Thirty years of economic reforms of 1991-II

Thirty years of economic reforms of 1991 is remembered on major way to look ahead for next decade, or more. 

The following are some of very interesting analysis of what went right and wrong in the last thirty years while implementing various reforms in Indian economy.

If there is any big takeaway from India’s post-Independence history, it lies in the effects of the 1991 reforms. Those reforms essentially consisted of the government retreating from large parts of the economic space of the country. The result: A doubling of GDP growth and the lifting of over 200 million people out of poverty in the two decades that followed. This was the effect of individual and corporate enterprise being unleashed under relatively less controlled regulatory conditions.

To counter the liquidity problem, the government ushered in policy reforms aimed at speeding up the pace of economic growth. The reforms began with the devaluation of the rupee on July 1, 1991, followed by a second round of transfer of a total of 46.91 tonnes of gold from the reserve assets of the RBI in Mumbai to the Bank of England, which enabled India to borrow $400 million to solve its liquidity problems.

The demographic dividend will go into reverse gear. Government programmes in earlier years aimed at population reduction but will now switch to promoting larger families. The old slogan “Do ya teen bas” will be replaced by “Sirf do ya teen, bas?”

The character of higher education and the governance and standards of the professions in India are likely the principal reasons why the social and political role of the Indian middle class has been so wanting.

Another problem is that most of our public discussion of reforms focuses on what the central government should do, but water, electricity distribution and health are critical areas which are all in the state sector. If you check what politicians are saying in state elections you will see that it does not reflect an awareness of the need for reforms.

Looking at the recent discussions on agricultural marketing reforms, the best course of action now may be to leave these measures to each state to decide whether they want these legislations or not. That will set the stage for experimental economics and farmers themselves will be able to see the best possible solution for different crops and conditions.

Wealth will thus migrate from developed countries to India. Of course, a critical requirement to achieve this goal is rapid re-skilling of our workforce and reforms in our education system to make our children and youth futureready. Specifically, we must expeditiously build world-class universities and research centres and also upgrade existing institutions to serve India’s 21st century needs.

India proved resistant to the sweeping transformation that would boost many East Asian economies. Too often, Indian politicians packaged measures designed to aid an individual business or industry as economic reform, when the measures in fact retard competition and growth. Pro-business is not the same as pro-capitalist, and the distinction continues to elude us.

Thirty Years of India's Economic Reforms

This year marks the journey of thirty years of major economic reforms of India which started in 1991 although not in a systematic manner. All the major steps taken to push the country out of abject poverty were really paid off much more than it was thought out to be by many experts. The reform journey is still yet to complete full square.

The following articles reflects on the India's 1991 economic reforms with a strong note on what should be done to complete the circle of the reforms both structural and systematic process of making the country not just rich by GDP but by every individual's prosperity with better standards of living.

Delhi based public policy think tank Centre for Civil Society has documented with well thought out articles on India Before 1991 major crisis, the economy that was crawling for decades to take off. 

Like 1991, 2021 is an opportunity by C. Rangarajan

‘More than just a BOP issue’ by Montek Singh Ahluwalia

"India’s path to capitalism is yet to credibly create markets that embrace competition and create conditions for widespread prosperity." Says Yamini Aiyar.

Reforms and Indian capitalism By Yamini Aiyar.

India after 1991: Towards East Asia or Latin America? by Niranjan Rajadhyaksha

The 30 years that changed the country

30 years after 1991, liberalisation 2.0 needed by Shankar Aiyar

From 1991, the lessons for the India of 2021 By Montek Singh Ahluwalia

India's reform story, a series of articles and interviews and discussions of experts.

Cities need to adopt a bundle of fundamentals: Case study of Erode in Tamil Nadu

This my new article on how cities governance has to be shaped up with a case of a tiny Erode city in western Tamil Nadu.

