5.44         ndian   onom
     social sector). In a sense, during this time, we see        (v) Excessive government dependence on
     an ideological shift in the government towards                   the financial system continued ‘crowding
     giving an ‘active’ or ‘central’ role to the private              out’ funds, and as a result, the private
     sector in the process of economic development.                   sector could not mobilise suitable levels
     This was an advice for a completely different kind               of funds for their requirements.
     of investment model. But due to lack of political          (vi) Technological upgradation and initiation
     will, the governments of the time could not go                   of new technologies into the economy
     in for the same. Though, we find the government                  got hampered due to non-availability
     going for a kind of limited degree of economic                   of foreign currency to the private sector
     reforms through the Industrial Policies of 1985                  (GoI, by late 1970, started facing the
     and 1986 (this should not be taken as Economic                   difficulty of paying its external liabilities,
     Reforms in India which officially starts in 1991                 which were mainly created due to the
     only).                                                           expansion of the PSUs).
           As a summary of the investment models up            (vii) Main sources of fund in this model
     to 1990, we can highlight the following points.                  were, government’s tax revenue, internal
           (i) Government remains the main investor                   borrowings, external borrowings and the
               in the economy and experts believe                     freshly printed currencies.
               that India did undue delay in putting              There always prevailed a lag between the
               in place an investment model by which        requirement of funds and their mobilisation
               the potential of the private sector could    resulting into government investment targets
               be channelised into the process of           getting derailed most of the times. In the
               developmental investment.                    meanwhile, the biggest crisis was building-up
                                                            in the areas of infrastructure shortcomings. By
          (ii) Emphasis on the public sector continued
                                                            early 1960s itself the Indian private sector was
               together with nationalisation drives
                                                            eager to enter this sector so that adequate levels
               also by late 1960s and early 1980s (the      of infrastructure could be developed. But due to
               PSUs, to a large extent, were privatised     several reasons we see the GoI continuing as the
               by the South East Asian economies by         monopoliser in these sectors.
               now, making these socially-oriented and
               loss-making units to catapult into hubs      PhAse-iv (1991 onWArD)
               of profit and real drivers of growth and
                                                            Due to prolonged follow-up of weak fundamentals
               development).
                                                            of economics and immediated after Gulf War-I,
        (iii) Tax system was structured to raise            India headed for a severe Balance of Payment
               maximum tax revenue (which led to tax        crisis by late 1980s, which made India go to the
               evasion and excessive tax burdens on the     IMF for financial help. It comes up but at some
               citizens).                                   ‘conditions’—the design of the ‘conditions’
         (iv) GoI continued cutting its non-plan            made India to go for a ‘restructuring’ of the
               expenditures so that resources could         economy under the process of economic reforms
               be allocated for the purpose of planned      commencing in 1991.
               development (which led to expenditure              Reform era shifted India towards including
               cuts even in essential areas like education, the ‘private sector’ (domestic as well as foreign)
               health care, etc.).                          for the future development of the economy—and