Remembering the summer of July 1991 certainly
brings cheers to India’s current prime minister Dr.Manmohan Singh who turned 79 this week. Thanks to political turmoil ,high oil prices and an almost fiscal trap. India was barely left with enough foreign exchange to last a fortnight. As an immediate measure India’s central bank(RBI) was forced to airlift 47 tonnes of gold to the bank of England as a collateral for loan while it waited for more help for IMF.
Dr.Manmohan Singh the then India’s Finance minister then took a step which would change India and the way the world looks at it.Mr.Singh devalued the rupee,abolished the quotas and licenses that dictated who would produce what . The gone years have only showed how correct the decision was. India’s economy has almost quadrupled in size,growing at about 7% a year on average over the past two decades and over 9% from 2005 to 2007.Given India’s sheer scale, it’s economic rises is bigger than any that came before,bar china’s and far bigger than anything that will come after.And it’s demography, unlike china’s will underpin future growth.Mr.Singh’s liberalization was of more lasting significance ,July 1991 therefore deserves its spot in the pages of economic history alongside December 19788,when China’s communist party approves the opening up of economy or even May 1846 when Britain voted out the corn laws.
India is however not in a mood to celebrate . Although it’s economy sailed through the global financial
crisis,inflation is rising and growth slowing. Price pressures have persisted long enough to cast doubt ion the
assumption that it can resume growth of 9% or more without overheating . India’s for long has been dependent on foreign investment but the continuous global turmoil hasn’t helped. It would be interesting to see if it’s domestic demand could be ample or not. The Government seems to think that a stout defense of past reforms in enough. It sometimes act as if growth is given: an expanding workforce and an impressive savings rate guarantee extra lab our and capital. India’s ingenuity and entrepreneurial-ism will take care of the rest.
Every year over 25m(approx 1.2crores) Indians enter the world and the labor force swells by 10m or more.
Each year that passes without progress on malnutrition,schooling and hiring thus consigns millions of youngsters to marginal jobs with little chance of realizing their potential. The task that India now faces are different from the one’s in 1991,delayed Infrastructure projects land acquiring problems are causing a hindrance to growth and successive governments have failed to solve these problems.But to improve education health and nutrition requires strong policy implementation and it’s up to local authorities to make sure that the money is pit to right use.
Thanks to India’s efforts it is now a far more resilient economy . It’s not on the brisk of another crisis . But it’s recent economic performance gas been disappointing enough to make place for another economic reform like the one 20 years ago. In the last years of the government and final years of Dr.Singh’s career India’s politicians need to rise themselves and give reform another POWERFUL PUSH.
[ Article Written By Guest Editor – Nikhil Dawar ]
Views presented in the article are those of the author and not of ED.