right? They're called developed countries including Japan is also developed country. They are the forces behind World Bank and IMF. They forced World Bank and IMF. IMF forced Indian prime minister and finance minister.

[00:25:38]Hence we have introduced we have introduced economic reforms 19 91 mamm new economic reforms 1991.

[00:25:52]New economic reforms 1991.

[00:25:57]Okay. Brief history.

[00:26:00]What is World Bank? What is IMF? We'll discuss everything.

[00:26:06]New economic reforms 1991.

[00:26:09]The new economic reforms is also called LPG reforms. It is also called new industrial policy 1991.

[00:26:24]New economic reforms, new economic reforms, new industrial policy or LPG reforms all the three were same.

[00:26:39]So the point in this lecture in the 11th class NCIT what we has discussed we have discussed about economy of India pre947 I can say during colonial rule then we discussed about Indian economy after independence that is the first seven five year plans first seven >> that is between 1950 to 19 90 previous now we are going to see Post LPG Indian economy sir 1950 1990 economic policies this see any country wanted to grow their country's growth is depending upon policy making am right policy making of the government 1950 1990 policy because of the bad experience that we have colonial rule am I right 1950 to 1990 bad experiences we have brought which reforms LPG reforms that is what the point here is let's have a look into the post LPG reforms what about Indian economy are Indian economy after LPG reforms or post liberalization globalization and what >> privatization clear keeping economic reform since >> 1991 let's have a discuss Yes.

[00:28:10]Look this after 40 years of planned development. Can I say 40 years? 1950 to 1990. How many years?

[00:28:18]>> 40 years.

[00:28:19]>> 40 years. How many five year plans?

[00:28:21]>> Seven years.

[00:28:22]>> E period.

[00:28:23]>> Seven five year plans.

[00:28:26]about in Manuki after 40 years of planned development India has been able to achieve strong industrial base because of self-sufficient in production of food grains first 40 years industrial policy economic policy we have produced more But most of the production consumed by ourself. There is nothing was exported. But what we need?

[00:29:02]We have to consume ourself and we need to export. Then only we can generate revenue. Only I have earned 10,000 rupees. I consume 10,000 rupees. What is there in the development?

[00:29:18]Then where is your growth and development? Right? So we need some surplus all the time in order to export and generate surplus economy. Right? So first 40 years low we are unable to achieve a strong industrial base because we are focused on self sufficient in production of food grains. Only food production focus not on other industries.

[00:29:45]Nevertheless, major segment of the population continues to depend on what?

[00:29:51]Agriculture for its livelihood. Japan 1915 India 1990 where is the maximum human force was there?

[00:30:02]>> Agriculture. Even where the maximum people was there agriculture but 1990 compar dependency on agriculture was reduced.

[00:30:15]Nevertheless, maximum population depending on agriculture for their livelihood. In 1991, a crisis in balance of payment. I said 1991. What is the one reason for reforms?

[00:30:30]>> BOP crisis. 1991 reforms.

[00:30:35]1991 reforms was fueled by BOP crisis.

[00:30:43]1991 reforms was fueled by BOP crisis.

[00:30:52]1991 reforms was fueled by BOP crisis.

[00:30:57]Balance of payment crisis.

[00:31:01]Balance of payment crisis. Sir, what is the balance of payment for a while?

[00:31:09]Balance of payment crisis is due to trade deficit.

[00:31:14]Balance of payment crisis is due to trade deficit.

[00:31:22]Trade deficit.

[00:31:24]Tell me what is a trade deficit? When I say trade deficit, it is imbalance between imports minus >> exports.

[00:31:33]When I say trade deficit, let us our imports are more, exports are less. We call it as trade deficit. Because of trade deficit, what is the experience that we have?

[00:31:46]Trade deficit.

[00:31:48]Trade deficit we can create something called current account deficit. That current account deficient is technically called B crisis. Balance of payment crisis. And situation 1990 India have foreign reserves which are enough only for 14 days. Only foreign reserves. For example amount be paid in the form of dollars. India is assumed as a dollar as our currency that you're using for trade purpose.

[00:32:26]currencies agreement only NCERTT classes India is paying in dollars but dollars 14 days after 14 days we don't know what to do we have already borrowed money from IMF World Bank and everyone when you're asking money again from them they'll definitely push some conditions they definitely put some conditions when you accept the conditions means you have to change Indian economics structure Indian economic structure.

