Development

Contents

Introduction 3

The Reforms and Impact 3

Industrial and Trade Policy 4

FDI 5

Infrastructure 6

Privatisation 6

Financial Sector 6

Other Liberalisation Measures 7

Conclusion 8

References 8

Introduction

For developing countries like India, sustained economic growth is a necessary condition for improving the quality of life of people in the country and achieving economic prosperity. Accordingly, many developing countries in the Asia-pacific region like China and India which account for one third of the world’s population are going through economic transitions. These transitions aim at improving efficiency of the economy and achieve higher rates of growth.

Post independence, Indian government followed socialist policies. The policies tended towards protectionism with emphasis on import substitution and the public sector. Setting up business in India was an elaborate procedure involving long and cumbersome processes of acquiring licenses and this also involved a lot of red tape also known as License Raj.

Foreign goods and investments were not allowed. This was driven by the colonial experience due to which there was a feeling that the internal markets should produce goods and flourish. The policies allowed for the monopoly of the public sector, led to very less investment on infrastructure development and were the cause of the bureaucracy and corruption which is still prevalent in the country.

In 1991, IMF bailed out the bankrupt state. This is when the government tried to adopt a more open and free economy and introduced several reforms. At that time, East Asia had embraced a more open economy and was able to reduce poverty and achieved more growth. This also prompted the government to adopt this approach.

The industrial policy of 1948 spelt out its approach for the development of the industrial sector which was followed by the Industries (Development & Regulation) Act, 1951 to regulate and control the development of...