ECONOMIC LIBERALISATION

  In India, the Economic Liberalization constitutes the on-going economic reforms in the country related to the private sector and the foreign investors of the economy. In 1947, after the Independence, India adhered to the ideology of democratic socialism. In 1966 and 1985, attempts were made for the liberalization of India. In 1967, the first attempt was reversed. Thereafter, a vision stronger than before was adopted. In 1985, the then Prime Minister, Rajiv Gandhi made the second major attempt. The process, however, halted in the year 1987.

            India in 1991, the country was stuck with a severe crisis of Balance of Payments and was nearly pushed to bankruptcy. India had to give away 20 tons of gold to the Union Bank of Switzerland and about 47 tons of gold to the Bank of England as a part of bailout deal with the International Monetary Fund, also called IMF. Moreover, many other economic reforms were forced upon India by the IMF.  As a result, P.V. Narsimha Rao’s government and the Finance Minister, Manmohan Singh, introduced revolutionary economic reforms.

            The reforms as introduced were:

1.     Industries were exempted from licensing

2.     Expansion of Industries

3.     Freedom of Production

4.      Investment limits of Small Industries were extended

5.     Inviting Foreign Direct Investment (FDI)

However, FDI has some positive as well as some negative aspects.

The positive ones include:

·        In the retail sector at least 10 million jobs would be created in the next three years.

·        FDI in the retail sector would be of help to the farmers so as to secure remunerative prices by removing exploitative intermediaries.

·        Because of the retail sector, it would lead to the Globalization of markets.

The negative points constitute:

·        Most of the Indians would lose their jobs and the shops wholly, because of the entry of the Big Shot Retails.

·        India would become a country with a high spending rate, instead of a high saving rated country if the foreign countries enter the retail sector.

·        It would monopolize the Indian market.

 On the emotional and philosophical aspect, any form of foreign participation in the Indian market is equivalent to the dangers of the colonialism. However, in principle, the government should not prevent anybody, Indian or foreign companies, from setting up any business unless there are appropriate reasons to do so.

SHAMBHAVI GANESH