Skip to comments.India marks watershed economic reforms anniversary
Posted on 07/24/2011 8:41:58 PM PDT by James C. Bennett
NEW DELHI Two decades ago, India's Prime Minister Manmohan Singh unleashed radical free-market reforms that were a watershed moment in the transformation and rise of the South Asian giant.
"We shall make the future happen," declared Singh, who was then finance minister, in presenting his landmark budget on July 24, 1991, that opened up India's markets and cut through the country's infamous red tape.
"Let the whole world hear it loud and clear -- India is now wide awake."
Singh, a former World Bank economist, switched the country's course from inward-looking socialist policies to a more market-friendly approach in the budget whose 20th anniversary was on Sunday.
He simplified tax collection, slashed customs duties, invited foreign investment, initiated privatisation of government-owned companies and lifted the shackles on Indian industry by abolishing stifling production quotas. The period preceding the crisis has become known as the "Licence Raj" -- a time when rigid government controls laid down how much companies could produce and permits were required for almost every economic activity.
"The reforms were a great catalyst for the rise of Indian entrepreneurship which was held back by dysfunctional controls on companies," Shankar Acharya, a former chief government economic advisor who worked with Singh, told AFP.
The move to a more capitalist-style economy triggered a surge in economic growth as exports zoomed and foreign investment that cured India's fiscal crisis, boosted incomes and dramatically expanded the country's middle class.
"The 1991 reforms had a major impact on the economy, but there have been precious few in recent years. " Surjit Bhalla, chairman of Oxus Investments, told AFP.
"In China, the economy grows because of the government but in India, the economy grows despite the government."
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