Prime Minister Narendra Modi on Saturday said major global firms are looking at India as a major investment destination, which is reflected by a robust inflow of Foreign Direct Investment (FDI) last financial year, and through ‗Atmanirbhar Bharat Abhiyan‘ (Self-Reliant India initiative) the country is shifting its focus from ‗Make in India‘ to ‗Make for world‘. He said Independent India should be ―vocal for local‖ and asked citizens to glorify Indian products to promote ‗Atmanirbhar Bharat‘. Unveiling his vision of a Self-Reliant India, the Prime Minister said that the government has unveiled over Rs 110 lakh crore National Infrastructure Pipeline (NIP) to boost the economy and create jobs. ―In order to rapidly modernise India, there is a need to give a new direction to overall infrastructure development,‖ he said, adding that over 7,000 projects under NIP have been already identified.
―This will be, in a way, a new revolution in the field of infrastructure. This is the time to end silos in infrastructure. There is a plan to connect the entire country with multi-model connectivity infrastructure,‖ he said. NIP will play a crucial role in overcoming the adverse impact of Covid-19 on the economy and catapult the economy in a higher growth trajectory, he said. The government on December 31 last year unveiled the NIP with an aim to make India a $5 trillion economy by 2024-25. The focus of the infrastructure pipeline is to accelerate growth and create employment in both urban and rural areas.
Source: Excerpt from Hindustan Times, written by Rajeev Jayaswal. (Dated 15th August, 2020)
Which of the following events can be seen as the stepping stone for the growth of the Foreign Direct Investment (FDI) in India?
Correct Answer :
The Economic liberalisation in the year 1991.
Solution :
The correct answer is: The Economic liberalisation in the year 1991.
Explanation and Logical Reasoning:
1. Historical Context of FDI in India: Prior to 1991, India maintained a highly regulated economy with strict controls on foreign trade and investment (often referred to as the License Raj). Foreign investments were heavily restricted to protect domestic industries.
2. The 1991 Economic Reforms: In July 1991, faced with a severe balance of payments crisis, the Indian government introduced major economic reforms focusing on Liberalisation, Privatisation, and Globalisation (LPG). These reforms opened up various sectors of the Indian economy to private and foreign investors, drastically reduced import tariffs, and simplified FDI approval processes.
3. Stepping Stone for FDI Growth: The 1991 liberalisation policy served as the foundational stepping stone and major structural turning point that allowed Foreign Direct Investment (FDI) to flow into India in a significant and sustained manner. Subsequent initiatives, such as sector-specific cap increases and programs like "Make in India", built upon the groundwork laid down by the 1991 economic reforms.
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