Twenty Years of India's Liberalisation

Experiences and Lessons

image of Twenty Years of India's Liberalisation
India’s growth miracle has attracted worldwide attention, particularly because this growth has been pursuant to the wide ranging economic reforms introduced in the early 1990s. Many other developing countries intensified liberalisation during this period but were unable to experience a similar spurt in their economic growth. One distinctive feature of Indian liberalisation experience is the gradual and calibrated manner in which reforms were introduced, especially with respect to external liberalisation, be it in the financial, agricultural or manufacturing sector. This book brings together distinguished economists of India, who analyse the role played by trade and foreign direct investment (FDI) polices in growth and development of different sectors in India.



Calibrated financial liberalization in India: Has it served the country?

The policymaker devising a financial Liberalization program is often faced with a choice of cold-turkey approach versus the gradualism approach. While it is not a zero-one choice, economy-specific discussions of economic Liberalization in general and financial Liberalization in particular start with a priori. Depending on the ideological location of the exponent, the pace of Liberalization is frequently labelled “fast” and “slow”. This chapter argues that such branding of the pace of Liberalization suffers from an inherent over-simplification and that economy-specific contexts need to be appreciated before pronouncing any value judgement about the pace of reform. At the risk of repeating a cliché, the analogy could be one of driving a car where depending on the road condition, the driver needs to zero in on an optimal application of the gas paddle vis-à-vis brakes. To say that driving was slow or fast without any reference to the road condition is intrinsically misleading. Without trivialising the analogy, this chapter presents an analytical account of the financial Liberalization in India.


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