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Speech from Manmohan Singh at 92nd annual conference of the Indian Economic Association:

In this he mentioned how Indian economy has been transformed due to the economic liberalization policies in early 1990’s along with  the effect of these policies on “balanced payment” and the poor in India.  He also mentions the growth-rate achieved under the congress-govt rule from 2004-2009.  He cautions sustainable development is linked with energy efficiency and energy security, and climatic changes will a pose great challenge. Finally he appeals all the economists to actively participate in building a socially just society. He ends his seech with Mahatma’s saying “Earth provides enough to satisfy every man’s need, but not every man’s greed”.

Following are the excerpts from his speech. The complete speech can be found on rediff webpage linked at the bottom.

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“practical men, who believe themselves to be quite exempt from any intellectual influence, are usually the slaves of some defunct economist. Madmen in authority, who hear voices in the air, are distilling their frenzy from some academic scribbler of a few years back.”

The real role of the economics profession is to subject orthodoxy constantly to the test of analytical scrutiny and empirical investigation

This debate began in the 1980s and led to a series of systemic reforms in the 1990s. We moved away from the earlier paradigm of extensive government control, a suspicion of market forces and an excessive reliance on protection of domestic industry to an economy with much greater acceptance of the beneficial role of markets and greater openness to trade and foreign investment.

“The measures adopted by our government in the areas of fiscal policy, monetary policy, exchange rate policy, trade policy and industrial policy are well known. I invite economists of all shades of opinion to help evolve a meaningful national consensus for adjustment, revival and structural reforms so that we can build a new India which is economically and technologically advanced and is at the same time a socially just society.”

The economy accelerated after 1991, then slowed down after 1997 as the world grappled with the East Asian crisis.

It picked up again after 2003, recording an average growth of 8.5 per cent in the next five years. The momentum was again interrupted by the global economic crisis in 2008 and we slowed down to 6.7 per cent in 2008-09 and are likely to achieve 7 per cent or a little more in 2009-10.

If we consider the 18 years from 1992-93 to 2009-10 the average growth rate is 6.8 per cent. I am happy to say that the Congress led government that has been in place since 2004-05, can claim to have achieved an average growth rate between 2004-05 and 2009-10 that is likely to be 8.5 per cent. We can therefore claim that we have entered the target range for growth set by Pandit Nehru long ago.

This criticism surfaces in different ways. Some argued that the new policies would make the rich richer and the poor poorer, and the percentage of the population below the poverty line would increase. Others focussed on a possible worsening of urban-rural differentials. Still others focussed on regional inequality.

As far as poverty is concerned, the facts are quite clear. The percentage of population below the poverty line has certainly not increased. In fact it has continued to decline after the economic reforms at least at the same rate as it did before. It is true that the rate of decline has not been faster and I personally feel it should be but that it has declined there is no doubt.

Since the period of rapid growth of the economy was largely after 2004-05, we will have to wait for a year or two to know its impact on poverty.

There is no doubt in my view that poverty remains a major challenge. Our poor are still too poor and we need to do much more to improve their standard of living. To this end, the economy has to grow fast enough to create new job opportunities at a rate faster than the growth of labour force.

Our goal is inclusive growth and this has been explicitly enshrined in our Eleventh Five Year Plan. To achieve our objective of inclusive growth, we need to pay much greater attention to education, health care and rural development focusing particularly on the needs of the poor  Scheduled Castes, Scheduled Tribes and Minorities.

We have to make efficient and economical use of our scarce natural resources, particularly land and water. Special attention has to be paid to increasing agricultural productivity, particularly of small and marginal farmers.

In industry, more systematic efforts have to be made to help small firms in mobilizing resources for their growth. Overall, greater emphasis has to be laid on reforms of the systems of governance so as to reduce the scope for corruption, lower the transaction costs of starting new businesses and create of an environment conducive to promotion of innovation and risk bearing.

Going beyond these concerns, we face new problems which pose very difficult challenges. Issues arising out of climate change and its impact give rise to new concerns about a sustainable path of development.

Sustainable development gets intimately linked with energy efficiency and energy security. It also poses complex problems of global equity in burden sharing. An optimal solution to the climate change challenge is only possible if the world can find ways to reach a mutually satisfactory collective solution. Economists have much to contribute to our understanding the complexities involved and finding constructive solutions.

I invite the Indian Economic Association to respond to these challenges, by stimulating reasoned debate on all these issues. Your work can help bridge differences and help us build a socially just society. In the words of Gandhiji, we must strive “to wipe every tear from every eye” to make India a just, prosperous and inclusive society.

We and indeed the world, must also be guided by Gandhiji’s other dictum “Earth provides enough to satisfy every man’s need, but not every man’s greed.”

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Comments: I added this useful comment on rediff by mallaiah anchoori

Author of the economic reforms initiated in the early 1992 under the stewardship of the then PM P.V.Narsimha Rao who picked up him rightly at right time.Manmohan is basically an economist par excellent & an intellectual of the highest order who headed the country’s Central Bank-Reserve Bank of India too.He is such a genius that he forewarned all the important global economies including USA quite before the melt down of America’s economy in 2008 itself that the internal audit system & controlling mechanism was not functioning properly leaving much scope for improvement.And quite rightly,Lehman Bros fall was due to the laxity by the audit.He can do any thing in the economic matters,the prime of which is alleviation of property.The only difference for him between now & his days of finance ministry is that he was able to fully concentrate all his talents on economic matters alone while his entire energies now are called for administration of the PM’s post alone.Rao was very lucky to have a FM like him to whom he had left every front of the country’s economy & relaxed.MMS cannot either shoulder Finance portfolio too for better administration/planning & delivery of the goods in view of the set back in his health which was also followed by a by pass surgery of the heart.Though more powerful as PM than as FM he was,he suffers constraint of time & energy of late with advancement of age.Any way,we should be happy that his guidance continues to be available to the concerned ministry

via PM on how to build a poverty-free India: Rediff.com Business.

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