The reforms
It is said that in 1990s a process of reforms started in India. One may ask: is going for reforms is to reject Nehruvian models of industrial socialism? The answer is no. As a matter of fact the term reform is used in a specific sense. It means removing the perceived institutional obstacles to economic growth. Clearly, it does not have Gandhian or even socialist connotations. For half a century Indian economy grew at a very slow pace. The per capita income grew at slightly above 1 per cent per year only. Using a derogatory term for this Indian economist Professor Raj Krishna called it a Hindu rate of growth. It may be noted here that here the term Hindu did not refer to religious or cultural beliefs of Indians but to protectionist and interventionist policies (often called Licence and Permit Raj). This called for a revisit of government economic policies (not the vision of development) and in one 1995 lecture Montek Singh Ahluwalia started an argument for economic reforms (1995). Baumol et al. (2008, 143) argue that the real growth of India started toward the end of the century and that was primarily due to rise of IT companies, a more liberal atmosphere and the rise of the internet. To reform is to go for a more liberal economy. In one sense, Nehruvian model of state control was a big hindrance in economic growth and, therefore, the economists started talking of reforms, but in another sense the idea of reforms supported the Nehruvian zeal for economic growth and industrialization. To quote:
|
… the growth experience of India, in particular, provides strong evidence that state guidance can be more of an hindrance than a stimulant to growth and that random or accidental events – so often characteristic of entrepreneurial success stories – can fuel the expansion of a world-class entrepreneurial sector and, in turn, advance growth of entire economy. Partially as a legacy of British colonial rule and partly as an outgrowth of the economic philosophy of its first leader, Jawaharlal Nehru, India’s economy for several decades after independence was a model of detailed, intrusive guidance by the state. For almost every type of economic activity – not just opening a business, but buying and installing a rudimentary piece of equipment – some sort of government approval was required. |
|
