Reforms initiated by Manmohan Singh

Fiscal Reforms

• Fiscal Discipline - The government set the target of bringing down fiscal deficit to 3-4% in the medium- term.
• It set the target of bringing the fiscal deficit target of 1992-93 to 5%, down from 6.2% in the previous year.
• Rationalising government spending - Through major cuts in subsidies and non- planned expenditures.
• Thus, the government announced major tax reforms to boost its tax revenue.

Trade Policy Reforms

• Rupee Devaluation - Rupee was devalued 18% to make Indian exports competitive.
• Import reforms – Import restrictions for exporters were reduced.
• Import of capital goods was allowed without the need of government permission.
• Export reforms - Exports trading houses were allowed to have 51% foreign equity.
• The government rationalised tariff structure and removed of quantitative restrictions on imports.

Monetary Policy Reforms

• Banking reforms – Setting of interest rates by lenders were deregulated, new private bank licences issued.

• Public listing of banks and moving to a new framework of recognition of accounts and introduction of capital adequacy norms recommended by Narasimham committee.
• Tighter policies - Tighter monetary and credit policy was envisaged to contain the current account deficit and to reduce non-discretionary imports.
• Introduced new monetary tools – 364-day T-bills, 10 and 15-year securities were introduced for the government to borrow from the market.

Industrial Policy Reforms

• Licensing reforms – Industrial licensing was abolished for all industries except 18 environmentally-risky sectors
• Amended Monopolies & Restrictive Trade Practices - MRTP Act was repealed to eliminate the need for prior approval for capacity expansion by companies.
• Increased Private role– Greater private sector participation was allowed in core and basic industries.
• Decreased Government control – Number of industries reserved for the public sector was reduced to 8 from 17.
• Small-scale enterprises were allowed to sell 44% equity to large companies.

FDI Policy reforms

• The limit for foreign equity holding raised from 40% to 51% in priority sector industries
• Foreign Investment Promotion Board was established to streamline the process of approval of FDI.

Telecom Policy reforms

• Introduced a unified access licensing regime for telecom services across the country in his tenure as PM between 2004-14.