The Economic Reforms in India Since 1991

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It has been over twenty years since the unlikely combination of P.V. Narasimha Rao as Prime Minister and his Oxford-educated finance minister finally liberated (so they claim) the Indian economy from overwhelming government control. It was a rotting edifice based on institutionalized scarcity, wildly illogical price controls, hilariously shoddy products, protectionism and endemic underperformance was swiftly demolished in 100 days of inspired action. The Socialist Utopia powered by the fevered imaginations of Nehru and Mahalanobis which seemed forever doomed to rot at the so called ‘Hindu Rate of Growth’ was now dead and buried, just like them. In the iconic Union Budget of 1991, Singh tabled the New Economic Policy or NEP, which overturned decades upon decades of inefficient policies. Some features of this policy included abolition of industrial licensing, de-reservation of industries for the public sector, removal of the threshold limit on assets, and most interestingly, automatic approval for foreign investment up to 51% in specified, high priority industries. Stabilization was also a priority, with the new measures like abolishing the export subsidies and restructuring the fertilizer subsidies reducing the crippling fiscal deficit from 8.4% in 1991 to a slightly more manageable 5.7% in 1993. What were the effects of these reforms on daily life? Indeed, they were manifold. Average real incomes have quadrupled (Rajadhyaksha, Open Sesame, 2011), with the concomitant rise in standards of living. Consumer spending came into its own and it became easier for individuals to borrow from banks. Banks, in turn began to offer better interest rates and schemes for car, house and personal loans. As a result, ownership of consumer go... ... middle of paper ... ...over a given period of time through the extent to which the distribution of income or consumption expenditure among individuals or households within an economy deviates from a perfectly equal distribution, worsened between 1993 and 2005, the difference- from 0.30 to 0.32 overall, and from 0.28 to 0.29 in Rural India (from 0.34 to 0.37 in Urban India) –suggests that the impact is less severe than what critics made it out to be. (Source: World Bank data) So things aren’t so bad after all. BIBLIOGRAPHY http://data.worldbank.org/country/india Human Development Report 2010 – UNDP New Economic Policy: Indian State and Bureaucracy , C. P. Bhambhri, Social Scientist, Vol. 24, No. 1/3 (Jan. - Mar., 1996). World Bank Report on Malnutrition, 2005 March of The Elephant, Salil Tripathi, Mint: The 1990s, 2011 Open Sesame, Niranjan Rajadhyaksha, Mint: The 1990s, 2011

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