INDIAN ECONOMY AFTER 15 YEARS
It has been an eventful 15 years,the economy has swung upwards in fits and
starts,helped by a reform policy that opened india and its people to theworld .the
main cause behind the resurgence of our economy is the reform policy ,which is
possible only due to new industrial policy, which had announced by P.V.Narsimha Rao
government on 24 th july 1991.The new industrial policy had altered the rulesof doing
business in india .
In 1991 Prime minister P.V.Narsimha Rao had bid good bye to Nehruvian
'socialism'.In fact Rao's simple words ,Industrial licensing will henceforth be abolished
for all industries except those specified ,irrespective of level of investment had singled
the end of an era and beginning of another one.
The same policy statement also made it clear that foreign investment would not
just be welcomed but wooed ,that the public sector once envisioned as attaining the
commanding heights of the economy would be asked to compete with private rivals in
most sectors and that some equity in PSUs would be divested .Later in a day
Manmohan Singh ,then Finance Minister in his budget speech would announce that the
peak customs rate would be cut from 300 to 150% .He also shocked the politicians
across the board by freeing the pricing of several fertilisers and hiking urea prices by
40%. The era of economic reforms had begun..Fifteen years on ,we have been through
four other prime ministersand three other finance ministers .More significantly ,not one
of the subsequent government has been a singlty government, but the reforms have
carried on .the pace may have varied , but the direction has not even when there have
been government supported by the left as in 1996-98 and since MAY 2004 .
The macroeconomic no.s do not make you feel to bad either .in
JUNE 1991, the forex reserve could barerly pay for two weeks of imports . Today India
could fund on entire years imports from its reserves.That is despite the imports having
risen almost six fold in this fifteen years .Inflation which was at double digit levels
then ,now touches 5% in a bad year.
But not all of the early promise has been transelated into action on
the ground .Disinvestment for instance having built up steam initially has been in a cold
storage for the last few years . Labour reforms have not even really begun.The extent of
FDI in various sectors steel remains contetious.Perhaps most importantly, the push that
the reforms should have given to physical and social infrasructure buiding has been
feeble at best.
Fiscal correction after regorous start has often falterd, infact even
come to a grinding halt at times . 15 Years of reforms have transformed India into an
active economy . It has got confidence while changing India's image globally. But there
is lots more to be done.In my view there should be no PSUs.There should be greater
liberalisation.