As the economic slowdown begins to really hurt, the instinctive response has been to focus on the actions of the BJP government. This is perfectly understandable, given the destructive effects of demonetisation and the implementation of the GST. Yet, the focus on the government converts the debate on the economy into a BJP-versus-Congress game show. In the process, it ignores the fundamental structural impediments that are holding back the economy.
These impediments include those that resulted from policy responses to the challenges that emerged during the process of liberalisation. And, these impediments cannot be adequately analysed unless we step back from the mindset of the last three decades, where any critique of reforms is seen as necessarily being a step backward.
If we look beyond the short-term crisis management that goes for economic policy in India and trace the course of the economy during the 28 years since liberalisation, it is not difficult to spot the measures that have created the current impediments to growth.
Boosting competitiveness
In his 1991 Budget speech, Manmohan Singh had made a persuasive case for liberalisation. The foreign exchange crisis that had forced the country to quite literally pledge its gold was the result of India not being competitive in the global market. In order to improve the competitiveness of the Indian industry, it had to learn to compete with global products. Allowing foreign capital and products into the domestic market would help the Indian industry learn to compete, in an environment they knew better than their foreign competitors.
What followed was not quite in line with the original script. While the economy did move on to a higher growth path, it was not because Indian products became more globally competitive. What did become globally attractive, helped by a weakening rupee, was the cost of inputs.
Esta historia es de la edición December 23, 2019 de The Hindu Business Line.
Comience su prueba gratuita de Magzter GOLD de 7 días para acceder a miles de historias premium seleccionadas y a más de 9,000 revistas y periódicos.
Ya eres suscriptor ? Conectar
Esta historia es de la edición December 23, 2019 de The Hindu Business Line.
Comience su prueba gratuita de Magzter GOLD de 7 días para acceder a miles de historias premium seleccionadas y a más de 9,000 revistas y periódicos.
Ya eres suscriptor? Conectar
Covid Presents An Opportunity For India
India must attract investors exiting China post-Covid. Streamlining of project clearances and relaxation in FRBM norms will help
Did Alternative Assets Shield You From Covid-19 Volatility?
The assets closely linked to stock and debt markets could not stave off the losses
How To Put Aircraft To Bed
Preserving grounded planes, to get them up and flying at short notice, is a challenging task. Ashwini Phadnis captures the process
There Can Be No Going Back On WFH
Covid-19 has fast-forwarded the shift to ‘work from home’. However, some face-to-face connect will always be needed
UN, WHO Urged To Ensure ‘Benefit Sharing' Of Covid-Related Data
Biopharma firms should reach vaccines, medicines to poor nations at an affordable price, say civil society bodies
With No Clear Signal From Rlys, States Explore Ways To Bring Back Migrants
Quarantine centres, cross-country buses being arranged even as migrants hop on to boats, trucks and ambulances
Centre Allows All Neighbourhood Shops To Open But With Riders
Final call will be taken by local authorities; shopping complexes that draw fewer ‘outsiders’ are permitted to operate
Covid Impact Relatively Muted In India
Compared to Italy and the US, India’s rate of infection spread has been slow. This can be attributed to the strict measures in place
How Global Trade Will Fare Post-Covid
China isn’t likely to lose its pre-eminent position soon. India, for one, will need to make manufacturing globally competitive
How To Curb Harassment In The Virtual Office
Training and sensitisation are essential. Institute a strict dress code and chat etiquette to ensure professionalism during video calls