Conclusion on impact of
economic liberalisation policy
Answers
Answer:
The economic liberalisation in India refers to the economic liberalisation of the country's economic policies, initiated in 1991 with the goal of making the economy more market- and service-oriented, and expanding the role of private and foreign investment.[1] Most of these changes were made as part of the conditions laid out by the World Bank and the IMF as a condition for a $500 million bail out to the Indian government in December 1991.[2] Specific changes include a reduction in import tariffs, deregulation of markets, reduction of taxes, and greater foreign investment. Liberalisation has been credited by its proponents for the high economic growth recorded by the country in the 1990s and 2000s. Its opponents have blamed it for increased inequality and economic degradation. The overall direction of liberalisation has since remained the same, irrespective of the ruling party, although no party has yet solved a variety of politically difficult issues, such as liberalising labour laws and reducing agricultural subsidies.[3] There exists a lively debate in India as to whether the economic reforms were sustainable and beneficial to the people of India as a whole.[4][5]
Indian government coalitions have been advised by the IMF and World Bank to continue liberalisation. Before 2015, India grew at a slower pace than China, which had been liberalising its economy since 1978.[6] In 2015, India's GDP growth outpaced that of China.[7] The McKinsey Quarterly stated that removing major obstacles "would free India's economy to grow as fast as China's, at 10% a year".[8]
There has been significant debate, however, around liberalisation as an inclusive economic growth strategy. Income inequality has deepened in India since 1992, with consumption among the poorest staying stable while the wealthiest generate consumption growth.[9] India's gross domestic product (GDP) growth rate in 2012–13 was the lowest for a decade, at just 5.1%,[10] at which time more criticism of India's economic reforms surfaced; it apparently failed to address employment growth, nutritional values in terms of food intake in calories, and also export growth—and thereby was leading to a worsening current account deficit compared to the period prior to reform.[11]