Explain the reason for the need for economic reforms.
The following are the reasons that necessitated the need for economic reforms in India:
a. Rise in fiscal deficit
b. Rise in current account deficit
c. High level of inflation
d. Poor performance of the public sector units
Economic Reforms are not ends in itself. Its success is appraised on the whetstone of whether it has been able to better the quality of life of the people for whom these reforms are meant. While one school of opinion avers that effects of reforms on the overall population of India will be slow and steady, critics say that reforms have made the rich richer and the poor poorer.
The reforms were launched at a time when in the words of Mr. Manmohan Singh, "it was recognised that the old economic instrument had become instrument of harassment, delay and corruption and had to be changed." Now fifteen years later we have bounced back. We cant proud of trade reforms, abolition of licensing opening up of industries the private sector and financial reforms.
The changes are more perceptible in our urban landscape where owners of two wheelers have switched over to Maruti, Santro, Sumo and Qualis. As sleek cars zip through six lanes and highways a communication revolution has removed the hassles in business and lent more punch in the entertainment world, cellphone, credit cards, internet, email, satellite channels, etc.
While the famous D Lake in Kashmir has been lost to terrorists, the loss of Kashmir has bet the gain of Kerala where tourism industry is thriving.
There is indeed a change in the mindset. People are willing to tale risk to make money; in other words, there is reward for enterprise. Indie economic reforms have coincided with a technological revolution, too and the small computer is fast changing Indian society. There empowerment for those who dare.
A bit of statistics that boost our morale during the last ten years that our forex reserves have risen from less than 1 billion dollar in June 19 to over 100 billion dollar now. From 140% of forex reserves in 1991 short term debt is 14% now. Our astounding success has been in the forex reserves and debt management.
But the miserably poor performance in a variety of fields that affects the common man has overshadowed our gains. Reforms have tended to bypass agriculture, the backbone of our rural economy as grain stocks has been eaten away by rodents in our godowns; people are dying of starvation. The decade of liberalization has witnessed the maximum- umber of suicides by farmers in Punjab, Vidarbha, Andhra Pradesh 2nd Karnatka.
Even a big industrialist like Mukesh Ambani feels that reform can succeed only if we go in for what he calls social renewal in the rural hinterland. Economic reforms have no meaning when we cannot provider schools, mid day meals for poor children, minimum health care for all, sanitation, safe-drinking water and power for domestic agriculture and industrial needs.
Years ago the Lok Sabha declared "The basic criterion for determining the lines of advancement should not be private profit but social gain and that the pattern of development and structure of socio economic relations should be so planned that they result not only in appreciable increase in national income and employment but also in great quantity in incomes and health." Is the present pace of liberalisation hilling these criteria?
Let us not miss the message of those hundreds upon thousands of protestors who have been converging on several global meets in the last some years to focus on the ill effects of globalization. The ill-effects of globalization more applicable to India than any other country. India has still to go a long way to provide the minimum needs to the people.
The fact that we have the largest child labour force in the third world speaks volumes for our failure on two fronts, failure to check the birth rate and failure to universalize elementary education. Worse still, for the vast majority of poor, even education is a luxury. We can't build an economic super structure on weak social foundations.