[00:33:00]So current account deficient indirectly this is what called balance of payment crisis. Balance of payment crisis import rights imports 80 I have to pay 100 what should I do borrowing don't I will go for pickpocketing what we Borrowings.

[00:33:37]>> Borrowings. Borrowings are two types.

[00:33:40]>> Internal borrowings. External borrowings. Internal and within India.

[00:33:44]External means >> from the international organizations.

[00:33:48]International >> organizations. We were in a situation of BOP crisis by 1990.

[00:33:55]Okay. Now BOP crisis is because of >> trade deficit or imbalance in imports and exports.

[00:34:05]Okay boys. So 1991 India faced what crisis? Balance of payment crisis led to the introduction of economic reforms in the country. 1991 economic reforms.

[00:34:20]Tell me one immediate reason.

[00:34:22]>> Balance of payment crisis. Balance of payment crisis. 19 91. Right. Everyone see balance of payment crisis.

[00:34:34]Economic. economic reforms, LPG, new industrial policy, new economic reforms.

[00:34:45]Yes.

[00:34:48]Next. This unit is an appraisal of reform process and its implications for India and a particular second unit.

[00:35:08]not required right. Yes. So what is the economic development or industrial base during 50 to 90? There is no good industrial base because we majorly focus on self sufficiency on food grains.

[00:35:23]Hence there is no good industrial base.

[00:35:25]There is no good. During 50 to 90 maximum population must depending on what agriculture as their >> livelihood as their >> Babuardinda.

[00:35:37]Yes. Can you go for next?

[00:35:40]Look the chapter liberalization, privatization, globalization, LPG reforms. Tell me one reason for LPG reforms, balance of payment. core points brain repeat. So LPG reforms is due to is due to BOP crisis is due to balance of payment crisis.

[00:36:15]balance of payment crisis. I'll tell you a topic. Can I share one of my experience right very very inspiring and you know it it might inspire you a little more.

[00:36:28]It was 2020 by the time I was a good faculty in the renowned institutes.

[00:36:36]One of institute director she was very close friend of mine called for economy teaching out of goodwill they requested I went in that academy there was one administrator a little more arrogant administrator who feels I know everything kind of person who cannot accept anybody's uh what do you called uh uh good name except his I went they asked me a demo on balance of payment then I gave demo only two persons were there one was ma'am next one was that you know so-called you know great person they asked me so many questions I answered then he asked me one question how many billion dollars was the you know balance of deficit during the time I said I think it is not relevant to examination sir If student ask what do you do? I said I'll sell the same answer. It is not important for exam. If you want you can browse you'll get the number but not important for you to remember that for exam that I told.

[00:37:49]Then I went he he talked to me that uh this is not the way you have to answer everything sir. I'll not answer everything that is not important for exam. If they want I'll teach them after class. once they meet me I'll tell them but I don't want to share the nonuseful important uh then I he said that is not the case students students and sir there are some doubts which are not important meet after the class am I right because I don't want to kill the class time and environment I give such answers said I'm saying all this for your good thing and I went to ma'am and I said ma'am who is he and she said person is like that leave then after going me and he said ma'am he's an arrogant person don't take him to don't take him to in you know in institute then that was my first a very brutal insult I feel after giving so much patience explanation I ma'am also said here he wanted so why did you uh argued with him ma'am I have to give my point right otherwise uh it's my mistake then they said like you know he'll see it later tal he's an administrator in our institute I can't disturb my ecosystem because of tussle between you and him then I said it's okay ma'am thank you I came out I have decided to start my own organization my own Right everyone so when you feel you are capable enough you have we have good content enough nobody is doing the live NCERTT videos right right nobody's doing live PQ series by one person doing all students I have started my own thing and we are doing well the so every insult is good when you take in the right manner Right everyone that is what where he was insulted me but yeah I'm the person who can explain all these things in a detailed manner right everyone can I go for it so point here is insult is not aure Focus on your growth and development.

[00:40:34]Your growth and development will be the answer for everyone.

[00:40:38]Now don't give oral answers. Don't give you know oral fight. Just work on work on work on that gives a damn answers for everyone in a single shot.

[00:40:50]I think I mean so fight will show in the results. Got it? Let us talk about this. So next point, understand the background of reform policies introduced in 199 reasons for LPG reforms. Reasons what are the reasons for bringing out LPG reforms. Next understand the mechanism through which reform policies were introduced.

