In 1991 India got a balance of payment crisis which means that for our country daily running we import a lot of goods from foreign countries. Exchange results are out. Our government has only the money needed to run our country for only three weeks. The whole country economy is sunk so much that the international debt of our country has crossed more than 53% of our GDP. Today Pakistan and Sri Lanka are in a worse situation than our India in 1991. Old Bank International Monetary there is a situation where we have to scramble for funds and some development in 1991 when PV Narasimha Rao was the prime minister of our country the then finance minister changed all the economic policies and brought some new economic police to bring the country out of this terrible situation. There is no doubt that these decisions changed the future of our India because today the Indian GDP is Russia France. And developed countries like UK have risen to the level of competing with China which means behind it there are many revolutionary economic policies taken by the PV Narasimha Rao Government in 1991 and due to this we have achieved in these 20 years what we could not achieve in the 40 years of independence. If you want see this data once how was our growth before 1991 this graph indicates how our growth.
after 1991 but the point here is how all this was actually possible PV Narasimha Rao garu and Manmohan Singh what are the major changes made in our country economy
How did they help our country development I am going to tell you guys today how PV Narasimha Rao government brought India out of crisis in 1991 we need to know why first India went into such a big crisis August 24 Own 1608 East India Company entered our country to trade spices in India and then slowly defeated the kings here and looted the wealth of the kingdoms. They ruled us for about 100 years our country leaders who understood that it was to allow business in our country after independence of our country in 1947 they followed the socialist system in India which means that all the core industries infrastructure and power in the country are mainly in the hands of the government so many private companies can do business. There are less opportunities. If any private company wants to do their business in India they would face many difficulties like rules regulations and license. So due to this no foreign investment comes to India and no foreign company likes to do their business in India all the core industries needed by the country were also in the hands of the government, that is electricity, steel, crude oil, cement, coal, natural gas, fertilizers, these are called core industries. But the point here is that core industries are kept in the hands of the government and private companies are not given a chance so the foreign investment in India has decreased and the industrial sector here has slowly weakened.
According to this law if foreign companies want to do their business in India they should give sixty percent share to Indians.
And they have to close their business in the country and leave so the farm companies like Coca cola have agreed to these rules and closed their business in India. Due to the emergency imposed by Indira Gandhi our country economy lost a lot of power and along with this the reason for India decline is the Gulf War in 1990 which was Iraq in 1990 for America. There was a war between them if they beat us what do we think Due to the war the prices of crude oil have increased all over the world and if we think that the economy of our country is not good the situation would have come to buy money. So due to this the value of the foreign exchange results with India fell to only 2500 crores. This money can run our country for only three weeks but the then Prime Minister Chandrasekhar went to the IMF for that loan. IMF means International Monetary Fund but here you need to know one thing Chandrasekhar Garu became the Prime Minister from a party. But this party does not have a complete majority in the Parliament even though it is the PM with the support of the Congress Party Chandrashekhar stepped down from the post of Prime Minister in 1991 when the Congress Party withdrew its support. If you are drowning and looking for money or new debts on the other hand the right Prime Minister for the country or in a turbulent time suddenly PV Narasimha Rao from the united Andhra Pradesh was sworn in as the Prime Minister of India.
Now the challenge before him is that he needs a financial expert to stabilize the country economy immediately so the person he saw was Mr. Manmohan Singh In 1991 PV Narasimha Rao appointed Manmohan Singh as Finance Minister in his cabinet but the reason why he selected Manmohan Singh is that before becoming the Finance Minister Manmohan Singh had worked as an Economic Advisor to the Indian Finance Ministry, as a Secretary and also as a Governor of the RBI so he has a lot of knowledge. Our country economy has completely changed within a few years but now let us see the steps and policies taken by PV Narasimha Rao and Manmohan Singh for this some of the step number one Rupee Guys is a little complicated. Listen carefully what is the main problem we faced in 1991 we do not have money to import so now if we want this money we have to borrow one or we have to earn that money ourselves. Since the government is already in debt, the government has come up with a plan to generate its own money without incurring new debt. That is our Indian rupee has been devalued by 20% before the dollar which means that its value has been reduced. For example one dollar has become equal to one hundred rupees. I think it is not that much but I am saying that to make it easy to understand. So if one dollar is equal to 100 rupees if the value of the rupee is depreciated by 20% then one dollar is equal to It will be equal to 120 rupees which means that our rupee will depreciate against the dollar
But what is the advantage of this Let me tell you that the exports from our country to foreign countries will increase tremendously. Let me tell you how when the value of our country currency decreases then every product manufactured in our country will be found very cheap in the international market to understand this and let us take dal as an example once a dollar used to fetch 100 rupees worth of dal but after depreciating the rupees flour percentage the same dollar now fetches 120 rupees worth of dal. It means that if we look at the price of pulses in dollars then everything manufactured in India will be available at a very low price in the international market then the exports from our country will increase and money will come to our country from abroad do you understand we can import goods This is called balance of payment in economic terminology,
do you understand If you don’t understand this tabular concept again because it is very important to understand but due to devaluing the currency that is reducing its value there are some disadvantages as well which are Indian products are available cheaply in the international market and the cost of foreign goods increases in India. And along with this, inflation in India will also increase. Listen carefully. One important thing you need to know here is that our enemy country, China, is also devaluing their currency and increasing their exports by making their goods cheaper abroad so because of this the goods made by China are very cheap in any country in the world can be found
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