Reform Measures

To save our country from the serious situation of crisis Government of India took the following reform measures: 

• Firstly, the fiscal deficit was reduced, and the New Industrial Policy was announced in July 1991.  
• The abolition of the Industrial Licensing Policy was established with the amendment of the MRTP Act.
• There was an open entry for the private sector to areas that were earlier public sector.
• There was a rise in foreign equity holders from 40% to 51%.
• The government set up the Foreign Investment Promotion Board(FIPB).
• Introduction of Indian development Bond scheme to get funds from IMF.
• Buying back of gold, pledged with Bank of England and Bank of Japan.
• Measures were laid to control the imports and encourage more export.
• There was an introduction of Liberalized Exchange Rate Management System.
• Government eliminated import licenses on capital goods and abolished export duties.

Economic environment refers to all these forces that have an economic impact on business activities. We know that business is an economic organization. Therefore, its survival and growth are dependent on economic factors. The economic environment includes various factors, such as inflammation, interest rate, price level, money supply in the market, etc. These factors serve a business as an opportunity or as a threat to a business. Therefore, management always remains active to grab the opportunity and tries to change threats into opportunities.