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Financial Sector Reforms in India

work, Entrepreneurship, and finance

The performance of the Indian economy in the last decade has been remarkable. This can be partly attributed to the multi-sector structural reforms, undertaken simultaneously in 1991, aimed at enhancing productivity, efficiency and international competitiveness of the economy. The reforms in the financial sector have been most effective. The main thrust of the financial sector reforms has been the creation of efficient and stable financial institutions and development of the markets, especially the money and government securities market. In addition, fiscal correction was undertaken and reforms in the banking and external sector were also initiated. The reforms have been undertaken gradually with mutual consent and wider debate amongst the participants and in a sequential pattern that is reinforcing to the overall economy. The financial markets have developed and are more integrated after the reforms, and regulatory and supervisory institutions have been set-up. The reforms, though slow paced initially but well synchronized, have begun to yield results. The economy has recorded consistently high growth rates, avoided any adverse impact from the South East Asian Crises, built substantial foreign exchange reserves, pre-paid some of its external debt and restructured its domestic debt.

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Charan Singh
Publication Date
February, 2005