India has completed a decade of economic reforms process. A decade is not a long time in the history of a nation. Still this decade has changed the face of India greatly, in fact, much more than the preceding four decades after independence. The average growth rate is now six percent, though for a couple of years in the last decade it touched seven percent. There is no doubt that India has made substantial progress since the balance of payments crisis of 1991, which ushered in the reform process. Its fiscal deficits have been reduced, external accounts are stronger, and the trade regime is more open, the financial sector has been liberalized, tax procedures have been simplified, and administration strengthened. It has opened up vast areas for foreign investment, and FDI in India is now around $4 bn a year from less than $1 bn before the reforms. However, if one were to compare this with China, it is not a great achievement. China's per capita income at $2,000 a year is more than twice that of India. Its foreign exchange reserves, at $165 bn, are nearly four times that of India's. It is almost ahead is every field from manufacturing to exports.
However, There is ample scope for further improvement. India's growth is below that of the New Industrial Countries India faces a poverty problem of enormous magnitude. In spite of the reforms, the economy is still over-regulated is some areas. Regulations have led to widespread corruption and have made state bureaucratic apparatus cumbersome, time-consuming, arbitrary, and cost ineffective. |
