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Last updated: 26 Jul, 2016  

India.Growth.9.Thmb.jpg 25 years of reforms

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Bikky Khosla | 26 Jul, 2016
India's economic liberalization began in July, 1991 and it is now 25 years since our economic policy was completely overhauled. The transformation began with a crisis, however. The economy was near to bankruptcy; foreign exchange reserves were too weak to finance more than three weeks' worth of the country's imports. As part of an IMF bailout deal, tonnes of gold was transferred to Union Bank of Switzerland and Bank of England as collateral; the rupee was devalued; economic reforms were forced upon. But it was a blessing in disguise. The reforms, besides helping the country to come out of the BoP crisis, set a new platform for future generations of reforms.

The Indian economy became eight times bigger in 2015 than it was in 1991, with GDP at market prices growing from $274.8 billion to $2073.5 billion. Our exports of goods and services grew nearly 20 times, with the sector's contribution to GDP growing from  8.3 percent in 1991 to 22.9 percent in 2014. Annual GDP growth was 1.1 percent in 1991 while today it stands at 7.6 percent. Per capita income grew over 13 times from what it was in 1991. These data sets clearly show how the economy has transformed itself in the last 25 years. The first generation of reforms was later followed by the second, third and fourth generations of reforms, which played a key role in lifting the economy to today's position.

Economic reforms hit a bump, however, once the UPA came to power in 2004. It was due to the nature of the coalition government, with the Left front supporting it from outside. The situation changed little when the UPA came to power again in 2009 and coalition politics continued to hold economic reforms on several fronts, including LPG pricing, GST and DTC, FDI in retail, etc. In addition, as pointed out by the Economic Survey 2011-12, several high-profile corruption scandals during the period led to a sense of caution among civil servants and this further fueled policy stagnation.

The scenario fortunately changed with the coming of the Modi government to power. Several steps have been taken since then, including steps to improve the ease of doing business, revamp the tax administration, curtail inspector raj, opening up of several sectors for FDI, legislation to auction coal and other natural resources, the Insolvency and Bankruptcy Act, 2015, fiscal consolidation, cooperative federalism, social sector initiatives, repeal of more than 1,000 redundant laws, and so on. It is true that we still have a long a way to go, but what has been achieved until now is certainly encouraging.

I invite your opinions.
 
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actual situation v/s fake situation
jitender kumar | Mon Aug 1 12:06:14 2016
i do agree on few points and the data presented in the above given article. our prime minister is doing many things for the betterment of our country i really appreciate his efforts, but the things are not actually happening on on grounds. like :- Rs. 12 life insurance for poor people. there is no proper guide lines for claim of the person who suffered or their relatives who deceived in some accident. :-corruption is still happening at state level, if we go to any property registry office, RTO office, even in district hospital. every one knows about this but no action is taken by any officer, as they themselves are involved in the same. :- and lot more issues. our prime minister is giving a right track to move, but senior level officers and their team ruined every step on the track.


Good review
Srinivasan | Sat Jul 30 05:01:39 2016
We need to keep watching on this statics for our dash board to monitor.


Indian business situation
MR. SANJAY MADHUKAR KALSEKAR | Fri Jul 29 06:31:32 2016
Analysis is very good but still Modi govt is not set path for business.Still its very difficult to do business in .Rich becomes richer poor becomes poorer. Very difficult to survive in business India.Policy is fluctuated in all sector.


World too moved on, faster
subramonium rajagopalan | Fri Jul 29 05:16:17 2016
True that India improved in the last quarter century. But world too moved on, a bit faster. Attempts are still not full hearted and faith in people is still not fully visible. Moves for economic restructuring must be targeted to achieve current world standards, even though some inspection raj is bound to go !


Fdi investment in SSI
Mahesh Mehta | Thu Jul 28 19:01:13 2016
Daily being small manufacturer-trader we are reading that FDI are here-but I do not understand after this here how much SSI benefit-we see large scale r benefiting-also hi light how SSI can attract funds at law rate and what r the rules for repayment to investor-mainly in field of plastics and packaging.


Good Story to tell the World
Muzi | Thu Jul 28 04:40:19 2016
This is of one the good stories to tell,it true that good policy in a country can assist the country and businesses to achieve more,here in South Africa we got Proudly South African whereby we are encourage to buy South African product in contributing to the growth of our economy and creating employment.


Curtail Inspector Raj
J.N.Thakkar | Wed Jul 27 11:42:45 2016
Today even in Excise department employees come very late around 11.30 a.m. and leave at 5.00 p.m. There is no bio metric attendance. Similar is the case with Custom department when you go for documentation of Imported cargo. Suggestion: Bio metric attendance should be introduced in all government offices.


luck favored
KKRAO | Wed Jul 27 07:44:57 2016
We Indian are superstition. Luck favored him and his governments too. He has not done much till now. he is maintaining status-co. Under his supervision and articulation all ministers are sincere working. That is blessing.


Very good Analysis
PANKAJ VYAS | Wed Jul 27 05:45:35 2016
Cheers . Very good Analysis of last 25 Years Economy. Short -sweet - unbiased -non political . Mr. Bikky Khosla deserves appreciation & compliments for his excellent analysis. Pankaj Vyas


Reform the IAS culture
J. C. Sekhar | Wed Jul 27 05:42:12 2016
Modi Government has not done any reforms. He says ease of doing business in India but makes it difficult of doing business in India. Only way to make ease of doing business in India is reform the IAS culture of holding powers to themselves. This group is the worst Enemy of this Country.


