IndiaEconomics: Ongoing Research
My research at the University of Sheffield and draft papers.
The Indian Economy in Transition
Overview
The twentieth century has been witness to enormous
changes in India’s fortunes. The end of colonial rule and independence brought
forth a state led policy of economic development referred to as “Nehruvian
socialism”. By the late 1980s, it became clear that India’s economic
problems were as pressing as ever. Comparisons with other countries revealed the
inadequacies of India’s development experience.[1]
The Asian “tiger” economies exhibited sustained high growth rates for many
years in succession, while India’s rate of growth remained at around three
percent from the 1950s to the early 1980s.[2]
More rapid growth in the late 1990s was accompanied by a break with India’s
traditional policy of fiscal conservatism. Unsustainable deficit levels
eventually culminated in a balance of payments crisis in 1991. The unlikely
combination of Manmohan Singh [Indian Finance Minister] and P.V. Narasimha
Rao[Indian PM] went ahead with a series of policy reforms that led to a
dismantling of the elaborate system of controls, and pervasive state
intervention in all spheres of economic activity. The result has been a
reappraisal of four decades of state-led economic effort and a realisation that
in many ways India faces the task of rebuilding her economy, before economic
progress becomes a reality for the people in India.
[1] India’s achievements on economic and social indicators have been revealed to be markedly worse as compared to countries like Taiwan and South Korea. In comparative terms, in 1950, both South Korea and India had roughly the same per capita income (at about 7% of the average for the United States). By 1980, this percentage had changed to 25% for South Korea, while it was virtually unchanged for India. M. Eswaran and A. Kotwal (1994), Why Poverty Persists in India, Delhi: Oxford University Press, p. 4.
[2] This has been derisively referred to as the Hindu rate of growth by Raj Krishna, who believed that a 3 to 3.5% annual rate of growth was all that the Indian economy could achieve in the long run. S. Khilnani (1997), The Idea of India, Penguin Books : London, 1997, p. 100. See also, J. Rohwer (1996), Asia Rising, London: Nicholas Brealey Publishing, p. 176, and L. I. Rudolph and S. H. Rudolph (1987), In Pursuit of Laksmi: The Political Economy of the Indian State, Chicago and London: The University of Chicago Press, p. 222. Events in the 1990s have proved that the Indian economy can grow much faster than the “Hindu rate of growth”.
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