What have India’s reforms achieved?
True, the growth rate has averaged eight per cent annually in the last two decades and the Indian industry has been exposed to competition. But has the resolve to indigenous development been redeemed? The truth is that consumer goods of foreign brands have flooded the market, which the burgeoning middle-class has lapped up. There has been an import of plant and machinery, too, but we lack in productivity and efficiency. Foreign companies have entered the field which finance ministers before Manmohan Singh had reserved for domestic producers who were not yet ready for competition with giants from abroad. The result is that many Indian producers have disappeared.
Resources for development were supposed to be raised from those who have the capacity to pay. This called for an increased rate of taxation. But the ceiling of income tax has been fixed at a mere 30 per cent. Millionaires are happy with the tax, which is less than what the same class pays in developed nations. There are now as many as 59 billionaires compared to just one 20 years ago. And now the retail trade, the backbone of the lower and middle-classes, is being opened to multinationals.
The country’s economy is guided (or misguided) by the World Bank. America is its boss. US Secretary of State Hillary Clinton admitted in Chennai recently: I can tell you that we (the West) are, in fact, betting on India’s future. We are betting that the opening of India’s market to the world will produce a more prosperous India.
I don’t know about India, but America has gained a lot by selling defence equipment worth $800 billion. India’s investment is the highest from among the investors in the UK. What has it got in return is the question that people ask Manmohan Singh.
After signing the nuclear energy treaty, Washington has not implemented it because it fears India’s indemnity act does not waive off the responsibility on the suppliers of nuclear power plants. After the experience of the Bhopal gas disaster, no government at Delhi can let the suppliers run away from compensating the victims for faulty equipment.
The US did not even insulate India from the treaty by the Nuclear Suppliers Group so as not to give access to nuclear enrichment and reprocessing technology to those countries which failed to sign the Nuclear Non-Proliferation Treaty. The 2008 India-US treaty had promised New Delhi a clean waiver for India.
As for the UK, it came through the East India Company and ruled us for 150 years. Now London’s ambition is not territory but free markets. New Delhi has made all the concessions that the British industry wanted. Tariffs have been lowered for all their imports. This benefits other foreign exporters as well.
The West, particularly the UK, is interested in services and has a substantial share of them in India. Our industry is beginning to be counted. Yet it has to have foreign investment, technology and markets. But there is no word on that. British Prime Minister David Cameron and Hillary Clinton must realise that it cannot be a one-way street.
In his speech on July 24, 1991, Manmohan Singh had quoted Victor Hugo’s observation that no power on earth can stop an idea whose time has come. He said India’s time has come. Let the prime minister learn from the progress that the country has made in the last 20 years and introspect where things went wrong. Some 30 per cent Indians, according to a report which has official backing, live on less than $2 a day. Around 52 per cent of the population is said to live in poverty. Maybe India’s time has come but the idea has gone awry because it has benefitted the upper strata. The rest are still wallowing in poverty and helplessness.
Published in The Express Tribune, August 1st, 2011.
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the reforms are quite strong but their implementation is lacking somewhere.So ther's need to implement them properly.Whether the reforms related to the education or farmers they need proper implementation.And without proper administration it can't be acheived.
kuldeep nayar remarks about \what indias reforms have achieved/ are devoid of facts about indias economic growth in 20 years of liberlisation of economy. I dont understand to whome he want to please or demoralise with his remarks. his remarks are allways vague. ved prakas chopra.
@Vicram Singh: Don't forget the candle-lighting at Wagah! That should keep him busy!
My suggestion is that the author should stick to the aman-ki-asha and liberal visa regime circuits.
The writer appears to be in some sort of depression in which negativity of the mind sets in. A person in such a state of mind will see will see the glass half empty instead of half full and that is precisely the whole article is all about. He talks about more billionaires produced in India. The question he needs to be asked that are these rich namely Ambanis, Tatas. Birlas, Mittals etc not generating lakhs of jobs in India which benefits all ie the poor, middle and the upper classes ? The economic growth has certainly uplifted the poor to a great extent if not all of them which may take another ten years or so. Did a house-hold maid would have dreamed to own a fritz, TV, gas or a mobile and even sent her children to schools/colleges ten years back ? The achievements are far too many which cant be penned in this forum.