[00:41:23]Reasons for LPG reforms and how LPG reforms were introduced, comprehensive process of globalization and its implication for India. Because of globalization, how India got affected? I told before globalization there is no competition in the Indian market. Indian domestic goods are flourished. But whenever you globalized automatically what happened foreign goods entered into Indian market they're at low price they're at high quality they give tough competition for Indian products slowly the domestic industries got got a severe threat from foreign goods that will be one biggest impact of globalization negative impact there are so many positives also so be aware be aware of impact of reform process in various sectors What is impact of various sectors reforms and impact on agriculture? Impact on industries, impact on service because of 1991 reforms.

[00:42:29]How 1991 reforms affected agriculture industries service that we need to understand and reforms reforms.

[00:42:41]Globalization implications in India.

[00:42:45]Impact of globalization on India. Impact of globalization on India. Implications and challenges.

[00:42:54]>> Challenges. Jagatra means questions law.

[00:42:57]Discuss the implications of globalization.

[00:43:00]Implications are nothing but what?

[00:43:02]>> Challenges. Let us see then how this LPG reforms impacted various sectors. LP reforms impact on agriculture industries service. Do you understand? Yes. This is what we have to understand here. But look at this statement given by Mr. Narayan.

[00:43:22]There is a there is a consu consensus in the world today that economic development is not all and GDP is not necessarily a measure of progress of society and even economic development society development economic development is one aspect of society there are so many aspects when society is developed means don't consider economic development is one element based on This entire society was developed is the wrong notion. Society development resulted to what? Education, health care, culture prevention. Are you getting culture production, economy, social aspects, everything collectively called development of a society. Clear everyone? Yes. Whose statement is this?

[00:44:14]>> Look at now introduction of this LPJ reforms. Before introducing clear everyone concept I can say I can tell you know there is LPG right?

[00:44:32]Liberalization privatization then output a globalization.

[00:44:38]Globalization is the outcome of liberalization and privatization.

[00:44:44]Globalization is the outcome of result of globalization is the outcome of Globalization is the result of liberalization under private privatization liberalization privatization globalization okay now I'll tell you what is globalization liberalization and privatization listen carefully so globalization is the outcome of >> liberalization and okay yes you know next introduction of LPJ reforms look now you have you have studied in the previous chapter After that since independence India followed what economy?

[00:45:47]>> I said not completely mixed economy. It is democratic socialism. Democratic socialism law. Highest role is played by government. Minimal role is played by >> and there is a role of private right in that context they called mixed but that is not completely mixed.

[00:46:06]mixed economy framework by combining the advantages of market economic system with those of planned economic system.

[00:46:15]Market and free trade planned means India point. Okay. Right.

[00:46:22]This policy which policy which policy let us say this policy resulted in what? Establishment of variety of rules and laws which were aimed to controlling and regulating what economy instead ended up harming the process of growth and development. And because of this because of this Indian economic policy between 1950 to 1990 there was a strict controlling and strict regulation. Government is acted like very rigid right? Yes sir.

[00:46:57]Licensing policy was so rigid. Our export import policy was so rigid.

[00:47:02]Government controlling everything where to produce. I told one point government gave license only when the companies are establishing in rural areas. Do you remember that? And a government is dictating the private sector or not.

[00:47:16]Because of this Indian economy development and growth was spoiled between 1950 to 19 >> 90. So between 1950 to 1990 Indian economy not have resulted expected growth and development because of its economic policies. Because of its >> economic policies >> between 1950 to 1990 Indian economy has not recorded expected growth.

[00:47:48]Indian economy has not expected recorded growth.

[00:47:55]Indian economy is not expected recorded growth due to its due to its rigid economic policy.

[00:48:12]Rigid economic policy, comma, socioeconomic and political conditions, comma, rigid socioeconomic and political conditions.

[00:48:33]Socioeconomic and what conditions?

[00:48:35]>> Political conditions. These are the reasons why Indian economy has not recorded proper growth and development between 1950 to 19. Clear all of you?

[00:48:47]Yes.

[00:49:01]When the decisions are good then your growth will be good. Our decisions are not so good during 50 to 90. Hence there was not having expected growth of Indian economy expected growth of Indian >> economy.

