The Free India - Chronicles of a liberalized economy

This year we are celebrating the 20^th anniversary of the event that changed the economic landscape of country. It was probably the most significant event in our young country’s history, most significant since our independence. This event propelled India from the fringes of the world to the centre stage. Today, if India is counted as a future superpower then it is due to this one significant moment. I am talking about the Liberalization of Indian economy in 1991.

Today India stands as one of the fastest growing economies of the world. People world over believe that we will overtake the Chinese in the coming decade. Today we are a respected economic power and the world listens when India speaks. We are amongst the most attractive investment destinations of the world.

The conditions under which these reforms were introduced were forced upon us. India was almost bankrupt, foreign investment was zero and growth was at standstill. Clearly none of our politicians had the muscle or the will to overthrow the old socialist system that was prevalent in the country since the time of our first PM Jawarharlal Nehru. So in a way we might consider ourselves fortunate that desperate times forced our leaders, then Prime Minister P.V. Narshimha Rao and finance minister Dr. Manmohan Singh, to take desperate measures. Nonetheless it was a very monumental decision, a decision that would shape the future of the nation.

Gone were the days of License Raj and Public sector domination. Gone were the days of government interference in even the tiniest of matters. ‘Business’ was no longer a bad word.

Pre liberalization era private sector was dominated by families with affluence and long histories. Today entrepreneurship is the buzz word. Liberalization gave birth to a whole new generation of entrepreneurs who have created business houses from scratch. We have seen the rise of the Indian MNC, a phenomenon unimaginable 20 years ago. Today the whole world salutes the business acumen of Indian entrepreneurs.

Liberalization has been a major force for poverty alleviation. About 300 million, that is almost the entire population of United States, have come out of poverty. Liberalization has changed the social fabric of our society, making the bulging middle class the fuel that is driving this country. It is this middle class that the world has recognized as the strength of our economy. Future growth of our country will be driven by this ever growing middle class.

People were expecting that on the 20^th anniversary of our economy our finance minister Mr. Pranab Mukherjee might usher in a new wave of reforms, but this expectation did not come true. The finance minister decided to play it safe. But India does need a second wave of reforms. Many economists and thinkers have started raising this issue of new reforms.

“The Free India” is a series of articles wherein we will see the difference that these 20 years of reforms have made to various sectors. Some very promising and exciting sectors like IT enabled services and Telecommunication came into the limelight. Sectors like Banking have grown strong over the years. In fact service sectors have taken the lead and are the highest contributor to the country’s GDP.

It’s been 20 years, but not everything that we had set out to achieve has been achieved. India still hasn’t crossed into the territory of double digit growth rate. Many problems still ail our economy. Many reforms are required to give a boost to our economy. This series also intends to take a look at what future reforms are needed and what new opportunities might lay in these sectors.

I would like to start off this series by talking about my favourite sector – Telecom.