INTRODUCTION

Economic policies of the government of India suggest the system for taxation, and also the
budget of this county, not only that but also it includes the currency and the rate of interest.
The market of labour and also the national ownership are an integral part of economic
policies of India. India has various economic policies which are industrial policy, trade
policy, monetary policy, fiscal policy, Indian agricultural policy, National agricultural policy,
industrial policies, International trade policy in India, exchange rate management policy,
EXIM policy.

The plan of the economic policies in India was first conducted in 1947. But after the advent
of the economic crisis in 1991, the government of India reforms the policies of economics in
India.

Industrial Policy- The stress of these policies is on the public sector of India in 1948.After the
1991’s economic crisis these governments took strong steps in order to make the industries in
India and also introduced the industry more competitive.

Trade Policy- The foreign trade policy of India focuses on enhancing the share of India in
universal trade from 2.1% to 3.5%. Most importantly, the trade of this country India became
$900 billion in the financial year of 2020.

Monetary Policy- This policy in India majorly deals with the monetary authority of this
country and it includes the central bank. It handles the allocation and also the supply of
money, rate of interest in order to present the high growth of the economy in India.

Fiscal Policy- This policy controls taxation and the decision of expenditure from the
perspective of the government of India.Through the initiative of the government, the
contribution of the resources and the principles of the market have been improved.

Indian Agricultural Policy- This policy mainly includes the reformation of the land in India.
The strategies regarding agriculture and the use of innovative technology in agriculture are
also the concern of this policy.

International Trade Policy- This policy includes free trade in India. Free trade suggests the
smooth trade of a country. In the mid 19th century

, the government of India modified the trade international trade policies. The main aim of
these policies is to make the economy of the country India strong.
Exchange Rate Management Policy- This policy is also known as the pegged exchange rate.
This policy includes the flexibilities in the exchange rate. There is the upper and lower limit
of the exchange rate. If the up and down rate is 1%, then the rate of exchange is in a normal
state. The main purpose of these policies regarding exchange rate is to assure stability
regarding foreign trade and capital movement.

EXIM Policy- EXIM policy suggests the export and import policies in India. Through these
policies, the guidelines have been fixed regarding export and import. The government of this
country India introduced these policies for five years in the control of the development and
regulation act 1992 regarding foreign trade.

CRITICISM OF CURRENT ECONOMIC POLICY

India at 75 is a mixed bag of development and missed opportunities. The country has
achieved much since Independence but a lot remains to be done to become a developed
society. The pandemic has exposed India’s deficiencies in stark terms. The uncivilised
conditions of living of a vast majority of the citizens became apparent. According to a report
from the Azim Premji University, 90% of the workers said during the lockdown that they did
not have enough savings to buy one week of essentials. This led to mass migration of
millions of people, in trying conditions, from cities to the villages, in the hope of access to
food and survival.

In 1947, at the time of Independence, India’s socio-economic parameters were similar to

those in countries of South East Asia and China. The level of poverty, illiteracy, inadequacy
of health infrastructure were all similar. Since then, these other countries have progressed
rapidly, leaving India behind in all parameters. Criticisms of cure economic policy are-

1. The first important criticism raised by critics against new economic reforms is that these
have failed to control inflation. Although the Government had a plan to contain the rate of
inflation 9 per cent in 1991-92 (as mentioned in the Memorandum to IMF) but the actual rate
of inflation successfully declined to 6.5 per cent in April, 1993 but then the same rate again
increased to the level of 11.0 per cent in 1994-95.

Thus the inflationary expectations had not been purged and the economy might come under
pressure if the spending ambition of the government was not reined. But it is only in 1999-
2000, the benefit of government measures to contain the rate of inflation has started to pour
in and the rates of inflation have reached the level of 4.69 per cent in March, 2003 and 7.41
per cent in March 2008. This is no doubt a great achievement.

2. The fiscal deficit maintained in the budget has not yet been controlled. In a discussion
paper tilled “Economic Reforms : two years after and the tasks ahead” released by the
Finance Ministry on July 2, 1993 laid stress on the reduction of fiscal deficit from five to six
per cent in 1992-93 to 3 per cent in 1996-97, ban on loan waivers, cut on subsidies and
tightening expenditure control amongst other things. But the actual fiscal deficit as per cent
of GDP what has nicely declined from 8.4 per cent in 1990-91 to 5.0 per cent in 1991-92 and
then to 5.25 per cent in 1992-93, again rose to 7.4 per cent in 1993-94 showing its ugly head
again. In 2007-2008, the fiscal deficit has reached the level of 3.1 per cent and in 2008-2009,
it has increased to 5.9 per cent.

Thus the economic reform has failed to contain the growth of fiscal deficit and budgetary
deficit in its budget leading to a reversion of inflationary tendencies in recent years due to
mismanagement of these deficit since 1990- 91 and thereafter.

3. In respect of cut on subsidies, whatever success was achieved in early years, that could not
gain its momentum in the later years. In respect of food subsidy also, the Government has
failed to formulate a fresh policy for redirecting the food subsidy from the creamy layer and
urban middle class of the society to the poorer sections.

Thus on the issue of subsidies, the Government needs to act more in unison which has not
actually happened. In respect of food subsidy, the government may continue it but it must be
redirected towards the poorer sections from the rich and urban middle class. But the fertilizer
subsidy should be withdrawn altogether.

4. Another criticism raised against economic reforms is in terms of unemployment arising out
of large scale retrenchment of workers. Thus both the public sector, on the plea of
overstaffing and redundancy, and the private sector, on the plea of modernisation and
technological up-gradation, workers are gradually being retrenched or forced to accept
voluntary retirement scheme like ‘Golden Handshake’. This sort of unemployment arising out
of structural adjustment is a serious problem and must be considered seriously.

5. Another point of criticism raised by the critics against the policy reforms is that the new
economic reforms are a complete surrender to the World Bank-IMF precepts and the
Government has surrendered its sovereignty in order to procure a huge amount of loan from
such international agencies.

Liberalisation of trade policies through withdrawal of import duties (as alleged by critics) is
being done to facilitate imports from developed countries, particularly USA, facing a
recession in their economics largely. This sort of criticism may not be totally baseless or
politically motivated. Thus the Government should take proper care in maintaining the
sovereignty or economic interest of the country so that it does not serve any policy under
external pressure and also should not dilute its long-term strategy for attaining self-reliance.

6. Another criticism connected with economic reforms is related to its organization of

reforms. While implementing the reform programmes whatever changes suggested by the
Finance Ministry can also be thwarted by R.B.I. noting’s. The various schemes of
deregulation and decontrol of reform programmes may not be easily accepted or obstructed
by bureaucracy.

Thus the government will have to remove all these bottlenecks by streamlining the revised
rules and regulations for preparing a congenial atmosphere for both Indian and foreign
investors to investment.

The achievements of the economy since the introduction of economic reforms in 1991 is also
quite disappointing. The new economic policy has so far failed to make the economy a viable
one. It is argued that the benefits of globalisation and liberalisation should percolate down to
the small and ordinary person both in the rural and urban areas of the country.

Even after fifty years independence and planned development, the country has failed to
ensure uninterrupted power supply, continues flow or supply of safe drinking water to the
people of our country. Moreover, the conditions of our roads, ports, harbour and airports are
really poor. Thus the Government should pay due attention for handling these three weakest
links, i.e., workers, agriculture and infrastructure so as to reap optimum benefits from
economic reforms.