[00:49:17]Others state that India which started its developmental path for from near stagnation. Do you remember this point?

[00:49:26]At the time of British agricultural sector was at stagnation point >> even after independence Indian agriculture sector was at stagnation.

[00:49:38]And meaning Indian economy after independence began from stagnation.

[00:49:44]Began from stagnation. Clear everyone?

[00:49:47]Yes. Indian economy.

[00:49:51]Indian economy.

[00:49:55]Indian economy 1991. Sorry, 1950. Indian economy began from stagnation.

[00:50:06]Began from stagnation.

[00:50:10]Began from stagnation.

[00:50:13]When I say stagnation, there is no growth and development. agriculture everything was like you know stagnated not recorded much growth there were everything is stagnated so Indian economy began with a stagnation at the time of independence has since been able to achieve growth in savings developed and diversified industrial sector which produce a variety of goods and has experienced sustained expansion of agriculture output which has ensured food security. Two points economy 1950 to 1990 expect Indian economy beginning stagnation economy growth was very good. It also recorded good growth in what what sectors economic savings law economic development low diversified industries.

[00:51:14]Chapan Gortunda initially Indian industries were confined to textiles textiles cotton later on they were diversified or not there was there was a purpose of variety of goods and we have produced variety of goods and experienced sustained expansion of agricultural output and we also ensured >> food security because at the time of independence there is no food security we have dependent on USA for food imports. But after green revolution, we have successfully achieved self-reliance in food grains and food security in India.

[00:52:04]Food security, self reliance, right?

[00:52:09]Equity clear growth and development was also happened.

[00:52:17]Economics batch economist batch 1950 to 199 because of its strict controlling rigid economic policies no we have drained everything during British time we began from zero but we achieved growth rate in agriculture industrial base food security self-reliance am I right and this is like opinion of different economist on Indian economy between 50 to >> 90 right that is what in 1991 India met with an economic crisis What are the reasons for economic crisis?

[00:53:19]>> Chapala B crisis. Right. India 1991 India met with an economic crisis relating to external debt. External debt of balance of payment crisis. External debt.

[00:53:48]than external debt.

[00:53:51]More imports, less exports. In 1991, India met with an economic crisis relating to its external debt. The government was not able to make repayment on its borrowings from abroad.

[00:54:08]point important for a debt or not.

[00:54:21]1991 India met with an economic crisis relating to its external debt.

[00:54:30]External debt.

[00:54:42]The government was not able to make repayment.

[00:54:48]This not able to make repayments on its borrowings from abroad.

[00:54:58]Abroad.

[00:55:03]Abroad.

[00:55:06]Next. Look at this. Foreign exchange reserves which we generally maintain to import petrol and other important items.

[00:55:15]Write down foreign exchange reserves. Forex foreign exchange reserves. We call them in short forex. India if forex maintain RBI RBI is the custodian of Forex reserves.

[00:55:39]RBI is the custodian of Forex reserves.

[00:55:46]RBI is a custodian of Forex reserves.

[00:55:55]is a custodian of forex reserves. Very very important for your exam. It is a custodian of forex reserves. Listen now.

[00:56:03]Foreign exchange reserves was generally maintained to import petrol and other important items.

[00:56:12]Why do we use foreign exchange reserves?

[00:56:15]To meet imports.

[00:56:25]Forex.

[00:56:29]Yes. Listen. Forex reserves which is generally maintained to import goods and rand import goods and crude oil whatever it is anything that you are importing from other country you have to pay them in dollars that is required forex.

[00:56:49]Yes, the point here is foreign exchange reserves were generally maintained for maintained for imports and a drop to the level that were not sufficient even for fortnight and 15 days forex reserves.

[00:57:09]Clear point important.

[00:57:14]They're generally to maintain import goods were dropped to the level that were dropped to levels that we were not sufficient even for fortnight.

[00:57:31]Even for Fortnite 1991, even 15 days foreign exchange.

[00:57:53]15 days.

[00:58:00]Crude oil.

[00:58:05]Diesel transportation problem.

[00:58:08]Transportation problem. Transportation problem.

[00:58:11]Foods all over India.

[00:58:16]Prices. Inflation. Economy collapsed.

[00:58:19]economy collapsed.

[00:58:24]So at the time of 1991, India's forex reserves just to meet imports for just 15 days. Just for 15 days.

[00:58:35]This crisis was further compounded by rising prices of essential goods.