A slice from the piece:

"Public policies in cities need to provide an enabling environment and a level-playing field to promote and nurture its      common identities with a strong governance system in place and to protect the interests of all. However, a tiny city like Erode in the western part of Tamil Nadu indicates anything but this  in the sense of good governance. Recently, there was news that the district administration of Erode has invited suggestions from the public to improve its road traffic systems, although the district administration has a very limited role in the growth and development of city administration and reforms."

My other articles on Erode city governance, growth and development are here, here,

Macro-economist Robert A Mundell (1932-2021): RIP

‘Impossible Trinity’

Recently, world renowned macro economist and Economics Nobel Prize winner Prof Robert A Mundell passed away.

Some of his early research were bath-breaking in the fields of international macroeconomics especially on the currency, trade, monetary policy and exchange related issues. 

He was awarded the 1999 Nobel Prize in economics “for his analysis of monetary and fiscal policy under different exchange rate regimes and his analysis of optimum currency areas.” A brief note on his major works are here.

The debate between great free market economist Milton Friedman and Mundell is really fascinating even after decades of its happening.

The following are some of the obituary articles explaining Prof Mundell's contribution in the world of economics:

Nobel prize winning economist Paul Krugman argues many dimensions of Mundell's contributions in international economics. 

Remembering Robert Mundell

Robert A. Mundell, a Father of the Euro and Reaganomics

The Euro Hero Economist dies

Dr. Mundell was widely regarded as one of the most consequential economists of the late 20th century, his work often compared or even equated with that of John Maynard Keynes and Milton Friedman. 

RIP, Robert Mundell: The economist BJP needs to adopt

The Zeus Of Economics Has Died

Father of International Economics by Martin Wolf

Former student of Mundell: The genius of Robert Mundell

InfraNirbhar Webinar Series: Sanjeev Sanyal Speaks On Building Smart And...

Biodigester: An Antidote to Cities’ Septage Management Challenges

I have a new article on one of the underpinning cities of cities in India. It is even grave situation in state like Tamil Nadu.

Few years ago DRDO, GoI, had came out with a decentralized technology to address the septage waste management, despite its high potentials, this technology has not been revolutionized yet. This year Union Budget has also talked about it a bit.

This article explains the need for revolutionary of decentralized septage waste management with bio-digester technology,

Very few companies makes cost effective DRDO model bio-digester septage tanks with its technology, MAK India Limited is one such company which makes quality bio-digester with cost effective manner.

My Talk: Dr P.V. Raghavan Endowment Lecture

My Talk on Union Budget Making and Implementation: Public policy Perspective: Dr P.V. Raghavan Endowment Lecture

On last Saturday i.e. 30.01.2021, I was invited to deliver the Prof Dr P V Raghavan Endowment Lecture on "Union Budget Making Process and Implementations in India: Public Policy Perspective", organised by Department of Economics, D G Vaishnav College, Chennai.

I was humbled by the presence of Prof.P.V Raghavan, who is now aged above 80s but was keen to participate in the event. He was Extremely inspiring teacher of economics especially micro economics.

The Union Budget is a important policy document of the government but how it is prepared to address various sectors issues and challenges are something unknown. There is seems to be missing some institutional framework system for stages of budget making process with some fair amount of transparency and accountability on decisions.

Moreover, the regulators and implementer of the budget announcements were always find clueless practically.

C.Rajagopalachari’s Venerable Thoughts on Culture

I have new  piece on thoughts of one of greatest statesmen of twentieth century India, C.Rajagopalachari who had profound thoughts about "culture" which is the most abused word in the literature anywhere in the world. But his views are civilization transition in nature and has relevance for all times.

According to Rajaji “civilisation has two instruments to achieve the object of curbing the sensual instincts and preventing or deterring over-indulgence.” He explains that one instrument is the government's enforcement of the law through penal codes and other instruments, importantly, the “civilisation is culture which acts through family training, tradition, religious belief, literature, and education. Culture puts down over-indulgence acting as an internal force, as distinguished from penal laws which operate from outside. Where it fails, it acts, though social obloquy and in very bad cases, through social ostracism".