Question

Write a short note on New Economic Policy.

Hint:

Remember: NEP 1991 = LPG (Liberalisation, Privatisation, Globalisation).

Answer 1

Concept: The New Economic Policy (NEP) refers to the economic reforms introduced in India in 1991 to improve economic performance and promote growth.
Step 1: Background.
India faced a severe economic crisis in 1991, including high fiscal deficit, low foreign exchange reserves, and inflation.
Step 2: Main components.
The New Economic Policy is based on three major reforms:

• Liberalisation $\rightarrow$ Removal of restrictions on industries
• Privatisation $\rightarrow$ Increased role of private sector
• Globalisation $\rightarrow$ Integration with world economy

Step 3: Objectives.

• To increase economic efficiency
• To attract foreign investment
• To promote industrial growth

Step 4: Impact.

• Increased competition and productivity
• Growth of private sector
• Expansion of international trade

Step 5: Conclusion.
Thus, the New Economic Policy transformed the Indian economy by introducing reforms that enhanced growth and global integration.