[00:58:43]These economic crisis, what are the economic crisis?

[00:58:47]Balance of payment crisis also compounded. What India loan essential goods price right? Essential goods. Essential commodities act 195 is essential commodities act. Previous class essential commodities government choice. Petrol is essential commodity.

[00:59:15]Edible oil is essential commodity. Rice is an essential commodity. Milk is an essential commodities. Government can add anything under this can remove from it. The government choice. Okay. Now, so the crisis of 1991 was further compounded by rising price of essential goods. All these led to the government to introduce new set of policy measures which changed directions of our developmental strategy. Because of these BOP crisis, because of the rise of price of essential goods forced Indian government to introduce new economic policies for India's economic development, for India's economic development, right? After this point clear? Yes. This chapter we will look the background of crisis measures that government has adopted and their impact on various reforms. Government measures reforms effect on agriculture industries surveys. Okay.

[01:00:25]background. Background meaning I can say reason introduction.

[01:00:36]What is the first thing? Introduction.

[01:00:37]Now we are going for background.

[01:00:40]Background. The origin of financial crisis can be traced from the inefficient management of Indian economy in 1980s.

[01:00:51]Director point background of 1991 economic reforms in adding reasons for 1991 economic reforms and first reason the origin of financial crisis can be traced from the origin of financial crisis.

[01:01:27]Financial crisis 198 199 almost decade 1980 1991.

[01:01:44]Okay.

[01:01:45]Yes.

[01:01:47]The financial crisis in India began began due to inefficient management of Indian economy began due to inefficient management of Indian economy in 1980s.

[01:02:08]1980s when I say inefficient management and it unable to manage sick industries, it unable to control population, it unable to control inflation, it unable to control unemployment, it unable to control government expenditure, it unable to control imports. Ryan Raini, right? So government is unable to control inflation.

[01:02:38]Sick industries population unable to control government expenditure.

[01:02:50]Government expenditure revenue. Can I call fiscal deficit? Yes sir.

[01:02:54]>> So unable to control fiscal deficit.

[01:02:57]Unable to control government expenditure and unable to control imports.

[01:03:05]Unable to control imports. These are the inefficient management of the government of India which resulted into economic crisis which resultant economic crisis.

[01:03:16]Okay. Now so when did economic crisis began?

[01:03:19]>> 1980s reason in efficient management of Indian economic system by the government of India. Clear?

[01:03:28]Next, we know that for implementing various policies and its general administration, the government generate funds from various sources such as taxation, comma, running public enterprises. For example, listen, this is one point we know implementing various policies. policies and meaning the government of India wanted to implement policies programs for >> welfare of the people. The government of India running programs policies for welfare of the people. Sir when it wanted to run welfare programs it requires revenue from where revenue raised by the government. Government is getting revenue from taxation and running public sector enterprises etc etc we can read government can get fund from taxes and non- taxes government can get revenue from taxes and non- taxes can non- taxes and fees fees charges other duties taxes and you know very well director and indirect taxes and the government of India wanted to provide welfare to every person for that it need revenue for where it is raising its revenue >> taxation by running >> public sector >> PSU public sector undertakings and other revenue sources. Okay.

[01:05:04]Yes.

[01:05:05]>> When expenditure is more than incomeis >> When expenditure is more than income.

[01:05:13]>> Fiscal deficit. Fiscal deficit.

[01:05:15]>> When expenditure is more than income, the government borrow to finance deficit from banks and also from people within the country and from international financial institution. Remember very important when government expenditure is more than income. For example, government expenditure is more than income.

[01:05:43]Fiscal deficit expendit 20 maybe from internal or like maybe international banks maybe other countries maybe within India maybe within India borrowings borrowings are internal borrowings >> which are good for economy.

[01:06:16]>> Internal borrowings are good or external borrowings are good.

[01:06:21]>> Strong gate.

[01:06:23]>> Internal borrowings are good for economy. External borrowings are little bad because internal borrowings we have less interest rate and we can repay them on install basis. Whereas external borrowings are high interest rate they can dominate us. They can dominate us.

[01:06:40]point important look when the expenditure is more than income why the government expenditure is more because it is spending money for policies to create welfare of the people because the government of India major object not to not to generate profit but to achieve welfare previous Yes.

[01:07:14]Right.

[01:07:18]Like look at this. Clear up to this.

