Q.32 ‘India’s economic policies are neo-liberal.’ Examine.

Ans. The process of economic reforms started by India in 1991 was a follow- up to liberal policies influenced by current world ideas of neo-liberalism via the IMF (as it agreed with Washington Consensus, 1985). This is why critics of the reform process call Indian economic policies neo-liberal (it was also remarked by the Supreme Court of India, in one of its judgements in 2012).

Through reform, India started redefining the economic role of state in the economy—a predominant role was assigned to the ‘private sector’, but the state today has a different and bigger role. We may cite some examples to show why India’s policies are still not neo-liberal:

(i) State still manages majority stakes in the PSUs and many ‘very big PSUs’ have been newly set up.

(ii) Higher degree of regulation gives more economic authority to the government.

(iii) Even after liberalisation, India is ranked very low in being a liberal economy what to ask of a neo-liberal economy.

(iv) Subsidies are still on the higher side.

(v) Government expenditure on education, healthcare, social security has increased hugely post-1991.

(vi) Even liberal policies of the government are under several official checks and controls.

(vii) Had India followed neo-liberal policies, it would also have faced some financial crisis after the US ‘sub-prime’ crisis.

By 2016–17, we find a new stance in the fiscal policy of the GoI (Union