Very biased article which hasn't seen all sides of the picture. People who love to crib "Reforms hasn't done much" ought to remember the dark ages of the Socialist years- where our isolationist policies reduced our foreign exchange to 1 billion $ - less than 6 weeks worth of imports!!
we had to hedge our gold in England to get a much needed IMF loan!! And now - 20 years later - we're on the way to becoming a world power - our military might is stronger because our economics is stronger.
Case in point : Servants are no longer available freely in a country that used to have an army of poverty stricken people willing to do all kinds of labor! With MNREGA and other social welfare working programs the govt COULD initiate because of rising coffers post reforms - people in India are finding their place in society!!
Now if people are expecting thousands of years of caste apartheid and over 50 years of congress led destructive socialist economic policies can be wiped out in one go - please go get your heads examined!!! I for one, am glad reforms came in. It gave me a choice to apply to CISCO, Microsoft, Sun when I finished engineering - and not the sad and decrepit PWD as was coveted during my father's IIT years!!!
The reforms are working. Go to any corner of India and ask the poorest farmer with the mobile phone what HE thinks !! Then paint your "Back to the 80s" Hindu Rate of growth articles with aplomb!!!
So many indiano trying to look at us from window.
india doom days ahead with all these prediction because started 20 years ago at 12 pm.
"What have India’s reforms achieved?"
Dear Sir, India's reforms have achieved many things for many people - if you care to change your specs, you will clearly see. will not be abvle to repeat all those innumerable achivement in the limited webspace of ET.I completely agree with those who wrote how the reforms helped them. My family rose from close to poverty line because we, the kids of the family, had two things. 1. Opportunities because of Reforms. 2. Education to grab those opportunities.
To spread the benefits of reforms, we need to spread the education and also keep improving its quality.
India doubled its economy in last 5 years. We will reach close to $2 trillion by March 12. It will again double in the next 5 years. That would mean lot of money would be available for further development.
Last weekend, I went on a trek to a fort in Sahyadris. I had visited that fort around 17-18 years back. At that time, the village at the base of the fort, had a very basic school. Now, they have a small but neat school. The temple ground and many parts of internal village roads are fitted with interlocking concrete blocks! Such developments can happen only if you have money.
@ Riaz Haq
u cannot compare the economies of India and Pakistan. India has Billionares and millions of millionares apart from middle class and huge poor population. Pakistan seems to be having only the miserably poor class. a few sprinkling of millionares maybe.
I think in this article most of the contributors are Indians. I am happy that most of the comments were of positive in nature than the article itself. That is the growing India. Older generations have to hand over the baton.
@Jaideep: You mean why dont we protect Indian businessman from global competition and let him sell third rate product at first rate price to the consumer and let the customer burn in the same hell when upto 80's he had to wait for a scooter for 5 to 6 years.Certainly we deny that position any more.
Kuldip Nayyar is yearning for those "good old days" of Nehruvian "socialistic pattern of society" when we would go about cutting off people's heads to make every one equal in height. That is what Harold Laski probably taught him (Nehru). By the time Nehru was done with his "socialist" madness, India was starving and had become as dependent on the PL 480 agricultural assistance from the US to feed itself as Pakistan is today for every kind of aid. But, he very conveniently died when he did, without being held accountable for all the depredations he brought upon his innocent nation. When the situation became so desperate, his successor, Lal Bahadur Shastri ("Jai Jawan, Jai Kisan") sent a delegation to US to beg for food aid once again but Lyndon Johnson absolutely and gruffly refused. The only people in those "good old days" whose girths increased by leaps and bounds were bureaucrats like Kuldip Nayyar. They were the kings on the hill regulating every damn aspect of Indian life with their quota, license raj. You couldn't produce a bar of soap without their say-so. Is it any wonder that Kuldip Nayyar rues reforms which made people like him redundant and unwanted, unlamented and unmourned!