[01:07:21]When when when we import goods like petroleum, we pay in dollars which we can earn from exports. Randama.

[01:07:31]We do trade in We do trade we do trade with forex reserves.

[01:07:40]Example dollar we do trade in forex or we do trade with forex reserves.

[01:07:50]Trade and imports exports. We do trade with forex reserves. Example, dollar dollar.

[01:08:02]We import the goods.

[01:08:05]We import the goods by paying dollars as a medium of exchange.

[01:08:14]By paying dollars as a medium of exchange.

[01:08:21]as a medium of exchange which we can earn from our exports.

[01:08:31]Which we can earn from our exports.

[01:08:38]Which we can earn from our exports.

[01:08:47]importational organization.

[01:09:11]We can borrow from international organizations like you know World Bank, IMF, other countries.

[01:09:18]Okay. Now what is good for imports exports exports imports to cut our trade deficit. But that is not possible. That is not imports automatically increase. Clear.

[01:09:42]Next, development policies required that even though even though the revenue were very low, very important.

[01:09:51]See developmental programs compromise.

[01:10:05]The government of India major goal is welfare of the people.

[01:10:11]The development policies required that even though the revenue was very low, the government had to overshoot its revenue to meet problems like unemployment, poverty, population explosion.

[01:10:28]Government has to launch the programs in order to overshoot the problems like >> unemployment, poverty, population explosion. The continued spending on developmental programs of the government did not generate additional welfare immediate returns generate. For example, hospitality for not hospitality. Public health more human capital employment revenue.

[01:11:19]Maybe in long run but government is spending lot. Yes, government spending money on education. Today government is giving free education for us but are government of India getting immediate returns? No. Free education and the welfare cannot generate immediate returns. That is why the government of India borrowing and spending. Borrowing and spending. Clear?

[01:11:52]Look the continued spending on developmental programs of the government did not generate additional revenue.

[01:12:00]That is why the government of India going into deficit. Going into deficit aravinda. Yes. The government was not able to generate sufficiently from internal source such as taxation. Hence we are going for external borrowing.

[01:12:18]Right on this point the government was not able to generate.

[01:12:25]The government was not able to generate sufficiently from internal sources such as taxation.

[01:12:36]such as taxation, comma, PSUs and so on, PSUs and public sector undertakings, government companies PSUs and so on.

[01:12:48]Hence, government of India going for external borrowings.

[01:12:57]External borrowings.

[01:13:00]Hence the government of India going for external borrowings.

[01:13:08]clear up to this point. Can I go for next?

[01:13:13]So when the government was spending a large share of its income on areas which do not provide immediate returns such as social sectors, defense and there was a need to utilize the rest of revenue in highly efficient manner. Point government spending maximum on the sectors where we can't get immediate returns.

[01:13:42]Government we are spending money on some sectors which are not generating immediate returns. At least some amount you have to generate on the sectors. We have to spend on the sectors where they can provide immediate >> returns as well. Otherwise we are totally depending upon borrowings which is bad for economy. Add for econom investment daily interest discount and these are called daily revenue generator that is for long-term returns long-term returns remaining what do you do you have to borrow money for survival right yes The income from public sector undertakings was also not very high to meet the growing expenditure. I told you already at the time of 1980s the government industries are sick. There are so many sick industries under PSUs and PSUs and the public sector industries are not are not very high to meet >> growing expenditure and they're not performing well. Foreign exchange. Our foreign exchange borrowed from other countries and international financial institutions. Example for international financial institutions was World Bank IMF. Look our foreign exchange borrowed from other countries. We borrowed from America, uh, Russia, France, Japan, right? We also borrow from other country. We also borrow from other financial institutions. Our foreign exchange borrowed from other countries and international financial institutions was spent on meeting what? Consumption.

[01:15:30]Consumption needs.

[01:15:45]So that investment will generate returns or not.

[01:15:50]Consumption >> return getting everyone. Yes. And consumption welfare and welfare. Neither was an attempt made to reduce such profit spending nor sufficient attention was given to boost export to pay for the growth of imports.

[01:16:14]Maximum borrowings, consumption, economic growth, imports, exports, to generate revenue.

[01:16:39]Indian jail clear bad or not?

[01:16:46]>> Yes sir.

