Day 33 – Q 1.Does liberalisation ensure inclusive growth? Critically examine by taking taking post-1991 India as a case in point.
1. Does liberalisation ensure inclusive growth? Critically examine by taking taking post-1991 India as a case in point.
क्या उदारीकरण समावेशी विकास सुनिश्चित करता है? 1991 के बाद भारत को एक उदहारण के रूप में लेकर समालोचनात्मक जांच करें।
Synopsis:
The goals of the liberalisation in 1991 embarked upon were short term as well as long term. The immediate provocation was the critical fiscal situation that India faced in terms of foreign obligations as well as stagnancy in the growth of the economy. To overcome it, certain actions were taken. It also included devaluation of rupee.
Inclusive growth entails comprehensive growth, shared growth, and pro-poor growth. It lessens the fast growth rate of poverty in a country and upsurges the participation of people into the development of the country. Inclusive growth infers an impartial allocation of resources with benefits incurred to every section of the society.
Liberalisation and inclusive growth:
A lot of thinking was done by the government to make the organised sector moving. The organised sector, industrial sector, finance sector, trade sector- all of those were experiencing minimal growth rates. This was the background in which the liberalisation process started. It can be clubbed as
- Industrial licensing- where most products and lines were de-licenced
- Trade liberalisation- a whole lot of items in which the trade was not allowed were removed from the restricted list. Also, to facilitate freer trade, the duties on export as well as on imports were done away with. However, there was no question of India participating in any of FTAs.
- Changed attitude towards FDI- it was not a direct impact. It has happened in tranches over 20 years and continues even now.
- Financial changes- privatisation of banks
- GST, IBC etc.,
One of the major aims of liberalisation was to create more wealth, create more jobs and shrink poverty and the gap as much as possible.
The markets are not good masters. It leads to marginalisation of those who are at the margins. Therefore, it happened so that the growth did not pick till first 12 years i.e. till 2002.
- India had achieved 5.8% growth in 1980s and it remained average from 1991-2002 at 5.3%.
- It is only from 2003 that India had a 9% growth for four years till the global financial crisis came.
- The rate of growth dropped but again it picked up in 2010 and then again from 2011 it came down.
- Now, India is again trying to reach higher growth rates.
Due such dynamic situations, instability has increased; the gap between the rich and the poor has expanded. There are 4th largest numbers of dollar billionaires in India. This shows the rising inequality.
For example, the minimum wage in 1991 was Rs. 35 which has risen to Rs. 165.
Although it has given so many positive changes, but there are some issues which has happened after the LPG reforms.
- Jobless growth: The jobless growth could have been corrected rapidly if right policies had been adopted.
- Pre-matured deindustrialisation happened
- Indigenous people got effected too much in this place
- Environmental degradation
- Focussed on non-agricultural activities.
- Agricultural contribution in the GDP declined.
- Less structural reforms in the economy
Conclusion:
We are the stage where the time has come to take the full benefits of the reforms. This will be possible when sectors like industries, finances become sustainable and deepen where sectors in which they had not reached also get the benefit of 1991 reforms.
Best Answer: Jyothi Singh
