Question

liberalism economic for reform are step for india economic growth.discuss?

Answer 1

The economic liberalisation in India refers to the economic liberalisation, initiated in 1991, of the country's economic policies, with the goal of making the economy more market-oriented and expanding the role of private and foreign investment. 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 poverty, 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.[1] There exists a lively debate in India as to what made the economic reforms sustainable.[2]

Indian government coalitions have been advised to continue liberalisation. Before 2015 India grew at slower pace than China which has been liberalising its economy since 1978.[3] But in year 2015 India outpaced China in terms of GDP growth rate.[4] The McKinsey Quarterly states that removing main obstacles "would free India's economy to grow as fast as China's, at 10% a year".[5]

There has been significant debate, however, around liberalisation as an inclusive economic growth strategy. Since 1992, income inequality has deepened in India with consumption among the poorest staying stable while the wealthiest generate consumption growth.[6] As India's gross domestic product (GDP) growth rate became lowest in 2012–13 over a decade, growing merely at 5.1%,[7] more criticism of India's economic reforms surfaced, as it apparently failed to address employment growth, nutritional values in terms of food intake in calories, and also exports growth – and thereby leading to a worsening level of current account deficit compared to the prior to the reform period.[8] But then in FY 2013–14 the growth rebounded to 6.9% and then in 2014–15 it rose to 7.3% as a result of the reforms put by the New Government which led to the economy becoming healthy again and the current account deficit coming in control. Growth reached 7.5% in the Jan-Mar quarter of 2015 before slowing to 7.0% in Apr–Jun quarter.