Why did RBI have to change its role from controller to facilitator of financial sector in India?
Prior to liberalisation, RBI used to regulate and control the financial sector that includes financial institutions like commercial banks, investment banks, stock exchange operations and foreign exchange markets. With the economic liberalisation and financial sector reforms, RBI needed to shift its role from a controller to facilitator of the financial sector. This implies that the financial organisations were free to make their own decisions on many matters without consulting the RBI. This opened up the gates of financial sectors for the private players. The main objective behind the financial reforms was to encourage private sector participation, increase competition and allow market forces to operate in the financial sector. Thus, it can be said that before liberalisation, RBI was controlling the financial sector operations whereas in the post-liberalisation period, the financial sector operations were mostly based on the market forces.
Match the following:
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1. Prime Minister 3. Quota 4. Land Reforms 5. HYV Seeds 6. Subsidy |
A. Seeds that give large proportion of output C. Chairperson of the planning commission D. The money value of all the final goods and services produced within the economy in one year. E. Improvements in the field of agriculture to increase its productivity F. The monetary assistance given by government for production activities. |
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Welcome to the NCERT Solutions for Class 11 Economics - Indian Economic Development - Chapter . This page offers a step-by-step solution to the specific question from Excercise 1 , Question 3: Why did RBI have to change its role from controller to facilitator of financial sector in India?....
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