[01:16:48]>> In the late 1980s late 1980s and >> 1986 to >> 1986 1989 work late 1980s government expenditure began to exceed its revenue by such a large margin that it become what? Unsustainable. and 1986 87 88 government expenditure become very high than its revenue and the fiscal deficit is less or more very see it good now fiscal deficit is very less late is my expenditure but my revenue is let us 80 rupees and how much I borrow.

[01:17:39]>> And the fiscal deficit is more or less >> more. Government expenditure is greater than government revenue and the fiscal deficit IS MORE RIGHT. EXPENDITURE IS more than the revenue and double.

[01:17:53]Yes. And the 1980s 85 86 87 88 89 time code sir okay government expenditure was very much increased revenue was decreased and the fiscal deficit was increased.

[01:18:10]The price of many essential goods rose sharply until there was high inflation.

[01:18:16]High rate of >> 1991 crisis inflation Japan sir Japan sir >> there is a rise in price of essential goods which means there is high rate of inflation.

[01:18:30]Next imports grew at very high rate without matching >> growth of >> growth of exports. 1988 89 inflation because of oil crisis, forex reserves, government expenditure, government industries are not performing well. We already taken so much of loan from other countries. This is the situation we had 1989, 1988, 1990. The government expenditure was so much, government revenue is very less and the fiscal deficit is very high.

[01:19:08]As pointed out earlier, foreign exchange reserves declined to a level that was not adequate to finance imports for more than Japan. We had foreign exchange reserves only to meet imports for fortnight and Japan and how many days 14 to 15 days.

[01:19:29]There was also not sufficient foreign exchange to pay interest right called Bris that need to be paid. international lenders inflation population growth at that same time there was a Gulf War. There was Gulf War, shortage in crude oil, shortage in crude oil.

[01:20:05]Our fiscal deficit was increased.

[01:20:07]Government industries are not performing well. Population is exploded.

[01:20:12]Unemployment, high rate of inflation.

[01:20:15]This is all the sides problems. India round up reforms. India reforms.

[01:20:26]Are you getting it right? Not a single problem. There were many India approach the international banks for resettlement and development IBD and we called World Bank. We called >> World Bank, >> Praancha Bank, World Bank. India approached who?

[01:20:45]>> World Bank and India also approached IMF also. India approached World Bank and IMF and received 7 billions as a loan to manage crisis.

[01:20:57]7 billion dollar because we are in BOP crisis. No, $7 billion as a loan to manage crisis for availing the loan.

[01:21:23]World Bankion.

[01:21:28]Happy. Very happy sir. Conditions terms and conditions.

[01:21:38]World Bank and IMF is agreed to give a loan for India for $7 billion to manage our crisis. India you are in crisis NO I'LL GIVE YOU MONEY but come put some agreement I have certain conditions the point is for availing the loan for a this benefit contact this number for a loans these international agencies expected India to >> liberalize and open up >> the economy by removing restrictions on the private sectors reduce the role of government in many areas and remove the trade restrictions.

[01:22:18]Liberalization right on this point important India India India went to IMF and World Bank to get the loans of $7 billion.

[01:22:32]World Bank and IMF, World Bank and IMF made certain restrictions or certain certain certain changes in the Indian economy such as liberalized Indian economy.

[01:22:51]Open up Indian economy. I told earlier it is semi-open right? Yes sir.

[01:22:55]>> Only few countries exports, few countries imports. Now it is completely open. Open up Indian economy by removing the restrictions on what? Private sectors.

[01:23:08]I told before 1990 government controlling private sector so rigorously right >> their production distribution where to establish company everything decided by >> government like restrictions need to be removed on private sector reduce the role of government in socialistic economy maximum role is >> government the IMF and World Bank said government role need to be reduced private role need to be increased and remote trade restrictions.

[01:23:41]Open up Indian economy.

[01:23:44]Open up Indian economy.

[01:23:46]Removing restrictions on private sectors.

[01:23:52]Role of government need to be minimized in many areas.

[01:24:00]And what next?

[01:24:03]Remove trade restrictions.

[01:24:06]You know right earlier we used to control the trade by imposing tariff fund kotaas. You remember IMF World Bank proposed these changes to Indian economy. We were forced to have these changes otherwise but followed by some conditions. How much was the loan we received? $7 billion to manage our crisis. What crisis?

[01:24:38]>> BOP crisis.

[01:24:38]>> BOP crisis. India agreed to the conditionalize of World Bank and IMF and announced a new economic >> policy.

