• Join over 1.2 million students every month
  • Accelerate your learning by 29%
  • Unlimited access from just £6.99 per month

Why did India launch a program of economic reforms in 1991? How successful these reforms have been?

Extracts from this document...

Introduction

Essay 2: Comparative Growth in Asia and Africa: Why did India launch a program of economic reforms in 1991? How successful these reforms have been? Introduction: In the literature several minor and major areas are covered by the reform program. However, according to Jagdish Bhagwati (1993, chapter 2, p.46) "the main elements of India's policy framework that stifled efficiency and growth until the 1970s and during the 1980s are the following three major groups: 1. Extensive bureaucratic controls over production, investment, and trade; 2. Inwards-looking trade and foreign investment policies; 3. A substantial public sector, going well beyond the conventional confines of public utilises and infrastructure". The author states that the first two groups affected the private sector's efficiency negatively and the last group with the inefficient functioning of public sector weakened the public sector's contribution to economy. And these groups led to low productivity and therefore low economic growth for India. I will elaborate on each of the group in second part of the essay, which will discuss the reasons for economic reforms in India during 1947 - 1991. The third part of the essay will discuss the success and failure of the reforms implemented and based on these reasons and implementation of reforms I will give conclusion whether the reforms have created an impact and supported the economic growth. ...read more.

Middle

Under banking system reforms included measures for liberlisation, measures designed to increase financial soundness and measures for increase competition. Also India's' stock market was accelerated by a stock market scam in 1992 serious weakness of in the regulatory mechanism. Therefore for eliminating approval of reserve bank of India for loans, strengthening banking supervision, for liberlisation and openness, and for dematerialisation of shares and stock market to regulate effectively reform were renewed (Study pack, Economic reforms in India since 1991, p. 336). Another important reform in financial sector was the withdrawal of the special privilege enjoyed by the Unit Trust of India, a dominant mutual fund investment vehicle. As far as he insurance sector reform is concerned, it renewed because government wanted to change it from being a public sector monopoly to private insurance company reducing government role and allowing private insurance companies to enter the market with equity up to 20%. This was expected to stimulate long term savings and depth to capital market (Study pack, Economic reform in India since 1991, p. 336 & 337). Privatisation: India adopted reform policies to achieve high economic growth and another policy they adopted beside trade liberlisation was to encourage privatisation. Indian economy targeted to achieve larger private sector by restructuring the role of government. This reduced government's intervention and allowed market forces to operate. ...read more.

Conclusion

According to Montek S. Ahluwalia "disinvestment receipts were consistently below the budget expectation, average realistaion in first five years was less than 0.25 percent of GDP compared with an average of 1.7 percent in 17 countries". Therefore government realised that a great deal of preliminary work is required before privatisation can be successfully implemented (Study pack, Economic reform in India since 1991, p. 338). Finally the development in social sector was worth noting as it continued to improve during the reforms. The literacy rate increased from 52% in1991 to 65% in 2001, and this increase has been high in low literacy states such as Bihar, Madhya Pradesh and Uttar Pradesh (Study pack, Economic reforms in India since 1991, p. 339). Conclusion: Undoubtedly prior to reforms India was at a critical turning point. The reforms were put into place mainly in the microeconomic framework, requiring the structural reforms that would free the economy and improve its functioning. Those reforms that worked did improve the efficiency of the system however some of them such as failure of fiscal front and privatisation needs to be reviewed. And some were put into to place only recently therefore their benefits for them are still to be felt. After revision once these reforms are put into to place it is possible for India to exceed well beyond 6 percent growth rate per year and achieve the government's target of 8 percent growth rate per year. ...read more.

The above preview is unformatted text

This student written piece of work is one of many that can be found in our GCSE Economy & Economics section.

Found what you're looking for?

  • Start learning 29% faster today
  • 150,000+ documents available
  • Just £6.99 a month

Not the one? Search for your essay title...
  • Join over 1.2 million students every month
  • Accelerate your learning by 29%
  • Unlimited access from just £6.99 per month

See related essaysSee related essays

Related GCSE Economy & Economics essays

  1. How Successful Was Nazi Economic Policy?

    In 1939 Germany was still dependent on foreign imports for a third of its raw materials. The Nazis realised that the only way Germany could become completely self-sufficient would be to conquer countries that could provide the raw materials they needed.

  2. Case Study: The Home Depot

    well as the store-owners who have to adapt this system in order to match with local demand. The basic portfolio is being enforced on a store by the headquarters but after that the store managers have the opportunity to adjust their portfolio.

  1. AN ANALYSIS OF MALAYSIAN ECONOMIC DEVELOPMENT FROM 1993 TO 2002

    During that period, GDP grew at an average annual rate of 9.5% with the highest growth rate recorded at 10% in 1996. [Figure 1, pp.7] In fact, 1996 marked the ninth consecutive year of rapid growth where the economy enjoyed the longest period of sustained robust growth.

  2. Toyota Motor Company Limited

    Therefore Toyota may be viewed as a threat to other car manufacturing company such as Toyota. Threat of substitute products or services: Substitute products are those products that appear to be different but can satisfy the same need as another product.

  1. Supply side policies and its economic impact.

    possible and when markets fail that test, government intervention can improve matters. Second, given that governments are already interfering in the market place for both good and bad reasons, they should strive to minimise the negative impact of their intervention.

  2. Chinese car market overview. Citroen case study

    Enterprises, with shortage of funds, and with weak survival capability and quick market response, will be eliminated. For a long time, China's car industry has been under the protection of the government in two ways, one, the high tariff rate, and the other, the control on import.

  1. Retailing In India - A Government Policy Perspective

    We then discuss the various aspects of Indian Retailing that need improvement and analyze the inherent complexities involved in the Indian retail trade sector. Then we analyze the Indian FDI experience, and try to drive some conclusions from the experience we have had in other sectors.

  2. US Financial Crisis vs. Economic Crisis

    Thus, paradoxically, the U.S. banks can be "saved" (in part) by the increase in foreign ownership. U.S. bankers are featured on their knees before these foreign investors, with prices and discounts to help them. It is also an important indication of the decline in economic hegemony of the United States as a result of this crisis.

  • Over 160,000 pieces
    of student written work
  • Annotated by
    experienced teachers
  • Ideas and feedback to
    improve your own work