The last 25 years since India began embarking on economic reforms provide various lessons for current economic policy-makers as they look ahead to future challenges that face the country and seek to combat such difficulties. This report provides broad recommendations for setting the agenda for India’s ‘economic reforms 2.0’. It builds on the presentations and discussions made during the conference, ‘25 years of Economic Reforms in India: Retrospect and Prospects’, organised by Observer Research Foundation-Kolkata and the Indian Institute of Management Calcutta in October 2016. The report does not propose to present an exhaustive list of reforms, but rather an indicative menu of strategies that were agreed upon during the conference.
FOREWORD
The year 1991 was a watershed for the Indian economy, as massive reforms were instituted to respond to the prevailing economic circumstances. The desperate conditions under which the reforms were taken have been aptly described by Shri Jairam Ramesh in his book, To the Brink and Back. Indeed, India’s balance of payments (BOP) problems started in 1985 and by the end of 1990, the country was in a serious economic crisis. Foreign exchange reserves in June 1991 were barely sufficient to carry out essential imports for two weeks; and the economy was weeks away from defaulting on its external debt payment obligations. It was during this time that P. V. Narsimha Rao took over as prime minister in June, and roped in Manmohan Singh as finance minister. What followed was a series of large-scale reforms in various domains of the economy, or what is known as structural adjustment, which provoked outcry from a public outraged by the government’s move to pledge the country’s gold reserves against its debts. Dissenting voices emerged not only from those outside the government and the Left, but also from within the Congress party and the incumbent. The challenge was bigger because it was a minority government.
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