Economic Reforms In India Achievements And Agenda Ahead
Javad Khalilzadeh-Shirazi and Roberto Zagha
Achievements and the
Agenda Ahead
Until recently, India was known for a highly regulated, closed economy that discouraged foreign investment. However, in June 1991 in the midst ofa serious economic crisis, a new government began to reform India's economy. If fully implemented, the reform program could make Indians economy one of the worlds most dynamic, and considerably reduce the incidence of poverty, Shirazi and Zagha describe the crisis of 1991, review the measures taken to liberalize the economy, and outline what, in their opinion, still needs to be done.
Two years after Prime Minister Rao assumed office in the midst of the June 1991 crisis, the Ministry of Finance issued a "Discussion Paper" assessing the accomplishments of the new government and charting a new course.' This cogently argued paper finds that, "The fundamental objective of economic reform is to bring about rapid and sustained improvement in the quality of life of the people of
India," and that "the only durable solution to the curse of poverty is sustained growth of incomes and employment."
Secondly, the paper notes that an important lesson from the international development experience is that "good economic environment combines the discipline of competitive markets with efficient provision of key public services, such as primary education, primary health care, transport and communication." Thirdly, the paper emphasizes that reforms will be arduous and take time to achieve, but the alternative, characterized by poverty, inflation, and stagnation, is unacceptable.
Javad Khalilzadeh-Shirazi is the Division Chief of the
Country Operations Division ofthe World Bank's India
Department.
Roberto Zagha is the Principal Economist in the Country
Operations Division ofthe World Bank's India Department.
The views expressed in this paper do not necessarily reflect the official views ofthe World Bank.
Spring 1994
These conclusions signal a fundamental break
Achievements and the
Agenda Ahead
Until recently, India was known for a highly regulated, closed economy that discouraged foreign investment. However, in June 1991 in the midst ofa serious economic crisis, a new government began to reform India's economy. If fully implemented, the reform program could make Indians economy one of the worlds most dynamic, and considerably reduce the incidence of poverty, Shirazi and Zagha describe the crisis of 1991, review the measures taken to liberalize the economy, and outline what, in their opinion, still needs to be done.
Two years after Prime Minister Rao assumed office in the midst of the June 1991 crisis, the Ministry of Finance issued a "Discussion Paper" assessing the accomplishments of the new government and charting a new course.' This cogently argued paper finds that, "The fundamental objective of economic reform is to bring about rapid and sustained improvement in the quality of life of the people of
India," and that "the only durable solution to the curse of poverty is sustained growth of incomes and employment."
Secondly, the paper notes that an important lesson from the international development experience is that "good economic environment combines the discipline of competitive markets with efficient provision of key public services, such as primary education, primary health care, transport and communication." Thirdly, the paper emphasizes that reforms will be arduous and take time to achieve, but the alternative, characterized by poverty, inflation, and stagnation, is unacceptable.
Javad Khalilzadeh-Shirazi is the Division Chief of the
Country Operations Division ofthe World Bank's India
Department.
Roberto Zagha is the Principal Economist in the Country
Operations Division ofthe World Bank's India Department.
The views expressed in this paper do not necessarily reflect the official views ofthe World Bank.
Spring 1994
These conclusions signal a fundamental break