ROLE OF INDIAN GOVERNMENT IN POVERTY AND DEVELOPMENT.

1.Introduction:
The Government of India has adopted an integrated approach to population and health,
linking population policies and programmes to improving human conditions
and poverty reduction. This approach simultaneously addresses concerns about rapid
population growth and the need to improve individual and family welfare.

2.Before 1991:
• On 15 August 1947, when India achieved independence, the country was
grappling with problems of widespread poverty and crises in agriculture as well
as industries. The First Five Year Plan was launched in 1951 which mainly
focused on the development of the primary sector. Five years later, on 14 May
1956, the Second Five Year Plan, famously known as the Mahalanobi s Model,
was announced. The emphasis of this plan was on government-led
industrialization. Mr. Nehru outlined the central role of government when he
said, “The public sector must grow not only absolutely but also relatively to the
private sector.” Thus started the License-Permit-Quota Raj in India, wherein
government control was so strong that it not only decided which company
would produce what, but also the amount of production, as well as the price of
commodities. With the nationalization of banks in 1969 and the Monopolies
and Restrictive Trade Practices (MRTP) Act of 1970, the License Raj was further
strengthened.

• Life under license raj was characterized by scarcity of resources. The choices
people had available to them in their day-to-day life were very limited. For
example, cars were available in one colour, and only two to three brands of cars
or scooters existed in the market to choose from. The specialty of License Raj
was that licenses were themselves made a commodity, and a scarce one, at that.
Hence, if a company wanted to expand production, it needed a license to do so,
which was not easily available. A ‘market’ for licenses developed; licenses had a
price. Business competition under the License Raj meant getting licenses before
your competitors. Often businesses acquired licenses, not to produce, but to
 stop the other from expanding. The License Raj created a ‘scarcity economy’,
and this scarcity also applied to foreign reserves since we practiced ‘swadeshi’.
The Balance of Payment crisis arose in the 1970s and worsened towards the
end of 1980s. The balance of payments situation came to the verge of collapse
in 1991, mainly because the current account deficits were financed by
borrowings from abroad. The economic situation of India was critical; the
government was close to default.

3.After 1991:

• The strategy of reforms introduced in India in July 1991 presented a mixture

of macroeconomic stabilization and structural adjustment. It was guided by
short-term and long-term objectives. Stabilization was necessary in the short
run to restore balance of payments equilibrium and to control inflation. At the
same time changing the structure of institutions themselves through reforms
was equally important from long term point of view.
• The new government moved urgently to implement a programme of
macroeconomic stabilization through fiscal correction. Besides this,
structural reforms were initiated in the field of trade, industry and the public
sector.
• Major Steps in the 1991 Reforms:
The major policy initiatives taken by the Government to fundamentally
address the balance of payments problem and the structural rigidities were
as follows: a.Fiscal Reforms. b. Monetary and Financial Sector Reforms. c.
Reforms in Capital Markets. d. Trade Policy Reform. e. Promoting foreign Investment. f.
Rationalization of Exchange Rate Policy

• Poverty reduced from 36 percent in 1993-94 to 26.1 percent in 1999-00.

The poverty ratio in rural areas and in urban areas declined.
• There was an increase in air travel and expansion in the civil aviation
sector due to reforms. In order to promote competition, the government
adopted the Open Skies Policy (through which private players were
allowed into aviation sector) in 1991. The results of this policy are visible
today with private players in the domestic aviation market as well as the
international markets.
 • As a result of the reforms that opened the borders to foreign goods, there
was easier access to foreign technology. A good example of this is cell
phone technology.
• The post 1991 era also saw an expansion of the automobile sector, easy
availability of motor vehicles, increased competition in the sector and
reduction in prices of motor vehicles.

• Once India developed a name in the global markets, there was also an
increase in the number of foreign tourists.
• Reforms led to the achievement of recognizable increases in international
competitiveness in a number of sectors including auto components,
telecommunications, software, pharmaceuticals, biotechnology, research
and development, and professional services provided by scientists,
technologists, doctors, nurses, teachers, management professionals and
similar professions.
• There was a vast expansion of the telecommunication sector. In fact, this
sector has been one of the biggest beneficiaries of economic reforms.
Once heavily shackled by regulation and government monopoly, the sector
now has several competing service providers. The telecom policy evolved
from the National Telecom Policy in 1994 to open up all the sectors to
private players.

4.Conclusion:

The reforms of the last few years have gone a long way toward freeing
up the domestic economy from state control. State monopoly has been
abolished in virtually all sectors, which have been opened to the private
sector. The License Raj is a thing of the past.