Now we have ultra-modern and ultra-primitive society coexisting and conflicting with each other. Undoubtedly strongest revolution of new century has been one of Information Technology, which started in last years of past century. This revolution was different because it made globalization even more obvious and stark.
Essay on the Economic Liberalisation in India
It made possible transfer of real time human labor across nations, without transfer humans themselves. Further, it erased all boundaries which hinder free flow of information. This has benefited sharing, nurturing and development of knowledge in societies which earlier had access only to substandard or non-updated information. As always package is coupled with some grim realities too. Governments all across the world has lost their capacity to regulate and ward of against malicious, false, sensitive information and content. Rise of Islamic State demonstrates that, IT revolution has helped development of global Terrorist links more than anything.
Moreover, explicit content is freely available on web, to which unmatured children have unrestricted access. Other things apart, it is clear that reforms led to crash of economy in , which was remedied by LPG reforms which were quite more comprehensive. It was IMF loan which gave government to adjust its economy. It was largest ever loan given by IMF. Industrial Growth Rate — Barring few years industrial growth rate has been not much impressive. Worst is that India has transitioned to be a service led economy, directly from an agrarian one. One expiation of this is end of policy of imports substitution which derived industrial growth upto Foreign companies got free access to Indian markets and made domestic products uncompetitive.
They obviously had better access to technology and larger economies of scale. Import substitution required certain degree of investment and efforts in domestic production. It was carried out even when imports were cheaper. This resulted in good and better capacity building upto that time. Technology Denial ended with liberalization and globalization.
Till that time Indian Industry was better and modern than that of China. But in two decades China has surpassed India by huge margin in case of both Industry and innovation. Impact on Small Scale in India.
- REASONS BEHIND ECONOMIC REFORMS.
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This impact shall be studied right from the beginning of colonization in 18 th century. Colonization can be considered as 1 st wave of globalization. With coming of industrial revolution along with foreign rule in India, Indian economy suffered a major setback and much of its indigenous small scale cottage Industry was destroyed. After independence, government attempted to revive small scale sector by reserving items exclusively for it to manufacture.
Economic liberalization and poverty in the developing countries
With liberalization list of reserved items was substantially curtailed and many new sectors were thrown open to big players. Small scale industry however exists and still remains backbone of Indian Economy. It contributes to major portion of exports and private sector employment. Results are mixed, many erstwhile Small scale industries got bigger and better.
But overall value addition, product innovation and technology adoption remains dismal and they exist only on back of government support. Their products are contested by cheaper imports from China. Policies of government toward SSI were covered in previous article access here and here. Impact on Agriculture. We saw under series relating to agriculture that there are still all pervasive government controls and interventions starting from production to distribution here SPS and here — WTO.
Global agricultural economy is highly distorted. This is mainly because imbalance in economic and political power in hands of farmers of developed and developing countries.
In developed countries, commercial and capitalistic agriculture is in place which is owned by influential Agri corporations. They easily influence policies of WTO and extract a better deal for themselves at cost of farmers of developing world. Farming in developing world is subsistence and supports large number of poor people. With globalization there has been high fluctuation in commodity prices which put them in massive risk.
India remains in the bottom half of countries measured by indicators of economic freedom. Social indicators of education, health, and nutrition have improved much too slowly, and India has been overtaken in some indicators by poorer Bangladesh and Nepal.
The delivery of all government services remains substandard. Political interference has eroded the independence and quality of institutions ranging from the police and courts to educational and cultural institutions. India's economic reforms over 25 years have transformed it from a low-income country to a middle-income one. But to become a high-income country, India must liberalize the economy much further, improve governance, and raise the quality of its institutions.
In India embarked on major reforms to liberalize its economy after three decades of socialism and a fourth of creeping liberalization. Twenty-five years later, the outcome has been an outstanding economic success. India has gone from being a poor, slow-growing country to the fastest-growing major economy in the world in The World Economic Outlook for says that the United States and India are the two pillars of strength today that are helping hold up a sagging world economy.
Yet those successes have been accompanied by significant failures and weaknesses in policies and institutions. The past 25 years of liberalization are largely a story of private-sector success and government failure and of successful economic reform tarnished by institutional erosion. Even as old controls have been abolished, new ones have been created, so what leftist critics call an era of neoliberalism could more accurately be called neo-illiberalism. The quality of government services remains abysmal, and social indicators have improved much too slowly.
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The provision of public goods — police, judiciary, general administration, basic health and education, and basic infrastructure — has seriously lagged improvements in economic performance. Political appointees and government interference erode the independence and quality of institutions ranging from the courts and universities to health and cultural organizations.
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India's economic reforms have been highly successful in moving the country from low-income to middle-income status, despite little improvement in its institutions and quality of public goods. To sustain rapid growth and to become a high-income country, India will need major reforms to deepen liberalization and build high-quality institutions.
Effects of Liberalization on Indian Economy and Society - INSIGHTS
It is difficult for youngsters today to grasp that until , India was famous or perhaps infamous as the biggest beggar in the world, seeking food aid and foreign aid from all and sundry. It was hamstrung by a million controls, imposed in the holy name of socialism and then used by politicians to create patronage networks and line their pockets.
On attaining independence in , Indian politicians were worried that imperial foreign rule would return in the guise of economic domination through trade and investment. So India sought "economic independence" to buttress political independence, and that took the form of aiming for economic sufficiency, along with a variation on soviet-style five-year plans.
India's share of global trade fell steadily from 2. The public sector was supposed to gain the commanding heights of the economy. Nothing could be manufactured without an industrial license or imported without an import license, and those licenses were scarce and difficult to get.
Any producers who exceeded their licensed capacity faced possible imprisonment for the sin of violating the government's sacred plan targets. India was perhaps the only country in the world where improving productivity and hence exceeding licensed capacity was a crime. The underlying socialist theory was that the market could not be trusted to produce good social outcomes, so the government in its wisdom must determine where the country's scarce resources should be deployed and what exactly should be produced, in what location, and by whom.
In other words, the people would be best served when they had no right to decide what to produce and no right to decide what to consume: that was all to be left to a benevolent government. In its first three decades after independence in , the Indian economy averaged just 3. Indian socialism reached its zenith in the s, when the banks and several major industries were nationalized.
The top income tax rate rose to In fact, the poverty ratio did not fall at all until Meanwhile, the population had virtually doubled since independence in , meaning that the number of poor people virtually doubled in this socialist era. There could scarcely be a crueler demonstration of how policies in the name of the poor could end up impoverishing them even further. GDP growth improved to 5.
But the spending spree was unsustainable and ended in tears and empty foreign exchange reserves in Narasimha Rao became prime minister in The Soviet Union was collapsing at the time, proving that more socialism could not be the solution for India's ills.