[01:24:48]India agreed for the conditions given by World Bank and IMF and brought economic reforms.

[01:24:55]The new economic policy consisted of wide ranging economic reforms. The thrust of policies was towards creating more competitive environment in economy and the foreign goods are now allowed.

[01:25:11]Before 1990, no competition because we're not allowing foreign goods. Indian domestic goods are flourishing like anything without competition. Right.

[01:25:19]>> Yes sir.

[01:25:20]>> But now we are allowing the foreign commodities into Indian market because the trade is open now. The trade is >> open now. And there is a good competition in the Indian market. Right.

[01:25:30]Yes. Removing the barriers to entry and the growth of firms and foreign firms and companies can enter into India.

[01:25:41]FDI, FIA >> removing the barriers to entry under growth of firms and foreign countries, companies enter what FDI and FI FDI and foreign direct investment FI foreign institutional investment FBI okay don't worry you can write FDI and FIS were allowed after NEP.

[01:26:14]after NEP which means new economic reforms.

[01:26:20]After NEP new economic reforms after NEP new economic reforms clear everyone up to this point right go now this set of policies can broadly be classified into two groups. What is the set of policies? The set of economic policies were broadly classified into what? Two groups. The two groups first establish measures and structural reform measures.

[01:26:57]Randama stabilization measures.

[01:27:05]Stabilization measures.

[01:27:09]Stabilization measures.

[01:27:13]and structural reform measures, stabilization measures and structural reform measures.

[01:27:23]Stabilization and destabilizing Indian economy and bringing the changes in the policies of Indian economy we called structural reform measures and earlier we depend on agriculture. Now we are largely depending on service and there is a structural change or not. The stabilization measures were short-term measures.

[01:27:46]Stabilization measures were short-term measures intended to intended to solve intended to solve BOP crisis BOP crisis and control inflation.

[01:28:16]and control inflation and control inflation.

[01:28:24]So LPG reforms slow into measures. So stabilization measure >> structural reform measure stabilization and short-term Indian economy unstable high inflation high crisis unstabiliz okay now so what are the stabilization measure means shortterm it is to control BOP crisis immediately and >> inflation in simple words this means that there was a need to maintain sufficient foreign exchange reserves and keep rising prices under Control sir maintaining sufficient foreign ex keep the rising prices under control and meaning what controlling inflation control because crisis inflation control stabilization measures LP reforms so two measures one is stabilization measure next one structural reform measures stabilization were short-term to control BOP crisis plus >> inflation structural reform policies are long-term measures they are meant for improving efficiency of Indian economy increasing international competitiveness random structural reform policies are long-term structural reform policies are long-term Long-term.

[01:29:59]Long-term for improving efficiency of economy.

[01:30:05]For improving efficiencies of economy, comma international competitiveness.

[01:30:18]International competitiveness.

[01:30:22]International competitiveness.

[01:30:27]So finally the government initiated variety of policies which fall under three heads. New economic program law or new economic policy law. Government introduced variety of policies which were fall under three heads. They're called liberalization, privatization, globalization.

[01:30:49]The structural measures. What next?

[01:30:52]Stabilization measures. They were done by the government of India under three heads. What are the three heads?

[01:30:58]Liberalization, privatization, globalization.

[01:31:02]So the first two policies and anti first two policy strategies and the last one is what? Outcome of the strategies and liberalization privatization and globalization is outcome of okay.

[01:31:22]What are the rest done? So many points NC given by government authentic information.

[01:31:44]Got it.

[01:31:50]current class I'll tell you what to do and s online students I'll also talk to you don't worry that's all for economy will you get the same clarity definitely not my dearcour Okay, I should give second reading.

[01:32:33]Not entire book.

[01:32:35]Got it friends.

[01:32:51]YouTube channel right don't feel like that one person is a competition for you rightature statements It's okay.

[01:33:25]When you go to some bigger people and experienced people every word when you're speaking with some bigger people and experience you should be you should be very much conscious they'll analyze every of your statement Yeah.

[01:33:55]For better survival.

[01:34:10]Are you going in the right strategy?

[01:34:12]Check yourself every time.

[01:34:16]Selfishness.

[01:34:18]Okay. progress just go first in every possible way.

[01:34:24]Serena, cello. See you in the current affair class. See you online. Have a nice day.