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Unit-4 Planning, Governance and Institutions

This unit outlines the growth performance in each plan, the shifts in plan priorities and strategies, and the shifts in major economic policies leading to the present regime of economic reforms with a central place to market induced investment and growth.

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What were the major recommendations of Narasimham Committee (1991)? 

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Learning Pundits Content Team

Written on Jun 26, 2019 2:50:32 PM

The Narasimham Committee (1991) made recommendations which have come to set in motion major reforms in the financial system.

The recommendations were aimed at:

 (i)  ensuring a degree of operational flexibility,

 (ii)  internal autonomy for the public sector banks, and

 (iii)  greater degree of professionalism in banking operations.

Some of the major recommendations of this committee are:

 i. Reduction of Statutory Liquidity Requirements (SLRs) as well as Cash Reserve  Ratio (CRR). In the view of the Committee, high SLRs and CRRs are idle lock  up of productive resource of the banks.

 ii.  phasing out of directed credit programmes, which meant withdrawing  differentiation of ‘priority sector’. According to the Committee, agriculture and  small industry had already grown to a mature stage not requiring any special  support.

 iii.  the level and structure of interest rates should be broadly determined by market  forces.

 iv.  bring about greater efficiency in banking operations by a substantial reduction  in the number of public sector banks through mergers and acquisitions.