ECONOMIC REFORMS PROCESS IN INDIA

Economic Reforms Process in India



Economic Reforms Process in India

Introduction

India is one of the countries which have the most rapid economic growth in the world. From 1990s, India went through a quick and fast transformation to a globalized country from a socialist economic country of the post independence period. It is the second most populated country in the world with an overall populace of about 1.1 billion and also has the seventh largest land area which covers 3,287,590 sq. km, stretching from the Bay of Bengal in the east to the Arabian Sea in the west (P, 2006, 68).

Although India's liberalization of economics is dated back to late 1970s, yet in earnest the reforms of economics started in July 1991. A stability of expenditures catastrophe during that era paved the means for an International Monetary Fund (IMF) plan which led to the implementation of a main reform package. Although the foreign exchange reserve was retrieved rapidly and the temporary clout of the World Bank and IMF ended successfully while the reforms proceeded in a stop-go manner. An insignificant role was played by India in the World trade. This was the time for the government of India to adopt the globalization market driven economy and ditch the decade old central planning system. Business was encouraged by the privatization of industries. An important part was played by both the foreign and indigenous private enterprises (P, 2006, 68).

Jawaharlal Nehru, the Prime Minister of India (1889-1964) formulated the post independence policies of India. In 1950, a planning commission was established and Nehru was made the chairperson who had to the job to modernize the big economic sectors. The emphasis was given to the growth in the structure of Agriculture productivity and industrialization of socialistic patterns of the society. The private ownership of industrial firms and agriculture was seen by the economy's mix patterns. Infrastructural activities, electricity, communication, manufacturing, aviation, railways and others were state controlled. Economic anguish in numerous sectors emerged during the four decades of socialistic economy with central planning (Anthony, 2005, 68).

The economy of the country and the business came to a slow and were stalled by the model by Nehru due to the control system or License Raj which was prevailing in the country. Numerous difficulties were faced by the private ventures and Indian think tanks abhorred the FDI (Foreign Direct Investment). About 1 % per capita was the annual economic growth, after the three decades of independence. 4.5% was the annual growth of the economic industry. The industry's profit and productivities were dampened by the central planning. Due to the control and tariff, the importing of goods was not encouraged. An insignificant role was played by India in the World trade. This was the time for the government of India to adopt the globalization market driven economy and ditch the decade old central planning system. (Anthony, 2005, 68).

Economic Reform and Economic Growth

Throughout Rajiv Gandhi's regime (1944-1991), India progressed forward towards the economic reforms which accomplished extensive ...