Future Reforms !
Nilesh Patel | Wed Jul 27 05:28:13 2016
Excellent ! But lacks snap of Statistics to support article. Secondly should focus more on things (reforms) to do rather than embracing glorious history.


Improvement in living standard
S.R. Sharma | Wed Jul 27 04:58:08 2016
After Modi's government we achieved targets & to much improvement in living standard specially in villages. Still more improvement require i.e. Higher Education.Hospitality,Roads Electricity & water supply in time to growth of villagers.


Indian business scenario
SANJAY MUKHERJE | Wed Jul 27 04:09:19 2016
India's economy is more inclined to trading, instead of a manufacturing hub? Kindly comment.

  Re: Indian business scenario
subramonium rajagopalan | Fri Jul 29 05:20:32 2016
This is true. R&D culture is totally missing. Intellectualism is required in R&D. Industries do not have faith in the intellectual capability of our researchers. Nor do they want to spend anything on it. They prefer to BUY old technology. This is permanent backwardness.


Reforms
Durgaprasad. sv. | Wed Jul 27 03:05:54 2016
Whoever may be in power to continue reforms started by the then late pm Mr. P V Nnarasimha Rao and Mr. Manmohan Singh FM.. now focus needed to strengthen rural economy esp agricultural sector and allied industries. no proper focus by last 7 years on this many starvation, debt oriented deaths, still happening. We need implementations not words... commitment by (T)rulers...needed.


A welcome change - Really ?
Pradip S Sachan | Wed Jul 27 02:54:11 2016
It is without any doubt, that the reforms of 1991 have played a major role in transforming India into a new economy. Like any change, this also came with pains, tribulations and challenges. We have done well in these 25 yrs and definitely can pat our backs for this. However, while I agree with your statement that "the scenario fortunately changed with the coming of the Modi government", I feel that this government could have done better in maintaining a social equilibrium, so essential to India's national character and future prosperity. History has been a mute spectator that nations which have pursued divisive policies have suffered pain later. Do we really need to follow this path, where some segments of our society feel let down, threatened and even disillusioned. A democratically elected government is supposed to be "by the people, of the people and for the people". It cannot and should not be allowed to be usurped by few vested interests to pursue their own narrow social narratives and objectives. Nations are built by their people so that they can pass on the baton to the next generation of a world better than they came into. Looking at events & incidents of the last few years, can we claim to be passing on a better legacy to our children Time for all of us to pause, retrospect and make conscious choices for the future. While, it is good to be proud of what we have achieved until now, we should rest in the laurels of our past. Future is what beckons us.


Reforms
Manish Rathi | Wed Jul 27 02:01:53 2016
Modi government work is silently killing the parallel economy concept, which will take time to get the result. Business house dealing in such trade were frustrated and are blaming the government, they need to understand the fact, it is for the betterment of whole country. India is not a poor country but half of the fund are circulating only for the benefits of few. Its a good initiative and I personally salute them for such initiatives. The result of the same will start showing within 2 years but people have to have trust on him. Jai Hind


Export Performance
R S Mani | Wed Jul 27 01:19:02 2016
In spite of our getting precious foreign exchange through transfer of funds by Indians working abroad and extending I T services and export, besides a bleak percentage of export of goods, we cannot sustain this present position for a long time due to reason of recession and down trend of economy in Foreign countries including America ....America First Policy and Brexist. Hence we should stop importation of consumer goods and FDI on consumer goods and encourage EXPORT from India from pin to Panton Tank. We have to look for export opportunities minutely by shop floor research and woo our exporters to export maximum, including man-power exports ...labour front ...while at the same time encourage new Entrepreneurs, give maximum facility for new Industries like what Mr.R Venkatraman the then Industry Minister of Tamil Nadu, Mr.C Subramanian and Mr.Pratap Singh Kairon ex Chief Minister of Punjab. The China and Eropean countries need Indian market because of our vast population and needs of consumer goods and we can dictate terms for such imports by levying high import duties, in spite of Economic Agreements. WTO etc. India has bright future and all of us should work hard towards this goal. Thanks. FEEL PROUD OF INDIA AND ITS CAPACITY..FEEL GOOD FACTOR AND SOLUTION WILL COME AUTOMATICALLY.


Done with attitude is different than gratitude
VIKRAM GOTAWAT | Tue Jul 26 18:28:03 2016
What I mean with the subject is very simple that whatever steps till now government had taken were not up to the expectations of the people I feel the country needs to stand by ending the system of others and get our own system. Maximum support is given to this government but work is happening at a slower pace, economy of any country depends on the people but here people are especially the mass are not happy at all, changes have to be bought in a robust manner and with a attitude to outsiders and gratitude to the people of this country. Then we shall see fast growth more visionary ideas coming alive, calculation of any sum is done on basis of interest of the work get that interest in people and work shall show calculations


Kindly explain why business scenario is changing from good to bad
Krunal k shah | Tue Jul 26 16:16:57 2016
Since 2014 business scenario has changed drastically & volumes & customers seems to be disappeared somewhere , it seems if this is how business goes day is near to bankruptcy for many ..plz through some light.


 
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