Kuldip Nayar is wrong on all counts. The problem in India is not too much reform; rather it is the lack of it in large sectors of the economy including agriculture and governance. Where does Kuldip Nayar think the money for the NREGA or the Sarva Siksha Abhyan come from? the moon? Most of the corruption we are witnessing are in areas where the government has a monopoly and discretionary powers. What is needed is accountability and transparency in administration with effective governance, followed by exemplary punishment for law breakers.
As far as agriculture is concerned , India's yield per acre is half that of developed countries. We don't have storage facilities. 40% of vegetables and fruits perish before they reach the markets. And farmers are dying. Need there be more reasons for reform?
Kuldip Nayar and his ilk would do well not to look at the past with rosy tinted glasses. Millions of Indians have moved up in life, motivated by ambition and enterprise after 1991. The poor don't want sympathy or handouts, just opportunities for a decent shot at life, which the sanctimonious socialism practised before 1991 never allowed for.
Kuldip Nayyar is an idealist. There is no ideal system. Yes, indian leaders have failed India, but they could've failed even more, and things could be worse.
Things are bad, but not half as bad as they were 20 years back. This is more a case of seeing Glass half empty than anything else. Check poverty figures, it has come down substantially.
And, would the author also care to comment his involvement in the Mr. Fai circus in USA??
Nayyar and other leftists are unhappy about income equality. They were much happier when everyone in India was poor.
Let me turn Mr. Nayyar's question on it's head. What did the 40 years of pre- reform Indian economic management achieve? The "hindu rate of growth" of 3.5%?
With regard to oligarchy, that is what existed in India till the 90s when families like Nandas (escorts) thrived on government patronage. Today there is far greater flux in the rise and fall of private sector entities - the opposite of an oligarchy.
If anything reforms have been too slow. Our current labor laws protect the miniscule minority of unionized workers against the interests of millions of un / under employed. India's lack of investment in infrastructure and lack of reform has held back it's ambitions in becoming a manufacturing hub like China - which is where the millions of jobs are.
I do not think my country failed me. My parents started their life in poverty. However , they took huge loans to give me good education. I work as an engineer with a multinational and will be out of debt in 5 years. I do not spend a cent thinking about the past. I do not care about GDP numbers, poverty %'s , reservation, corruption. I just have the hunger to succeed in life & I will work harder. My dad told me , " if you beg for benefits , you will always be a begger. So create your own destiny , do not worry about the circumstances ". Poverty existed earlier & we will have poverty in the future. Do not worry about it , just dream and work hard.
Forgot to add, there was not a single farmer suicide before 1991 reforms. Possibly even no Hindu-Muslim riots before 1991 reforms. Please feel free to add to the list, if I have forgotten anything
Agreed. India was a great place before 1991. There was no poverty, no inequality, no iiliteracy, no malnutrition, no beggars, no child & maternal mortality. India was a land of milk & honey and it was glorious. Reforms of 1991 have spoiled everything. I hope nobody misses my sarcasm.
India neds more reforms to live to its full potential. Mr Kuldip Nayar earns his living by anti-India propoganda. Sir, have you spoken to Mr Ghulam Fai lately ?
What does Mr Nayar expect. Everything to go right from Day 1. Compared to my younger days, the villages around my town in Tamilnadu are much better of. Compared to 1000 engg seats in Tamilnadu in 1970s, there are more than 100000 engg seats, 5000 medical college seats and the govt fixes fee structures. The no of graduates coming out of all colleges have gone thru the roof with some govt support in the form of free college education for the first graduate in the family, free laptops and ofcourse reservations. Only education can provide salvation and that is going on. Agreed, there are incidents of extremism, vulgar wealth and farmers suicide. Isnt the govt doing anything about it. What about the crude oil prices and gold prices, havent they gone thru the roof after India liberalised. With our obsession with Gold, how many farmers are hoarding gold instead of doing farming. Could mr nayar provide any data on such misappropriated wealth esp in rural areas. One can be cynical of the progress we have achieved, but that cannot be taken away at all. All we need now is a corruption free govt and then things should automatically turn for the good.
yeah i am pretty satisfied with his views because the reforms are made to help out the general public. so i whole heartedly accept the above views.
