In June 1991, India's foreign currency assets could finance imports for about:

Two weeks. Barely enough to pay for two weeks of imports.

Inflation in August 1991 reached:

16.7%. Annual inflation touched 16.7%.

Abolition of government licence for business activity. Most industries no longer need a licence.

Under the new policy the state acts mainly as a:

Facilitator. It became a facilitator, co-ordinator, inspirer and supervisor.

Which Act was abolished to encourage industrial growth?

MRTP Act. Abolition of MRTP removed approval requirements.

Maharashtra State Board · HSC Commerce · Class 11 (Std XI)

Class 11 Economics Chapter 9: Economic Policy of India since 1991

Short notes, key concepts, quick revision and practice MCQs with answers

A severe economic crisis in 1991 led India to adopt the New Economic Policy, which reduced government controls and opened the economy to private and foreign investment.

Key concepts: Economic Policy of India since 1991

Crisis of 1991: Foreign currency assets were barely enough to finance two weeks of imports and inflation hit 16.7% in August 1991.
Role of the state: From controller and regulator to facilitator, co-ordinator, inspirer and supervisor.
Objectives: Globalisation, lower inflation, correcting the balance of payments, higher growth, more forex reserves, lower fiscal deficit and more private sector participation.
Delicensing: Abolition of licences: only four industries now need compulsory licensing (aerospace and defence electronics, industrial explosives, hazardous chemicals, cigarettes).
MRTP Act abolished: Large houses no longer need central approval for expansion or mergers, which encouraged industrial growth.
Small sector and foreign investment: Investment limit of the small sector raised from Rs 1 crore to Rs 5 crore; foreign investment encouraged.

Quick revision: important points

NEP = New Economic Policy of 1991.
Fiscal deficit: government spending is greater than its revenue.
The process had begun in 1985 but gained momentum in 1991.

Practice MCQs with answers

In June 1991, India's foreign currency assets could finance imports for about:
1. Two weeks
2. Two years
3. Six months
4. Five years
Show answer
Answer: A. Two weeks
Barely enough to pay for two weeks of imports.
Inflation in August 1991 reached:
1. 6.7%
2. 10.5%
3. 16.7%
4. 26.7%
Show answer
Answer: C. 16.7%
Annual inflation touched 16.7%.
Delicensing means:
1. Adding licences
2. Abolition of government licence for business activity
3. Nationalisation
4. Higher taxes
Show answer
Answer: B. Abolition of government licence for business activity
Most industries no longer need a licence.
Under the new policy the state acts mainly as a:
1. Controller
2. Facilitator
3. Sole producer
4. Ban authority
Show answer
Answer: B. Facilitator
It became a facilitator, co-ordinator, inspirer and supervisor.
Which Act was abolished to encourage industrial growth?
1. MRTP Act
2. Companies Act
3. Contract Act
4. Sale of Goods Act
Show answer
Answer: A. MRTP Act
Abolition of MRTP removed approval requirements.

All Class 11 Economics chapters

Chapter 1: Basic Concepts in Economics
Chapter 2: Money
Chapter 3: Partition Values
Chapter 4: The Economy of Maharashtra
Chapter 5: Rural Development in India
Chapter 6: Population in India
Chapter 7: Unemployment in India
Chapter 8: Poverty in India
Chapter 9: Economic Policy of India since 1991
Chapter 10: Economic Planning in India

Class 11 Economics notes: all chapters