39.Mandal Commission, India after 1991 Flashcards
What circumstances led to the implementation of the New Economic Policy in India in 1991?
The convergence of circumstances such as the Gulf war, collapse of the Soviet Union, unstable governments, and economic crisis, particularly the balance of payment issue, made it imperative for India to respond to the changed scenario.
What were some issues in the Indian economy in the 1980s that contributed to the economic crisis?
Inefficient management of the Indian economy in the 1980s led to government expenditure exceeding revenue, high inflation, growing imports surpassing exports, declining foreign exchange reserves, and insufficient foreign exchange to pay interest to international lenders.
How did India manage the economic crisis in the early 1990s?
India approached the World Bank and IMF and received a $7 billion loan to manage the crisis. In return, the institutions required India to open up the economy by removing restrictions in various sectors, reducing the role of government, and removing trade restrictions.
What was the purpose of the New Economic Policy announced in 1991?
The New Economic Policy aimed to address the economic crisis and stabilize the Indian economy by implementing liberalization measures, removing restrictions in various sectors, reducing the role of government, and opening up the economy to global markets.
Which international institutions provided financial assistance to India during the economic crisis?
The World Bank and IMF provided a loan of $7 billion to India to manage the crisis.
What were some conditions imposed by the World Bank and IMF in exchange for the financial assistance?
The conditions included opening up the economy, removing restrictions in several sectors, reducing the role of government, and removing trade restrictions.
How did India respond to the conditions imposed by the World Bank and IMF?
India had no choice but to accept the conditions and announced the New Economic Policy, which involved implementing the required reforms to open up the economy and reduce government intervention in various areas.
What were the three main policy strategies of the New Economic Policy in 1991?
The three main policy strategies were Liberalization, Privatization, and Globalization (LPG Policy).
What was the purpose of the 1991 reforms compared to the reforms of the 1980s?
The 1991 reforms were more comprehensive and aimed to remove barriers to the entry of private firms and create a more competitive environment for the economy.
Which industries were reserved for the public sector after the 1991 reforms?
The industries reserved for the public sector after the 1991 reforms were defense equipment, atomic energy generation, and railway transport.
What changes were made in the financial sector as part of the 1991 reforms?
The major aim of the financial sector reforms was to reduce the role of the Reserve Bank of India (RBI) from regulator to facilitator. The reforms allowed the establishment of private sector banks and entry of foreign banks with certain conditions on Foreign Institutional Investment (FII).
What were the changes in taxes as a result of the 1991 reforms?
Since 1991, there has been a continuous reduction in taxes on individual incomes. The rate of corporation tax was also reduced, and procedures to pay income tax were simplified.
Which industries still required industrial licensing after the 1991 reforms?
Only a few product categories such as alcohol, cigarettes, hazardous chemicals industries, expensive electronics, aerospace drugs, and pharmaceuticals still required industrial licensing after the 1991 reforms.
What role did the market play in determining prices after the 1991 reforms?
In many industries, the market was allowed to determine the prices after the 1991 reforms.
What was the initial step taken regarding the rupee in the New Economic Policy of 1991?
The rupee was devalued against foreign currencies to increase the inflow of foreign exchange.
How are exchange rates determined after the devaluation of the rupee?
Exchange rates are usually determined by the market based on the demand and supply of foreign exchange.
What was the impact of abolishing import licensing under the New Economic Policy?
Abolishing import licensing promoted the efficiency of local industries, facilitated the adoption of modern technologies, and increased competitiveness in industrial production. Import licensing remained only for hazardous and environmentally sensitive industries.
What was the objective of the government’s disinvestment of public sector enterprises?
The government aimed to improve financial discipline and facilitate the modernization of public sector enterprises through the disinvestment process. This involved selling off equity of PSU’s (Public Sector Undertakings).
Why did the government initiate disinvestment under the New Economic Policy?
The purpose behind disinvestment was to improve financial discipline and facilitate the modernization of government-owned enterprises.
What industries were exempted from the abolition of import licensing?
Import licensing was abolished for most industries except for hazardous and environmentally sensitive industries.
What were the goals of promoting foreign investment and technology in the economy?
The promotion of foreign investment and technology aimed to enhance the competitiveness of industrial production and facilitate the adoption of modern technologies in local industries.
Who was chosen to head the Second Backward Class Commission?
Bindeshwari Prasad Mandal, a former chief minister of Bihar, was chosen to head the Second Backward Class Commission.
When did Mandal submit his report?
Mandal submitted his report on December 31, 1980.
What happened to the issue of the Mandal Commission after the submission of the report?
The issue remained in a dormant state for about a decade due to changes in government and political circumstances.
When did the implementation of the Mandal Commission recommendations get announced?
The then Prime Minister V P Singh announced the implementation of the Mandal Commission recommendations in 1990.
What was the response to the announcement of the Mandal Commission implementation?
The announcement witnessed violent protests across India, particularly in northern and western regions, and several students protested by self-immolation, leading to casualties.
What is the Indira Sawhney Case also known as?
The Indira Sawhney Case is also known as the ‘Mandal Case’ or the ‘Indira Sawhney Judgment’.
What did the Supreme Court uphold in the Indira Sawhney Case?
The Supreme Court upheld the 27% reservation for Other Backward Classes (OBCs) but introduced the concept of the creamy layer criteria and stated that caste alone is not sufficient to determine social and educational backwardness.
