Development Experience of India and Economic Reforms
Development Experience of India and Economic Reforms tests the goals of planning, the 1991 reforms and their components, and India's comparison with China and Pakistan.
Core rules
- Planning aimed at growth, modernisation, self-reliance, equity and full employment; the Planning Commission was set up in 1950 and replaced by NITI Aayog in 2015.
- The 1991 crisis of high fiscal deficit, inflation, low reserves and the Gulf War oil shock led to LPG: liberalisation, privatisation, globalisation.
- Liberalisation: removal of industrial licensing, freer interest rates, lower tariffs, deregulation.
- Privatisation: disinvestment of public-sector equity; Navratna status gave select PSUs greater autonomy.
- Globalisation: integration with the world economy through trade, capital flows and technology.
- India versus China: China's growth was led by manufacturing and FDI; India's by services. India versus Pakistan: India grew faster and diversified more, though both started similarly in the 1950s.
Worked example
Openness of an economy = (exports + imports)/GDP. If exports are ₹300 crore, imports ₹400 crore and GDP ₹2,000 crore, openness = 700/2,000 × 100 = 35%. If reforms raise trade to ₹900 crore with GDP unchanged, openness becomes 45%, which is how post-1991 integration is often measured.
Traps that cost marks
- Equating liberalisation with privatisation; liberalisation removes controls, privatisation transfers ownership.
- Claiming disinvestment always means privatisation; the government may retain a majority stake.
- Writing that the 1991 reforms ended the public sector's presence entirely.