Which of the following is not a part of new economic reforms?

The correct answer is Centralization.

Key Points

• Indian economy experienced an economic crisis in 1991.
• The foreign currency assets declined to such an extent that it was barely enough to finance two weeks of imports.
• The annual rate of inflation reached 16.7% in August 1991.
• The government expenditure was greater than its revenue due to defence expenditure, subsidies, interest on loans, etc.
  • The positive effects of the socialistic pattern of society were on the verge of decline.
  • On this ground, it was necessary to bring new changes to the economy. Hence, the Government of India adopted a New Economic Policy (NEP) in 1991.
  • It is also known as LPG i.e.
    1. Liberalization
    2. Privatization
    3. Globalization.
• The process of new economic policy which started in 1985 got momentum in 1991.

Additional Information

• Liberalization:
  • Liberalization refers to 'economic freedom' or 'freedom for economic decision'.
  • It means producers, consumers, and owners of factors of production, are free to take the decision to promote their self-interest.
  • Indian government accepted policies suggested by the IMF for economic liberalization.
    • Macroeconomic Stabilisation :
      • Inflation control
      • Balance of Payment adjustment
      • Currency devaluation
    • Structural Adjustment Programs :
      • Trade and capital inflow reforms
      • Industrial reforms
      • Tax reforms
      • Fiscal reforms
      • Monetary and financial reforms
      • Privatization
• Privatization: 
  • Privatization means the transfer of ownership from the public to the private sector.
  • It refers to a process that reduces the involvement of the public sector and increases that of the private sector in economic activities.
  • Measures :
    • Disinvestment
    • Dereservation policy
    • Establishment of BIFR (Board of Industrial and Financial Reconstruction)
    • Creation of National Renewal Board (NRB)
    • Navratna Status
• Globalization:
  • Globalization means integrating the economy of a country with the world economy.
  • Measures : 
    • Removal of quantitative restrictions
    • Encouragement to Foreign Capital
    • Convertibility of Rupee
    • Foreign collaboration
    • Long term trade Policy
    • Encouragement to Exports