List the Major Achievements and Weakness of New Economic Policy 1991.

The Major Achievements of New Economic Policy are:

  • GDP Growth: GDP rose from 0.8 percent in 1991-92 to 7 percent for the period from 1994-95 to 1996-97.
  • Increase in Gross rate of return (ROR) on Capital: In 1995-96, the gross rate of return was recorded at a high of 16.1 percent.
  • Decline in inflationary trend of Wholesale Price Index (WPI): The WPI declined to 4.6 percent in 1995-96 from 13.7 percent level in 1991-92 (at 1981-82 prices).
  • Rise in foreign reserves: The foreign exchange reserves increased to US. $ 25.4 billion (July 4, 1997) from US $ 2.24 billion in 1990-91.
  • Improvement in Index of Industrial Production: The industrial production index rose to 11.8 percent, in 1995-96 from merely 0.6 percent in 1991-92.
  • Export growth: Exports rose to 20.8 percent in 1995-96 from 3.8 percent in 1992-93 (in US Dollars).

Some of the major weaknesses of New Economic Policy are:

  • The New Economic Policy concentrates mainly on large corporate sector. The policy largely ignores small scale industries and agriculture sectors on which large population depend.
  • Large dependence on foreign investment in several sectors of economy.
  • The rate of Consumer Price Index (CPI) has increased over the years.
  • Inadequate privatization due to strong resistance from labor unions.
  • Government has disinvestment mostly in healthy industrial units and mote so to reduce the fiscal deficit, which is unjustifiable.
  • The implementation of new economic policy has not helped in reducing fiscal deficit. Non-plan expenditures have been not reduced.

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