6.4        ndian    onom
          Technically speaking, shifting of economic
     policy of a country from one to the other above-
                                                              EconomIc rEforms In IndIa
     given three ‘alternative development strategies’      On July 23, 1991, India launched a process
     is economic reform. But in the history of world       of economic reforms in response to a fiscal and
     economy, it was inclination of the economies          balance-of-payment (BoP) crisis. The reforms were
     towards the market economy, which have been           historic and were going to change the very face and
     referred as economic reforms. In the Indian case,     the nature of the economy in the coming times. The
     economic reform has always been used in this sense.   reforms and the related programmes are still going
     Here, one should note that when India started         on with changing emphasis and dimensions, but
     the programme of economic reforms in the early        they are criticised as being slow ever since the UPA
     1990s, the world view was in favour of privatisation, Government came to power in May 2004. Back
     liberalisation, de-nationalisation, etc., as the main in the mid-1980s, the governments had taken its
     plank of economic reforms. But by the mid-            first steps to economic reforms. While the reforms
     1990s, not only the world view has polarised in       of the 1980s witnessed rather limited deregulation
     favour of a mixed economy’, but one another           and ‘partial liberalisation of only a few aspects of
     change was about to sweep the world economies,        the existing control regime, the reforms started
                                                           in early 1990s in the fields of industries, trade,
     i.e., the favour for globalisation sponsored by
                                                           investment and later to include agriculture, were
     the World Trade Organisation (WTO). Now,
                                                           much ‘wider and deeper’.8 Though liberal policies
     the developing economies (mixed economies
                                                           were announced by the governments during the
     with planning as their development strategy) as
                                                           reforms of the 1980s itself, with the slogan of
     well as the transition economies (Russia and the      ‘economic reforms’, it was only launched with
     whole Eastern Europe, and China)—who were             full conviction in the early 1990s. But the reforms
     already promoting the market-oriented reform          of the 1980s, which were under the influence of
     process were faced with a dilemma. To prosper         the famous ‘Washington Consensus’ ideology
     and compete in the globalising environment while      had a crippling impact on the economy. The
     they needed immediate liberation from their state-    whole Seventh Plan (1985–90) promoted further
     dominated mode of economies at one hand, they         relaxation of market regulations with heavy
     also needed to strike a balance between the state     external borrowings to increase exports (as the
     and the market on the other. Each one of them         thrust of the policy reform). Though the thrust
     tried to strike the balance in their own way with     increased the growth rate led by higher industrial
     mixed results. In India, the governments have not     growth (riding on costly imports supported by
     been able to convince the masses that the economy     foreign borrowings, which the industries would
     needs reforms and the attempted reforms will          not be able to pay back and service), it also led to
     benefit all. In every election since the reforms of   a substantial increase in foreign indebtedness that
     1991, the voters have not supported a pro-reform      played a major role in the BoP crisis of 1991.9 The
     government. Though the process of economic            crisis was immediated by the First Gulf War (1991)
     reforms started in India with the slogan ‘reforms         8.  Jeffrey D. Sachs, Ashutosh Varshney and Nirupan
     with human face’—the slogan has utterly failed                Bajpai, India in the Era of Economic Reforms, (New
     to garner the empathy of the masses. We may                   Delhi: Oxford University Press, 199), p. 1.
     hope that in coming times the masses will start           9.  J. Barkley Rosser, Jr. and Marina V. Rosser,
                                                                   Comparative Economics in a Transforming World
     connecting with the reforms and will able to get              Economy, 2nd Edition (New Delhi: Prentice Hall of
     the message clear, i.e., reforms are to benefit all.          India, 2005), p. 469.