The printable version is no longer supported and may have rendering errors. Please update your browser bookmarks and please use the default browser print function instead.
The combination of protectionist, import substitution ,fabian ,socialism and social democratic-inspired policies governed India for sometime after the end of British rule. The was then characterised by extensive regulation, protectionism, public ownership of large monopolies, pervasive corruption and slow growth.
1991 continuing economic liberalisation has moved the country towards a market based economy
By 2008 India had established itself as one of the worlds faster growing economies
This paper tries to present an overall insight towards the process of economic reforms started in early 1990s and the technical progress in Indian economy after the 25 years of economic reforms
CONTENT
Numbered list itemInsert non-formatted text here
INTRODUCTION
HISTORY
AFTER25 YEARS OF ECONOMIC REFORMS
PROBLEMS IN INDIAN ECONOMY AFTER 25 YEARSOF ECONOMIC REFORM
INTRODUCTION
This paper focuses mainly on economic fluctuations after the 25 years of economic reform with a light light on the history of economic reforms.
1991 was the start of economic liberalization and soon India had become the fastest growing economy in the world.
With the year 2016 India had completed it’s 25 years of economic reforms. Patronized based rent seeking economy was changing to an economy much based on entrepreneurship and high trust society where government and bureaucrats took charge of the country’s economy
Modi ji determined to correct Gurucharan Das ji’s statement that “ India grows at night when the government sleeps”, addressed the country for 48 minutes at the night of 8th november unilaterally announcing that 14 lakh crore rupees worth of 500 and 1000 notes amounting to 86.4 % of all the currency in circulation in India would be illegal as of midnight .(pun intended)
HISTORY
“Licence permit raj- the cause of India's fiscal, monetary deficit misery after British rule”
1990 Chandrashekhar took oath as the pm of India. The same year saddam Hussein's Iraq attacked and captured Kuwait.
Price of oil was touching the celings and India was forced to buy oil for 12crores
Drowning in debts, with only 7 days worth of oil in reserve, India was facing a major economic crisis.
The gulf war brought about a huge change in India’s economic as well as it’s foreign policy. The shock of the Gulf war pushed the deteriorating balance of payments into a full-blown crisis, leaving the country’s reserves with just enough foreign exchange to cover the import bill for barely three weeks, It was a severe helplessness that India was facing
India was in dire need of loan from IMF (to which America hold highest stocks)
Subramanyam swami who was the cabinet minister at the time took advantage of the war between America and Iraq . swami asked for 2 billion dollar from IMF without any conditions in return for refilling america’s fighter plane on the way from philippins to Saudi Arabia
ON 17 january 1991 america bombarded Iraq . and On 18 january 1991 imf provided India with 1 arab 3 crore dollar
Still India needed more
Looking at the severe economic conditions of India the Governor of RBI- S. Venkitaramanan presented the prime minister Chandrasekhar Singh with an idea to mortgage the reserve gold of India,which was later approved by the economic adviser Manmohan Singh , finance minister Yashwant Singh and congress leader Rajiv gandhi .
Even so India’s economic condition was still hanging on the edge when dr. narsshim rao became the pm of india .(He was also refered as father of Indian economic reforms”)
And so began the economic liberalisation of India .
Dr.manmohan singh launched India’s globalization angle of reforms that implemented the IMF policies to rescue the almost bankrupt nation
“No power on earth can stop an idea whose time has come,” said then finance minister Manmohan Singh quoting Victor Hugo while presenting the Union Budget on 24 July 1991. And with these words started the long and painful process of economic liberalisation in India. The liberalisation was aimed at ending the licence-permit raj by decreasing the government intervention in the business, thereby pushing economic growth through reforms. The policy opened up the country to global economy. It discouraged public sector monopoly and paved the way for competition in the market.
The policy, which met with wide opposition from within the Congress and even the domestic industry, was seen as the only way out for India after the balance of payments crisis that brought the country to its knees.
However, the biggest challenge for the economy ever since the economic reforms were initiated has been the lack of employment creation.
The agricultural sector continues to remain the largest employer with the absolute number of workers declining only recently.
Between 2005 and 2008, the economy clocked the 9% mark annually. With the NDA government revising the GDP growth figures and China slowing down, post-reforms, India remained the second fastest growing economy in the world, behind China until 2015. Especially India is now being billed as the fastest growing major economy in the world, with a growth rate of 7.6% in 2015-16. The economy of Uttar Pradesh is the second largest of all the states of India. According to the state budget for 2017-18, Uttar Pradesh's gross state domestic product is ₹14.46 lakh crore (US$220 billion) In the tenth five-year planning period of 2002 and 2007, Uttar Pradesh registered an annual economic growth rate of 5.2%. In the eleventh period, between 2007 and 2012, Uttar Pradesh registered an annual economic growth rate of 7%. In 2012-13 and 2013-14, however, the growth rate decreased to 5.9% and 5.1%, respectively, one of the lowest in India
Additionally, the state government has selected five cities for Metro train projects: Meerut, Agra, Kanpur,Lucknow, and Varanasi.