It's very obvious the beneficiaries are the politicians and a select few! The common man has never benefitted any time in India. Remember Dronacharya during the days of the great Mahabharat was so poor that instead of milk he would feed his son water mixed with wheat floor. For one square meal he promised the princes that he will get their ball out of the well. Also Sudaama, Krishna's childhood friend lived in abject poverty ! Who are we Indians kidding ? On paper India is the fourth richest country in the world, so why are we still toiling? Where is the money ?
After reading gushing articles about how well the Indian economy is doing, this is a sobering analysis. Nevertheless people know that beneath the glamor of high GDP growth rates, India has deep fault-lines and the highest concentration of poverty in the world -- far greater than sub-sahara Africa.
On a separate point, why blame the west for selling India armaments? India wants to buy them, do they not?
Your narrative makes it look as if the financial-reforms have something to do with the farmers sucides. Why is it that illiterate Bangladeshis can work and live in Mumbai, Calcutta and parts of Southern India, whereas farmers from Maharashtra commit suicide like this. The reason is mostly sociological.
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It is not for the government to uplift all the citizens who are poor and miserable. People have the responsibility to uplift themselves.
Mr. kuldeep nayar, Compare 1947 to 1990 with 1991 to 2011. You will come with answer the reforms were better. We want more reforms in other sectors too.
Domestic producers who were not able to compete have disappeared. That is survial of the fittest at work and can only be good for consumer. You are also completely ignoring the other part of the story. Which is that Indian industry has matured and is no longer India centric.
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Indian IT and BPO industry brands like WIPRO, INFOSYS e.t.c. are well known all over the world. India is refining crude from Iran, Columbia. As far away as in Belgium they use petrol from Columbia, refined in Indian refineries. Indian telecom major Bharti is operating in many African countries. Indian mining companies like Tata Steel, Sterlite, SAIL have acquired mining blocks all over the world. The popular brands Land Rover and Jaguar now belong to TATA Motors, which is an Indian company.
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In short this is the age of globalization. You should wake up from your socialist dream.
Why do retail traders need to be protected from international competition. It is precisely the lower and middle-income classes that will benefit from retail being opened up, because competition will make quality goods more affordable.
This is only a small thing that Indian government can do for the tax-paying minority who are in a no-minor way responsible for India's growth.
Who do you think then contributes to the resources for development. Poor people?!
The lower tax cieling is around 180 thousand rupees. This itself means that the rich have to shoulder the burden of tax.
Agricultural income is totally excempt from income tax. In many Indian states farmers get free electricity. In 2008, because of a bad crop season, Indian government wrote off farm loans worth $ 15 billion. Who do you think covers for all this loss. Poor people -or- tax payers?
$800 billion is almost 1/2 of India's GDP! $200-240 billion is what Indian government collects as taxes in a year. Around 40 billion is what India spent on defence in 2010.
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$800 billion looks like an overtly exagerrated figure to me. It would be India's defence spending for 20 years!
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Even if suppose Americans have gotten so much money in selling defence equipments to India. Comon India buys them because it thinks buying is better than manufacturing it on its own.
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And remember it is not a one way street. 60 % of India's IT exports are to the USA. Indian IT industry annually exports at least $ 50 billion. That much is not even India's 2010 defence budget.
