Describe the Next Phase of Reforms in the Indian Economy

Economic reforms in India are linked to the neoliberal policies implemented by the Narsimha-Rao administration in 1991. The country was in the grip of a severe financial crisis caused by external debt, triggered by economic management failures in the 1980s. Profits from the government were inadequate to cover expenses. As a result, it was forced to borrow heavily from international banks to settle the loan, pulling the nation into an economic crisis.

To resolve the issue and move ahead with Liberalisation, India sought the help of the World Bank and the International Monetary Fund (IMF) for a loan and got $7 million. So, these international organisations anticipated India to remove the previously existing tight limitations to open its door to commerce with other nations.

Launching Committees for a Change

The rethinking of Indian economic policy began in the late 1970s with three government committees:

• The first on trade reforms, led by P.C. Alexander,

• The second on controls, headed by Vadilal Dagli, and 

• The third on indirect tax reform, directed by L.K. Jha.

In the next decade, further work was done on different policy fronts. The Seventh Five-Year Plan, developed by a committee led by Manmohan Singh, pushed for a shift away from a concentration on capital expenditure and toward improved productivity through technical up-gradation of Indian industry and Globalisation.

The Next Phase of Reforms in the Indian Economy

• The administration has successfully pushed through with crucial economic policy reforms that the previous regime had left on the table. Following the taken legislative decision, the legal groundwork for the new Goods and Services Tax (GST) has been activated, which led to the Privatisation of taxes.

• The emergence of Information and Communication Technologies (ICT) has altered the global economic order and influenced India’s entry into the global political-economic arena.

• Revolutions have occurred in finance and banking, infrastructure, trade, education, and social services.

• Due to strategic decisions, India currently has a new monetary policy to control inflation. The new bankruptcy rule will aid in addressing what Arvind Subramanian refers to as the “crisis of capitalism without an escape.” The Fourteenth Finance Commission had given the concept of cooperative federalism budgetary heft. 

• The government has also dealt with the administrative snarls that almost devastated the Indian economy, ranging from the misallocation of natural resources to the mishandling of the food economy to defence modernisation.

Important Aspects of the Next Phase of Economic Reforms in the Country

• Liberalisation: Liberalisation was conceived with the premise that any laws or limits put on free commerce must be relaxed for trade to occur. It enabled the opening of economic frontiers to international investors and MNCs. Several economic reforms were implemented as part of Liberalisation, including increasing production capacity, de-servicing of producing areas, abolishing government industrial licensing, and the freedom to import commodities.

• Privatisation: Privatisation means providing the private sector greater possibilities to regulate various services while limiting the involvement of the public sector (government-owned firms) in them. FDI (Foreign Direct Investment) was introduced in India with privatisation, providing healthy competition for Indian goods and services.

• Globalisation: It refers to the implementation of the Indian economy well with the global economy in the context of economic reforms. It signifies that India’s economy will depend on the global economy and vice versa. It promotes FDI and foreign trade with many countries.

Economic Reforms After 2014

• There has been a clear, apparent, and growing conviction with changes since the Economic Reforms after 2014.

• From the PMJDY (Pradhan Mantri Jan Dhan Yojana) in 2014 to the IBC (Insolvency and Bankruptcy Code) in 2016,our PM  has been able to push through hazardous measures such as 2016’s demonetisation and the GST (Goods and Services Tax) in 2017, the most complicated economic legislation since Independence.

• In his second election, which began in May 2019, he implemented three farm legislation reminiscent of the 1991 agricultural changes and demanded a great degree of courage and conviction. 

• Modi has employed moral suasion as an economic reform technique, such as millions of people willingly giving up gas subsidies and affecting reforms through legal means (legislations or announcements).

Conclusion

India’s economic reforms have been taking place recently and managing to change the dynamics of India’s GDP. The pace needs to go as it is going for India to finally reach the dream of a trillion-dollar nation. The country is reaching ahead towards betterment; it’s a good opportunity to look back on the last quarter-century and plot a course for a brighter future in the next 25 years.