Question

why did india move away from import substituting industrialisation in 1990s.?explain​

Answer 1

Explanation:

Import substitution industrialization

trade and economic policy

Import substitution industrialization (ISI) is a trade and economic policy that advocates replacing foreign imports with domestic production. It is based on the premise that a country should attempt to reduce its foreign dependency through the local production of industrialized products. The term primarily refers to 20th-century development economics policies, but it has been advocated since the 18th century by economists such as Friedrich List and Alexander Hamilton.

ISI policies have been enacted by countries in the Global South with the intention of producing development and self-sufficiency by the creation of an internal market. The state leads economic development by nationalization, subsidization of vital industries (agriculture, power generation, etc.), increased taxation, and highly-protectionist trade policies. ISI was gradually abandoned by most developing countries in the 1980s and after the fall of the Soviet Union because of its failure in providing development and, thereafter, the insistence of the IMF and World Bank on their structural adjustment programs aimed at the Global South.

In the Todaro & Smith fourfold category, Import Substitution is a "secondary inward" approach to development. Countries that suppress imports as a policy might have to keep exchange rates high and eventually to create an indirect tax on exports as well. It can lead to rent-seeking activities by local industries. On the other hand, an outward-looking developmental policy encourages free trade and the flow of capital along with movement of workers, students, and enterprises. Some countries also take a selective approach by using ideas from both inward- and outward-looking approaches and target some sectors.

In the context of Latin American development, the term "Latin American structuralism" refers to the era of import substitution industrialization in many Latin American countries from the 1950s to the 1980s. The theories behind Latin American structuralism and ISI were organized in the works of Raúl Prebisch, Hans Singer, Celso Furtado, and other structural economic thinkers and gained prominence with the creation of the United Nations Economic Commission for Latin America and the Caribbean (UNECLAC or CEPAL). The theorists behind ISI or Latin American structuralism were not homogeneous and did not belong to one particular school of economic thought, but ISI and Latin American structuralism and the theorists who developed its economic framework shared a basic common belief in a state-directed centrally-planned form of economic development. In promoting state-induced industrialization through governmental spending by the infant industry argument, ISI and Latin American structuralist approaches to development are largely influenced by a wide range of Keynesian, communitarian, and socialist economic thought. ISI is often associated and linked with dependency theory, but the latter has traditionally adopted a much broader Marxist sociological framework in addressing what are perceived to be the origins of underdevelopment through the historical effects of colonialism, Eurocentrism, and neoliberalism.