9. Assessment of Reforms

Although there is a broad consensus among most of the political parties on the desirability of reforms, considerable debate has emerged on the contents of the reform programme, their sequencing and pace as well as their implementation and impact.

The balance sheet of the Indian economy in the post-reform period is mixed. The overall post- reform growth rate has been higher than the average rate achieved during the pre-reform period, largely because of the services sector. The fiscal balance and inflationary tendency have been controlled. India is emerging as an important player in fields such as manufacturing and medical services. Robust export growth especially software exports, and rising remittances by Indian workers abroad have created a new confidence in the Indian economy. It has led to phenomenal growth in foreign exchange reserves. The growth competitiveness and the business competitiveness of the country are increasing. India is emerging as a stable growth engine and as a Big Emerging Market (BEM) in the world due to robust economic performance supported by a vibrant democracy, increasing young population, expanding middle class and domestic market and well-developed private sector.

However, this growth is not inclusive. First, the growth is skewed within the economy. For example, there is a great divide separating industry and agriculture, and the infrastructure, especially the rural infrastructure, is in an appalling state. Second, the reforms are just confined to the economy and they are not spreading to the social sector. The social sector including healthcare, education, social security, gender equity and environmental protection has suffered a setback owing to the decline of the public investment in this crucial area. Low spending by the government has led to growing inequity in education and a decline in the quality of education. Indian society is marked by four great divides: rural-urban, rich-poor, and along gender and caste lines – which pervade every aspect of life, including social services. In each category, there is the existence of a disadvantaged section that finds it extremely difficult to get access to social

services and thus gets left out.

Though there has been immense improvement since Independence, we do not yet have a system in place that is capable of providing access to public goods. As a result of liberalization, the state is increasingly transferring its constitutional responsibility of providing public goods to market forces. Hence, the state is failing to build human capability and to ensure dignity of life for every citizen of the country. Since the market operates on the basis of economic power, it excludes the common people and the marginalized sections that do not have economic power from its benefits. Free market, coupled with the lack of necessary state support in the social sector, has led to huge interpersonal and inter-regional inequalities. These inequalities have caused social instability manifested by increasing protests and farmers’ suicides.

Globalization, as shaped by the new development paradigm has given rise to large-scale human displacement and the consequent disappearance of many communities and cultures, and massive protests. The continuing paradox of India and Bharat – a fast-growing economy supported by a well-developed private sector and yet with persistent mass deprivation and no effective freedom – within the democratic framework in the country has given rise to the question of whether democracy and market are incompatible. While the market excludes common people from its outcome, democracy based on universal adult franchise includes all in economic benefits.

Nevertheless, the inherent exclusionary tendencies of the market can be limited only by the State through providing public goods and services to the marginalized and the excluded sections of the population and regions of the country. This can be done most effectively in India’s highly pluralist and participative democracy with a very competitive print and electronic media, since they put pressure on governments to focus on the deprived sections of the society. To foster a more inclusive growth, we need to create new employment opportunities in rural areas, improve the quality of infrastructure (both the so-called ‘soft infrastructure’ – political and economic policies and institutions; and ‘hard infrastructure’ – roads, railways and ports) and improve human capabilities by prioritizing health and education.

Keeping these concerns in view, the government decided to introduce the second-generation reforms while continuing the beneficial measures of the first-generation reforms, or the reforms initiated in the early 1990s. The second-generation reforms focus on the predominant issues of contemporary India. These include: (a) extending reforms to the states; (b) creating infrastructure through public-private partnerships; (c) reforming the labour market, agriculture, intellectual property rights regime and the telecom sector; (d) improving governance through legal and political reforms; (e) empowering the underprivileged; (f) expanding primary education and improving quality of higher education; (g) improving human-development sector through intensive engagement with civil-society actors; and (h) achieving environmental sustainability.

The aim of these reforms is not only to help turn India into a fast-growing economy, but also a knowledge economy by strengthening the knowledge sector; a strong democracy by building social capital; and finally a humane society with the highest levels of sustainable human development. In light of this, the government has introduced various reports, schemes and programmes which aim to eradicate poverty and unemployment and fulfill that long-awaited promise that Jawaharlal Nehru so eloquently described as our ‘tryst with destiny’ at Independence.