Measures Adopted by Government of India to Correct its Adverse BOP

Measures Adopted by Government of India
to Correct its Adverse BOP

Government of India has taken the following measures for correcting the BOP problems –

1. Full Convertibility of Rupee in the Current Account – Government of India has made rupee fully convertible in the trade account from 20th August, 1994. Unified exchange rate system has been enforced after abolishing the dual exchange rate system for imports and exports. The Finance Minister has declared the rupee fully convertible in the capital account in the budget of 1994-95.

2. Liberalisation of Imports – Government of India in accordance with the commitments made to World Trade Organisation, declared some ralaxations in imports. Various goods were transferred from restricted list to Special Import Licence and also goods from this list were shifted to Open General Licence. The Central Government has removed quantitative restrictions on imports of 714 products from 1st April, 2000, and it further removed the restrictions on the imports of the remaining 715 products from April 1, 2001.

3. Liberalisation in Gold Import Policy – Under the gold import policy NRIs and Indian tourists coming from abroad can bring gold upto 10 Kgs, while coming to India.

4. Establishment of Export Oriented Units (EOUS), Export Processing Zones (EPZs) and Special Economic Zones (SEZs) Schemes – The Central Government has liberalized the scheme for EOUS and (EPZs). Agriculture, poultry, fisheries and dairying have been included in (EOUS). EPZ units are allowed to export through trading and star trading houses.

5. Export Promotion and Import Substitution Measures- Government of India has adopted measures for export promotion and import substitution. The

6. Liberalisation in Foreign Investment Policy- Government adopted liberal foreign policy to attract foreign investments.

7. Value Aided Advance Licensing System – Government of India has launched a new value aided based Advance Licensing System in which duty free imports of raw material components are permitted upto a certain percentage of declared export value.

8. Export Promotion Capital Goods Scheme (EPCG) – This scheme was commenced to permit the exporters to import capital goods on concessional import duties

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