@Riaz Haq The important point to note here is that many of these billioniars are first generation rich, without having any feudal, political or business background. So it is not really as if the rich are controlling everything, the field is open. I understand the point the poverty is still there but having a socialist system will not prevent it. The suggestion to increase tax on rich is gong to be counter productive as rich will stop reporting their actual income, it has happened in the past, when most of the rich used to stash away there welth as black money and show a red balance sheet. Government has to work on universal education, helth care and social reforms, that is the way to move forward and I don't think lack of resources is the reason for slow progress. It is corruption which is eating up the government spending and prevention of corruption is top priority for India. Only hope is that people have started taking note of good governance and this will force political parties to show better governance rather than some useless ideological slogans.
The author is so wrong on facts that one wonders wehre to begin. No wonder, Hindu society advocates "vaan-prastha" for aged. Kuldeep Nayar who has been active since early 1950s.. should now call it quits.
Is the farmers' welfare the only barometer to measure development? How about the urban poor? Aren't they benefiting from the reforms of 1991? If the farmers are still committing suicides, it is a shortcoming of policies from 1947 onwards, not 1991. It is the byporduct of socialist era rules and mindsets which are yet to change. The government has no business to run businesses. If they exit all the PSUs, they'll have more money to spend on welfare of poor. Unfortunately, the unions have become so strong that they dictate what the onwers should do. The government has confused policies. Its implementers are crooked. So, the poor do not get the desired benefits. The fact is - socialism and communism are good only on paper and in utopia, not in real life. We've seen what happened to the mighty USSR, eastern Europe, and to us (1947-1991). Of course, there are some pitfalls attached to capitalism, but you can always control it. Greed and competitiveness looks like the only driver of humanity's welfare that works.
What have India's reforms achieved? * It has provided us with an average growth of +8% for the past 5 years, +7% for the past 15 years. * Has made Indian goods competitive - after many decades, exports are actually growing as a % share of world exports in the past decade (sorry, I don't have the figures). Indian goods are as good as anywhere else in the west. * It has done away with the Licence Raj. I can buy whatever I want to, not what the bureaucrats tell me to! * The taxation policies (30% limit) has resulted in a substantial increase in compliance. The direct taxes have increased as % of government's total revenue. * Nuclear treaty - The fact that the US made an exception to its own rule wrt NPT to accomodate us says a lot. Forget about insurance of suppliers. Those are tactical details, not strategic. * I can list another 15 - 20 easily but there's no need. I think these are sufficient to drive my point.
We've to concentrate on only one thing wrt development. It has to be equitable.
I wonder why Mr Nayyar has to air his Lefty views in a Pakistani paper, tho' i admit ET does command a fairly large Indian readership. Obviously Mr Nayyar would be in good company with the "Hindutva" group Swadeshi Jagran Manch. Their views on the economy match Mr Nayyar's exactly i.e. Luddite with an Indian accent. I don't see how going back to Indira Gandhi's 97% taxation rate will help either. Economic distress of the farmers is not because of, but due to lack of reforms at the village level. In the old days the farmers were at the mercy of the money lenders, today it is the bank and private financier. Holdings are getting smaller with each new generation, and a compulsion to produce or perish makes them get finance for tractors, spray equipment, pesticides, fertilizers etc. Poor access to markets makes for poor financial returns. Two such failures in a row means getting into a debt trap. I don't see how making Tata or Ambani poor will solve any problem.
@Everybody - There are lot of things that still need to be rectified in India. But people should know that in 90s, 75 percent of the population was termed as poor which currently stands at 50%. So the point is that there is a gradual improvement and by 2030 we should see a much more improved stats. The major problems that we are facing now are corruption and bureaucratic inefficiency.
@Arindom:
No we did not go wrong. I know everyone who benefited from this economic freedom, have in one way or other try to help others to come up the ladder. But the economic freedom and politicians willingness in not in sync. While we thought hard word we can move forward, the politicians thought it is a new slogan thorough which they can move move forward. Result: 2G scams. CWG scam etc., Now the middle class which fought through this economic freedom is finding solace in Anna Hazare/Ram Dave kind of movements? Hope we will see the light in the end of tunnel. I have every hope that at the fag end of his career, Dr.Manmohan Singh will open out his mind on corruption as he is the one PM who has seen the monster in closed encounter?
