Indian Economy & Liberation

The effect of economy of liberation on Indian economy has been widely debated, but a consensus opinion has not emerged. Since, 1991 the Indian economy has been running under the mantra of liberation. While there has been almost unanimous approval amongst the more affluent section of the population for liberating the consumer goods sector from the “License Raj” of the previous decades.

Why and how liberation came in existence?
After independence Indian economy grew, but with snail’s speed, there were more speed breakers than a smooth highway. The major problem with the economy was that almost every large industry let it be: infrastructure, petroleum, mining, health, education, were controlled by government. There was private participation in consumer goods sector but that was also indirectly controlled by government. And so the norms, rules and regulations for establishing a new company were so complicated that private sector didn’t have the opportunity to expand its arms. And so the import duties, custom duties, excise duties were so high that MNC’s were reluctant to invest in India.

But later on it was recognized that for better future, something new and in a new way has to be done and then how the liberalization came into existence . Liberalization is a process of making something such as law, politics system less strict i.e., norms, rules, various duties were relaxed up to an extent. It was initiated and implemented in a stepwise manner under the guidance of IMS (international monitory fund) and World Bank in 1991 under the regime of former PM Mr. Narasimha Rao.

The effect:
As India was always the lucrative destination for MNC’s, and as day sot the opportunities they started pouring into the domestic markets, be it consumer goods, manufacturing, education, infrastructure, etc. As a result of which the market grew rapidly, competition increased, quality improved day by day. Better cars, electronic item, better communication was now available at affordable price.

GDP (gross domestic product) which is the barometer of any nations development increased and presently it is around 9% which is 2nd best after china. Inflation rate is high but under control. Sensex is booming around 13000, FDI (foreign direct investment) is around $ 165 billion and is increasing by each week.

There has been positive effect but there is also a portion of society which thinks that liberalization benefits is restricted to a particular society and has no benefit for backward or the poor strata of society. Yes, it is true that the effect has not been so widespread but we should also know that “Liberalization” is a long process and we will have to go a long path to achieve it and then definitely the weaker section will be the most benefited part of the society.

Sanjeev Singh
B. Tech. Computer Science & Engineering   (2008 Batch)