Manas Chakravarty has an interesting article in MINT and it is provocatively titled ‘Seven failures of economic liberalisation’, the charts are not about economic liberalisation failures but about the failure of economic liberalisers to persist with reforms in many areas.
1991 reforms did, for the most part, the following:
Dismantled industrial licensing
Ushered in capital market reforms, esp. stock markets (FII)
Exchange rate reform and current account convertibility; limited capital convertibility
Continued liberalisation of Foreign Direct Investment
Phased de-reservation of production for the small-scale sector
In 1997 budget, the then Finance Minister Chidambaram did the following:
Drastically lowered income taxes
Ended automatic monetisation of fiscal deficit
NDA showed that privatisation was possible but it has not been taken forward much since then.
Production or reforms of factors of production – labour and land – have been largely non-starters or modestly incremental.
Agriculture, healthcare and education have not seen any innovative approach to deliver outcomes yet.
So, there is the danger of over-hyping India’s economic liberalisation. They were good, they were needed and they did show us the glimpse of possibility. But, there is still a very long way to go – twenty-five years later.
What Manas’ article shows is the absence of economic liberalisation permeating all aspects and ingredients of economic activity in the country