The road taken

We observe 25 years of “economic reforms”. A simple test to judge the success or otherwise of these reforms is to see whether the life of an average Indian has improved. Each can have his own answer. Launched in 1991 by PV Narasimha Rao and Dr Manmohan Singh in response to a balance of payments crisis when India had to mortgage its gold, the reforms have lifted India’s stature on global platforms. A near political consensus on reforms today stands in sharp contrast to the initial howls of protest and dire warnings of doom. Skilful political navigation helped Narasimha Rao weather all storms. Corporate India cried for protection but stands confident today.

Tested on traditional parameters, India has benefited from the economy’s opening up. Some of the Western champions of free trade are on the retreat today. Globalisation is hurting them. Left with foreign currency reserves of just $1.12 billion in 1991, India today has $339.57 billion in its kitty and the confidence to meet any threat — be it the 2008 global meltdown or Brexit. Poverty has reduced. In 1993-94 some 45% of the population lived below the poverty line. Today’s figure is half of that. Of course, the reforms produced certain aberrations, including crony capitalism. India ranks ninth in a global crony capitalism index. 

An improved air, road and phone connectivity defines new India. Some of the landmark decisions included the reduction in customs duties to let in foreign goods, throwing the door wide open to foreign investment, grant of legislative status to SEBI, removal of wealth tax, introduction of VAT and the Aadhaar-based direct benefit transfers. GST is another big thing on the agenda. The political challenge of taking such momentous decisions can be gauged from the kind of politics played over the GST Bill. Reforms happened and were successful because Dr Manmohan Singh relied on a talented team. His own competence, honesty and humility attracted political and intellectual backing. Prime Minister Modi can learn a lesson or two. An outspoken Raghuram Rajan can do him, and the country, more good than a mediocre bhakt.