Mr. Kuldip Nayar, I am a second generation Indian, I was born poor but I wanted to grow much before 1991 economic revolution began (precisely in 70's), no Govt. helped me. Thank God, my father within his short span of 51 years of life gave me University education in spite of being in debt and made my other three siblings suffer. I realized that I have to emulate him and gone ahead. Today, we are all fine thanks to the struggle. If you want freedom and would like to excel, you should not believe in Govt. but Constitutional rights and fight. If you believe in Govt. dole, please dismantle democracy and believe in Mao and Communism like China.
ps: Please don't quote farmer's suicide as Govt.'s failure, but local compatriots failure to protect? It is the failure of local Panchayat? Building of a democratic Center begins from Panchayat level.The strength of any nation is derived from within i.e. micro interiors.
India's reforms have acheived neoliberal chaos - its democracy is held hostage by businessmen who are increasingly seduced by the cultural fundamentalism of Hindu nationalism and its public discourse has become so corporatized selling a crude brand of patriotism that it leaves little room for any genuine intellectual discourse or dissent in India.
people also do sucides in China too
20 years back everybody was poor in India. Middle class purchasing power was non-existent. India was ancient in everything - airports, trains, TV, jobs,electronics, healthcare , sports etc. Now , even if the 50% poverty number is true, that means over half a billion people have come into the middle class and above. They eat good food, send their kids to USA for education and go to Europe for vacations. The trend is in the positive direction. I don't know how else India could have attempted a metamorphosis. There will be poor people any place you go. Even USA has them. But as long as there is a mechanism to escape the circumstances (at least for their next generation), there is some hope.
Maybe the author Mr Nayar can ruminate and detail how things have turned positive for his grand kids or kids from extended families in the last 20 odd years. Maybe somebody else can quote how the GDP per capita number has fared over the last 20 years.
I supported the reforms wholeheartedly when they were launched in 1991- as we were breaking free and the energies of India were being unleashed. As an educated member of the middle class I have personally benefitted from the reforms as I have got jobs in new industries and have generally benefited from higher standards of living.
But to know that 50% of our people are still sufffering under grinding poverty and that even after 20 years we are still cannot compete and beat the US and UK is shameful. I hang my head in shame at the level of corruption and rising inequalities and the lack of safety net.
Have we gone wrong?
Bravo! You are a true patriot. The problem is that the reforms were neoliberal and neo liberalism benefits the upper strata, whether it is India, US, UK or any other country. Other countries that have also helped other sections are not influenced so heavily by neoliberalism. Look what Brazil has achieved, what Vietnam and China have achieved. Brazil provides universal health care and as an Indian friend pointed out to me spends much more of its GDP on it than India does on its healthcare. This is why farmer suicides are linked also to health care costs, as they have had to rely on loan sharks. Iran by the way has a primary care system lauded by WHO and other UN bodies! So even that country provides more to its people. See: http://www.unicef.org/iran/media_4427.html Iran’s Excellent Primary Health Care System
If you ask an economist, the typical response will be that Kuznets curve is at work. Simon Kuznets himself was a member of the affluent class, how can he or his disciples understand the desperation of a suicidal peasant from Andhra, Maharashtra, or Punjab.
I strong support the views of Mr Nayar. It is a pity indeed that vested interests permit the crippling of the poor in India. I too have always felt and believed that there should be NO permission to foreigners to carry out businesses that can be managed by it's own citizens. I mourn the day when the Colas, and there are many other examples, were permitted to drive out Indians from the scene, I fail to understand why, why the powers that be, never care for the businesses, its own people. As regards defence equipment, I believe it is in the interest of the corrupt, not to let that Industry develop in India. I feel so disgusted, that I have no words to condemn the apalling state of affairs.