A Gradual Shift from Socialism to Capitalism in India

Socialism has shaped India's initial socio and economic policies from the time of independence until
1982 that marked the end of Nehruvian socialism. India began with economic liberalisation with the
Indian telecom boom in 1986 inviting private players and setting up of Telecom Commission in 1989.
India gradually shifted from socialism to capitalism with Liberalisation, Privatisation and
Globalisation (LPG) reforms in mid-1991 and shifted its directive from state owned entities (that only
made loss) to market driven economy. This change was imperative especially after the USSR socialist
pattern of society getting collapsed in Dec 1991. LPG led the economy to progress immensely when
it became more market and service oriented and expanded the role of private and foreign
investment by adopting Macro- Economic Stabilisation (short term measures) and Structural
Adjustment Programs (long term measures). During 1991-95 period, India had achieved better
growth rate of 6.78% vs target of 5.6%, increase in employment, GDP % and agricultural growth was
witnessed. The governments that came thereafter have only intensified the process of LPG reforms
aiming for better growth rate, faster broad based, sustainable and inclusive growth (focus on all
sectors) thereby insulating the economy from external volatile macroeconomic conditions.

Nevertheless, the market cannot do social justice, cannot remove poverty nor create willingness and
ability to buy the product. Hence, government should enable conducive environment for markets to
function properly and government initiatives and investment in social sectors are equally important.
Hence, country has to have economic elements of both capitalism and socialism to allow its
economy to become progressive by nature.

The current government has brought multiple reforms to transform India with a vision of self-
reliance and aims to meet the social objectives through protectionism. The reforms planned by the
government like GST, demonetisation, farmer bills, privatisation of PSU’s have given short term
pains to every sector of the economy but there have been hopes that the reforms would reap long
term gains and help in reshaping the economy for good.

However, there should be no denial that India has been groomed under a socialist system of society
where the means of production such as money and other forms of capital, are owned by the state or
public. India has progressed gradually to a capitalist pattern of society over the years, where the
means of production is owned by private individuals/ owners/ managers. For this very reason, it has
been very challenging for the government recently to get wide acceptance from each economic
strata of the society towards the reforms that the government has planned for the country. May be
the government should slow down and smoothly implement the reforms that are rolled out till date,
watch the repercussions that may be good or bad, in the near term and gradually progress with the
lessons learnt.