Decoding the Indian financial economy in 9 years

Animportant development in the last few years has been the increased focus on technology enablement in the banks in the form of digital banking.

- NEETI SHIKHA & RAHUL PRAKASH

The economic philosophy of India soon after it gained its Independence can be well captured in a quote by its former Prime Minister Jawaharlal Nehru who said, “The public sector (in India) must grow not only absolutely but also relatively to the private sector.” The reliance was on the public sector to build up the core sectors of the economy, as agreed upon by private sector leaders in the 1948 Bombay Plan.

However, the Indian economy has undergone transformative changes since 1991. Structural reforms in the economy—initiated post 1991—have continued albeit with different speeds under all governments, irrespective of political inclinations. Most of the reforms catered to the product and capital market liberalisation, i.e. delicensing the manufacturing sector, removal of restrictive trade acts, opening up of the sectors for foreign investment, deregulation of the currency market, etc. The structural reforms gained impetus post 2014. Focus on governance and administrative reforms led to more trust in the market. There has also been push on privatisation though increased private participation and push for neoliberal ideas. Goods and Services Tax, Insolvency and Bankruptcy Code, enactment and simplification of new Labour Code, investment in infrastructure to create more public goods, increased efficiency in the target-based welfare delivery system through direct benefit transfer have been some of the hallmarks of the reform process in the last nine years. The reforms addressed administrative bottlenecks as well as leakages.