Q.21 ‘Economic reforms with a human face’. Examine the rationale behind it and the possible outcomes.

Ans. The UPA Government announced its committment to economic reforms, with this sentence and the proverb got media attention. The political elite looks convinced today that the process of economic reform has not been able to take care of the masses, thus the future of the process will focus on it.

Economic reform with a human face is no empty rhetoric as it is based on stark realities and sound logic. As we know, in the era of reforms, the economy is moving towards a market economy in which demand/supply and price mechanism plays the main role. As vast sections of the population lacks the desired level of purchasing power, the process looks ‘anti-poor’ and consequeafly ‘pro-rich’. Such reform processes might bring higher economic growth, but for equitable development, a conscious attempt for inclusive growth is essential.

The masses who lack the real level of purchasing capacity, should be supplied with subsidised goods and services till micro-level growth takes place. This is why the government is emphasising upon the social sector and enhancing its expenditure on the delivery of the so-called ‘public goods’ (education, water, healthcare, shelter etc.).

By 2016–17, we see a changed thinking in the government’s fiscal policy. Now, the government stance is ‘pro-corporate’ as well as ‘pro-poor’ (quoting the Finance Minister himself). Today, the government believes in subsidising goods and services for welfare of the poor but it also intends to rationalise the subsidies with the Aadhar-seeded technology-based platform the direct benefit transfer (DBT). On the other hand, there is an effort by the government to create the best possible environment for the growth and expansion of business and industry in the country (by improving the ‘ease of doing business’). Naturally, the government needs revenue to do welfare for the poor. This fiscal stance looks quite logical and timely.