How do you assess the performance of Indian Economy during the initial years of Globalization (since 1991)?

 How do you assess the performance of Indian Economy during the initial years of Globalization (since 1991)?

Ans: Globalisation in India had its impact in terms of a regime change in economic policies since the beginning of 1991. While the immediate factors which had been responsible for a change-over to a liberalised regime in July 1991 included a severe balance of payments constraint and a change of leadership at the Centre, one can trace the beginning of the change to the mideighties since when trade as well as industrial policies have been liberalised to a considerable degree. Economic reforms during the 1990s encompassed the entire economy, covering the external sector, industry, agriculture, services, monetary and fiscal policy and finally, labour policy. Behind these moves was an undercurrent of an uncritical reliance on the ‘efficient market’ hypothesis of mainstream neo-classical economics, which today is subscribed by advanced countries as well as most international financial and trading institutions.

Critics denouncing the universal virtues of a free-market regime have often been pointing at the limitations of the neo-liberal agenda. This , as pointed out, especially relates to the developing countries which are yet to strengthen the domestic economic base, not just to achieve higher growth but also to cater to the teeming millions of people who lack even the bare minimum of subsistence. Instead of enhancing growth via efficiency gains, these policies, as is claimed by the critics, may stall growth in these economies and be responsible for increasing income inequality and social unrest. Countries as above would, as a consequence, be more dependent on the vicissitudes of the global economy, a process which generally contributes to an added degree of vulnerability and instability in their respective domestic economies.

Some Key Elements of the Macroeconomic Landscape

It is well-acknowledged that the period since the early 1990s has witnessed a fundamental repositioning of the State versus the Market in the Indian economy. Essentially, the transition has been characterized by a strong push towards a neoliberal reform programme, resulting in a very substantial degree of internal and external economic liberalization. Although the process had begun in the second half of the 1980s, it was in July 1991 that a rapid and sharp shift in the economic policy regime was officially enunciated, which justifies the view of a transition from a State-led development model to a neoliberal paradigm.

Sure enough, unlike many other countries in the developing world, India’s experience of neoliberal economic reforms, whether in terms of content or pace, is not a simple replica of the classic text book model of big-bang stabilization and structural adjustment, pushed by the Bretton Woods Institutions (i.e. the World Bank and the IMF) in several countries of Africa and Latin America during the 1980s. This is largely due to the substantial opposition to the neoliberal agenda from several quarters. Nonetheless, the trajectory of India’s economic policy has been firmly on the neoliberal track since the early 1990s, with sustained domestic deregulation and a continuous deepening of the integration with the global economy. Through the entire academic spectrum from the left to right – among the observers of the Indian economy, there is unanimity as regards this fundamental break in the macroeconomic policy regime.

CONCLUSIONS

Within the constraints of democratic politics and the relatively 'soft' nature of the economic reforms implemented since 1991, the Indian economy has reaped several welcome rewards from its reforms. These have strengthened the conviction that the broad direction of the reforms is right and, in that sense, made the reform process irreversible. However, India needs to launch a 'second generation' of economic reforms, with a more human face, if it is to reap their full potential. Politicians and administrators need to display greater pragmatism while designing and implementing future economic reforms. The ECONOMIC REFORM IN INDIA.