The Finance Minister of Uttar Pradesh, Mr. Rajesh Agarwal presented the Budget for Uttar Pradesh for the financial year 2017-18 on July 11, 2017. This note provides key highlights of the budget.
To evaluate the impact of reforms on the performance of the economy it is useful to distinguish between two periods. The first period is the three years 1991-2 to 1993-4 which were years of crisis management, when the primary objective of policy was to stabilize the economy.The next four years 1994-5 to 1997-8 constitute the post-stabilization period, when the focus of policy was on the longer-term objective of putting the economy on a higher growth path.
The Indian economy slowed down in 2016-17, with the gross domestic product declining drastically from 8 per cent in 2015-16 to 7.1 per cent the next year, government said on Friday.
Union Finance Minister Arun Jaitley said the slower economic growth reflected lower growth in the industry and the services sectors, due to a number of factors including structural, external, fiscal and monetary factors.
Mr. Jaitley claimed that despite the slowdown, as per the IMF, India was the fastest growing major economy in 2016 and second fastest growing major economy in 2017 in the world.
“For highways development, the Bharatmala Pariyojana has been launched. The government has launched a phased programme for bank recapitalisation. This entails infusion of capital to the public sector banks, that is expected to encourage banks to enhance lending,” he said.
Mr. Jaitley said the Insolvency and Bankruptcy Code was enacted to achieve insolvency resolution in a time bound manner.
Mr. Jaitley said as per information available from Reserve Bank of India, the gross bank credit (outstanding) for agriculture and allied sectors was ₹ 9,923.87 billion as of 2016-17 as against ₹ 8,829.42 billion as on 2015-16.
“The introduction of the Goods and Services Tax (GST) has provided a significant opportunity to improve growth momentum by reducing barriers to trade, business and related economic activities,” he added.
Unlike demonetisation, GST has a history of evolution.
The reform process of India’s indirect tax regime started back in 1986 with the introduction of the Modified Value Added Tax (MODVAT), which subsequently morphed into proposals of VAT and GST.
In 1999, Prime Minister Vajpayee set up a committee headed by the then finance minister of West Bengal, economist Asim Dasgupta, to design a GST model with a single tax rate across the country,by 2010 it was 80 percent ready to be rolled out.However, with the exit of Dasgupta in 2010 from the GST committee, the progress on the nitty gritty of the design was halted. After the Modi government came to power, the newly formed GST council under the leadership of the Union Finance Minister Mr Arun Jaitley rushed to deciding the GST rates within a year
PROBLEMS IN INDIAN ECONOMY AFTER 25 YEARS OF ECONOMIC REFORM
Little cash in circulation: unavailability of small currency.
Slowdown in Economic Growth: Economic growth experienceD a period of lull due to business disruptions, at least in the short term.
Disruption of Trade: The normal trading activities got disrupted by this process since it takes time for consumers and suppliers to adjust to the new monetary policy.
ATMs have to be re-calibrated: ATM machines were re-calibrated to accommodate the new currencies. It resulted in additional costs for banks and also inconvenience customers.
Short term financial crisis for poor people as majority of the population dealt with cash
AS CHAMBAL DACOITS LOOTED CENTRAL INDIA IN 1970’s and 80’s SHENZHEN AND SILICON VALLEY DACOITS ARE SAVAGING OUR DIGITAL LANDSCAPE IN 21ST CENTURY
We are already under Facebook and google dominance ..of which America takes 90%of all digital ad dollars from India
flip kart was founded by Sachin and Binny Bansal but china tencents with other foreign investors owns 70% and bansals are down to 10 %
Bhavish Agrawal and Ankit Bhati created ola but again ola is now owned 60% by foreign investors including Softbank of japan even paytm 60% is owned by Alibaba
In short Indians economies are dacotised
Indian entrepreneurs are trusted up in archaic laws,they are not allowed to issue differential voting shares they are not allowed to issue non voting shares. They are constrained in issuing perpetual bonds warrants convertibles puts calls tracking stocks or options they cannot list on overseas exchanges unless the entity is listed in India
If people like Bhavish or Sachin give hundreds of billions of dollars of economic ownership to foreign investors even as they maintain voting control with their minority stakes they can create Indian digital behemoths without ceding to American and Chinese acquirers