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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.

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Role of trade policies in growth of Indian manufacturing sector

Manufacturing sector in India, compared with the other sectors, has always been the main focus of Liberalization policies. From import substitution policies of the 1950s to export promotion strategies of the 1980s and to major tariff Liberalization of the 1990s, the sector has experienced a wide variety of policy interventions. However, this sector has also been of major concern owing to its sticky growth rates, decade after decade, and persistently low contribution to total output and employment in the economy. The sector’s average annual growth rate remained around 5.8 per cent in the 1950s and 1960s, falling to 5 per cent in the 1970s and returning to 5.8 per cent in the 1980s. The sector’s contribution to GDP varied from 12 per cent to 14 per cent from the 1960s till the 1980s and its contribution to total employment remained low with negative growth in the 1980s (-0.12 per cent per annum).

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