WELCOME

Topic : An appraisal of India‘s economic reforms- post reform

infrastructure Investment Models –PPP.
BACKGROUND
 The rethinking of the economic reforms had begun in the mid 1980s.
 Reason for economic policy – limitations- post reforms.
 Import substitutions, public sector dominance, pervasive control on private sector
 India started economic reforms in 1991.
 Two components:-Stabilization programmes and structural reforms.
 In india adopted economic reforms in 1991.
 Two components:- Stabilization programmes and structural reforms.
 The economic reforms in 1991 introduced under Congress Democratic period- 1991 to 1996-
1997.
 In 1998 BJP government will come into power- strengthening the reforms.
ECONOMIC PERFORMANCE
UNDER THE REFORMS
 1991-2 to 1993-4_ crisis management period.
 Primary objective of the policy was to stablize the economy.
 1994-5 to 1997-8_constitute post stabilization period-long term objective-high growth.
CRISIS MANAGEMENT IN
1991-2 TO 1993-4
 Oil prices triggered the Gulf War in 1990_BOP disequilibrium_large fiscal deficit-increase
external dept- bank reserves decresed- reduce the expands of loans by international banks.
 This leads to decrease the foreign exchange reserves at 1.2 billion in 1991-restrictions on
import- industrial output will declined.
 The government approach the IMF and withdraw 12.3 billion for over come the crisis at the 2
years.
 But the foreign exchange reserves will declines.
 The growth rate reduced 5.4 Percent to 0.8 Percent in 1991-2.but proposal of stabilization
programmes growth rate increases 6.2 percent in 1993-4.
 1997 Tendulkar estimates- both rural and urban poverty is declined in stabilization period.
 The estimate based on- the first two years the poverty will increase under the reforms.
 But it will reduce 1993-4 30.94 Percent in urban, but the rural poverty increased 39.65
percent.
 To overcome this phenomenon- poverty alleviation programmes, supply of subsidized food
grains through PDS.
POST STABILIZATION PERIOD
1994-5 TO 1997-8
 Main objective-sustainable acceleration in growth.
 GDP grew average rate 7.5 percent in 3 years1994-5 to 1996-7
 And it reduce it 5.1 percent in 1997.
 But it increased next 4 years- GDP growth rate achieved in eighth plan period 1992-7 at 6.8
percent.
 India‘s post reforms growth rate was higher than the growth rate of all developing countries
taken together.
 GDP growth accelerated significantly after the reforms.
 The high growth post reforms leads to improvement in external payment positions such as
foreign exchange reserves attain comfortable rate, export grew 1992-3 20 percent dollar
growth per year between 1993-4 to 1995-6.
POST REFORM
INFRASTRUCTURE
INVESTMENT MODEL-PPP
 In 1980s latin America countries public private investment is declined
 In india accelerated the growth- fiscal discipline did lead to public sector investment as 9 percent
of GDP in post reform period, also increase private investment in both corporate and household
sector.
 The rate of investment in the later years compare to post reform period is only marginally higher
than the post reform year.
 Inadequate public investment in post reform had an adverce impact on the economy.
 The total investment in infrastructure development was less than it should have been leading a
large infrastructure gaps.
 It led to serious under investment in critical sectors of infrastructure such as electric power
generation, roads, railways.
 This Short fall will cause to expand private sector
STRUCTURAL REFORMS
 The decontrol of private investment opening up the economy to foreign trade and foreign
investment, financial sector reforms etc.
 Removing controls on private investment
 Opening the economy to foreign trade
 Dismantling guatitative restrictions
 Reducing tariffs
 Exchange rate flexibility
 Policy towards foreign investment such as FDI and FII were increase
 Reducing price control on iron, steel, coal, potasic fertilizer etc.
PUBLIC SECTOR REFORMS
 In the 1980s public sector reforms focused on increased the fictional autonomy of public
sector organization to improve the efficiency
 Introduction of disinvestment in 1990s-to raise resources for the budget.
 In post reform period 1997-8 government had sold varying proportions of equity ranging from
5 percent to 49 percent in 50 public enterprises generating the total of over Rs -8400 crore for
the budget.
 Privatisation
 In 1996 established disinvestment commission. This commission recommended that 50
percent public sector will transfer the management of private sector.
 Public sector reforms reduced in 20 percent
 BIFR recommend
 BIFR analysis that in post reform period public sector profit improved
 The profitability of public sector increased during the post reform period by the invention of
structural reforms. Gross profit- increased to 10.9 percent capital employed in 1990-1 and it
increased 16.10 percent in 1995-6.
 So that the structural reforms also helps to generate greater efficiency in the public sector.
PRIVATE SECTOR
INVESTMENT
 Private investment to supplement public sector effort ever seen as the solution and new
policies were announced to encourage private (foreign investment) investment in power
generation, telecommunications services, ports and roads.
 “learning by doing”
 Private sector projects have taken off successfully
 Power projects are now commercial production
 Private telecommunication services commenced in the country
 Roads are the most difficult area for private investment but a few small private sector toll road
projects are being implemented larger projects in futures
 Private infrastructural projects by the all India financial institutions have increased from Rs-
5880 crore in 1995-6, Rs-22, 225 crore in 1997-8
REFERENCE:
 Indian economy- misra and puri
 Montek s Ahulwalia
THANK YOU

Presented by,
Unnimaya k u
MA economics