Some Overviews on Economic Reforms and Its Assessment
The Evolution of the Indian Economy's Economic Reforms and its Dual Nature
by Sonali Chauhan*, Dr. Narendra Singh,
- Published in Journal of Advances and Scholarly Researches in Allied Education, E-ISSN: 2230-7540
Volume 8, Issue No. 16, Oct 2014, Pages 0 - 0 (0)
Published by: Ignited Minds Journals
ABSTRACT
After Independence, the managers of the Indian economyfound that the world has been sharply divided into two blocks: the one led bythe capitalist economies and other led by the communist economies, primarilythe then USSR. There was a cold war between these two blocs. Less developedeconomies had no option than to join either of the two and invite the ire ofthe opposite bloc. Especially those economies that were under the BritishEmpire and won freedom during 1940's faced a difficult choice. India chose tokeep a safe distance from both the blocks by inventing the idea of a mixedeconomy. In doing so, India invited as much favor as suspicion from both theblocks. Some economists hold the opinion that the Indian economy waspro-capitalism in its core that wore the façade of a socialistic economy. Thestate-managed economic endeavors facilitated capital formation in the privatesector, often at the cost of the public sector and resources, preparing for asmooth transition to open capitalism in future when the conditions were ripefor such a transition.
KEYWORD
economic reforms, assessment, Independence, Indian economy, capitalist economies, communist economies, cold war, less developed economies, British Empire, freedom, mixed economy, pro-capitalism, socialistic economy, state-managed economic endeavors, capital formation, private sector, public sector, open capitalism
India today has an enviable framework for the conduct of comprehensive industrial policy in the broad sense. Many of the necessary institutions required such as the Planning Commission are in place and have broad acceptance among all the political parties and the Indian people. This is one of the reasons why this essay has not concerned itself with the normal starting point of any economic discussion of industrial policy in terms of market failures and externalities. As Dosi et al. have noted in the introduction to this volume, when considering experience regarding achieving long-run dynamic economic efficiency, market failures and coordination problems are ubiquitous in capitalistic economies, whether developed or developing; these are not minor exceptions as is often implied in orthodox writings. That planning and industrial policy are well embedded in the Indian political economy is a major advantage compared. A main issue for the future of industry planning in India is what functions, old and new, should the Indian Planning Commission focus on in the years ahead.
CONCLUSION
The Indian economy has been moving towards closer integration with the global economy and with the leading regional trading blocs. This can be seen using three indicators: (i) Trade in goods and services as a proportion of GDP; (ii) Gross Private Capital Inflows; and (iii) Gross Foreign Direct Investment as a proportion of GDP. In all three areas, China has had the economic reform process, India can be seen to have done „reasonably well‟ in globalizing its economy. The ratio of trade to GDP increased from 13.1 percent in 1990 to 20.3 percent in 2000. The proportion of Gross Capital Inflows to GDP during the same period increased from 0.8 percent to 3.0 percent. Gross Foreign Direct Investment as a percentage of GDP (which was zero in 1990) rose to 0.6 percent in 2000. India‟s economy clearly is on the move and most certainly has the potential to emerge as a global economic power within next twenty to twenty-five years. However, this potential can be made a reality only if India mobilizes adequate political will and quickly commits itself to design and fully implement the next phase deeper „second-generation reforms‟. The concept of „second-generation‟ reforms has been in the making for some years. However, these are yet to take concrete shape. Considering that India currently has no social security system in place for nearly 90 percent of its labor force employed in the unorganized sectors, India needs to evolve a well-calibrated approach to its future economic reforms.
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