onomi e orms 6.5
which had two-pronged negative impact on the obligAtory reform
Indian foreign exchange (forex) reserves. First, the Similar reform process started by some other
war led the oil prices to go upward forcing India economies since the 1980s were voluntary
to use its forex reserves in comparatively shorter decisions of the concerned countries. But in
period and second, the private remittances from the case of India it was an involuntary decision
Indians working in the Gulf region fell down taken by the government of the time in the wake
fast (due to their emergency evacuation)—both of the BoP crisis. Under the Extended Fund
Facility (EFF) programme of the IMF, countries
the crises were induced by a single cause, i.e., the
get external currency support from the fund
Gulf War. But the balance of payments crisis also
to mitigate their BoP crisis, but such supports
reflected deeper problems of rising foreign debt, a have some obligatory conditionalities put on the
fiscal deficit of over 8 per cent of the GDP and a economy to be fulfilled. There are no set rules of
hyper-inflation (over 13 per cent) situation.10 such conditions already available with the IMF,
The minority government of the time had though they are devised and prescribed to the BoP-
taken a highly bold and controversial step in the crisis-ridden economy at the time of need. A point
needs to be referred here is that the conditionalities
form of economic reforms criticised throughout
put upon India were of the nature which required
the 1990s by one and all—right from the all the economic measures to be formulated by
opposition in the Parliament, to the communist them. It means that the reforms India carried or
parties, to the industrial houses, the business is carrying out at present were neither formulated
houses, media, experts and by the masses also. By by India nor mandated by the public. Yes, there
now as the benefits of the reforms have accrued to was a large section of experts inside and outside
many, the criticism has somewhat calmed down, the government who believed in similar economic
measures to bring the economy on the right path.
but still the reform process is considered as ‘anti-
Some of them were arguing the same since the
poor’ and ‘pro-rich’ by at least the masses—the
1970s, while many other experts believed in them
people who decide the political mandate for the since the mid-1980s.12 But why after all was the
country to rule. At least one belief is followed by Rao-Manmohan Government credited to start the
everybody, i.e., the benefits of reforms are not reform process in India? It is because they thought
tickling to the masses (the ‘aam aadami’) with it suitable to follow and make it politically possible
the desirable pace.11 The need of the hour is to go in India. Imagine, a government proposing to
for ‘distributive growth’, though the reform has sell the state-owned companies to the private
sector or closing them down in a country which
led the economy to a higher growth path.
has been convinced that these companies will be
10. Vijay Joshi and I. M. D. Little, India’s Economic Reforms, the ‘temples of modern India’. The masses were
1991–2001, (Oxford: Clarendon Press, 1996), p. 17. convinced that the government has bowed down
11. The feeling is even shared by the government of to the dictates of the IMF, the imperialist forces,
the present time. One may refer to the similar open
acceptance by India’s Minister of Commerce at the the multinationals, etc. Even today such feelings
Davos Summit of the World Economic Forum (2007). are there in several quarters of the economy. The
In an interview to the CNN-IBN programme, the
Cabinet Minister for Panchayat Raj, and the North 12. The Seventh and the Eight Plans have many such
East (Mani Shankar Aiyar) on 20 May 2007 opined suggestions to give to the governments of the time,
that enefits of higher growth are going to the selected especially the latter Plan called for the same nature of
‘classes’ and not to the ‘masses’. the reform process, very clearly.