Source: Indian Express
Relevance: Changed dynamics in Indian economy after 1991 reforms
Synopsis: 1991 reforms was a transformational step for the Indian economy, causing a tremendous shift in the way business was carried out in India. An analysis of the changes brought by the reforms and its impact.
Changes brought by 1991 reform
- Centrality of the consumer – the reforms gave centrality to the consumer, who till 1991 did not have a choice. The Indian consumer was given choices and companies, both foreign and Indian, wanted to be their first choice which boosted demand which is reflected in GDP growth rapidly moving up to 7% per annum.
- Increased competition in the market – Indian companies faced real competition from other Indian as well as foreign companies.
- Government-industry partnership – Post reform the government’s dialogue with industry deepened. Consultations were frequent. Feedback on what was happening on the ground was taken regularly. A government-industry partnership improved further.
- Increased “aspirations” of the industry – There was excitement and ambition to be world-class. And, in this, the IT industry led by TCS, Infosys and Wipro played a major role.
- Emergence of Entrepreneur Class – The reforms created not just the big boys of the industry, but also, the small and medium sectors that became part of the new energy in industry.
- Ended Monopoly of the government in Infrastructure – private sector was invited to participate, to get into public-private partnerships and end the government’s monopoly.
- Induced Competition in Banking sector – the reforms of 1991 gave birth to a new private sector bank — HDFC Bank. This was a huge step forward in the reform process.
The reforms of 1991 placed Private sector at the centre which has grown many folds. There is still a long way to go, but the die that was cast in 1991 has led to a new tsunami of change. Over the last 30 years, the Indian industry has expanded its global reach. Its products and services are internationally competitive, matching the best. The period from 1991-2021 was transformational.
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