Tuesday, 23 August 2011

Liberalisation in India.


India’s serious efforts at economic reform had started in 1991, when Rao government initiated a fresh wave of reforms. Since July 1991, it devalued the currency and made it partially convertible; reduced quantitative restrictions on imports; reduced import duties on capital goods; cut a number of subsidies, including that on fertilizers; progressively liberalized interest rates; abolished production license for most of the industries; ease restrictions on repatriating dividends and royalties; established a partial tax exemption on profits from export sales; allowed a partial sale of shares in selected public enterprises; reduced restrictions on foreign trading companies; revised the system of personal income tax and so on. The years of reform showed creditable progress with the country recording a fast recovery from a deep macro-economic crisis. The growth rate of Gross Domestic Product recovered to 5.3% by 1992-93 from the abysmal 0.8% in 1991-92. In the next few years the growth rate averaged at around 7.5%--close to that of powered performers of East Asia. We in the year of 2006-07 became the second fastest growing major economy after China. Exports recovered and exports earnings increasingly paid for the major part of imports. The foreign exchange reserves achieved a respectable look. Encouragement to the foreign investment resulted in foreign direct investment increasing at the rate of nearly 100%.
          So far so good ! But how have the reforms affected the people? the masses? The ‘ average citizen ’ ? Critics of the reform, most of them from the Left, charge that the process being followed is anti-poor, that it helps only the rich to get richer. The major challenges before Indian economy are to increase the agricultural and industrial strength of the country. Beyond all these lies the character of the country, its people; our attitude to change and to work. Economic reforms cannot merely be a matter of policies nor can economic efficiency be an automatic product of the right economic policies. If India has to forge ahead, the power of vested interest and the resultant corruption in every field including--education--must be curbed.

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