The document discusses two stages of economic reforms. The second generation reforms aim to ensure the state plays its proper role in a market economy by creating a level playing field for all sectors and implementing social policies to alleviate poverty and provide equal opportunity. These reforms focus on strengthening financial systems, encouraging good governance, adjusting fiscal composition, and deeper structural reforms such as civil service reform and labor market reform.

20. Two stages of Economic Reforms

42.  The "SECOND GENERATION" reforms are aimed at "ensuring that the
State fulfills its proper role in a market economy, by creating a level
playing field for all sectors and implementing policies for the common
good, particularly social policies that will help to alleviate poverty and
provide more equal opportunity".
 These reforms focus on 4 areas in particular:
 The financial system - paying greater attention to the soundness
of banking systems and encouraging greater transparency, better
data dissemination and the liberalization of capital accounts;
 "Good governance" - by reducing corruption, encouraging
transparency of public accounts, improving public resource
management and the stability and transparency of the economic
and regulatory environment for private sector activity;
 Composition of fiscal adjustment - reducing unproductive
expenditures such as military spending and focusing spending on social
sectors; and
 Deeper structural reform - including civil service reform, labour
market reform, trade and regulatory reform, and agrarian reform.

44. Objectives of II-G Reform measures in India
1. Strengthen the foundations of growth of our rural economy,
especially agriculture and allied activities.
2. Nurture the revolutionary potential of the new knowledge-based
industries such as InfoTech, biotechnology and pharmaceuticals.
3. Strengthen and modernize traditional industries such as textiles, leather,
agro processing and the SSI sector.
4. Mount a sustained attack on infrastructure bottlenecks in power, roads,
ports, telecom, railways and airways.
5. According the highest priority to human resource development and
other social programmes and policies in education, health and other
social services, with special emphasis on the poorest and weakest
sections of society.
6. Strengthen our role in the world economy through rapid growth of
exports, higher foreign investment and prudent external debt
management.
7. Establish a credible framework of fiscal discipline, without which other
elements of our strategy can fall.

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