Reforms & Politics
In 1991, when India faced a major economic crisis, the government asked the International Monetary Fund for a bailout loan. To prevent a repeat, the government introduced reforms in the economy in accordance with the international trend of privatisation and globalisation. This was a milestone as it changed Indian markets and the financial sector in the country. Foreign direct investment was encouraged, public monopolies were restricted and service and tertiary sectors were developed.
Since then, all sectors of the economy have changed their approach. The economic reforms have completed 25 years, and this book debates on the achievements and failures of this policy. It draws upon the research insights and opinions of academicians, scholars and practising managers who, apart from the analysis, also offer their views on the corrective measures needed.
In his essay, Are Economic Reforms Accepted in India? Mr Sinha notes that politics will always dominate economics in India, at least in the foreseeable future. He writes: "Politicians and political parties are risk averse, especially as far as elections are concerned. They would never like to put the existence of their government or their political future at stake for the sake of economic reforms. Economic growth has never been an election issue in India."
Mr Sinha adds: "Sometimes, I feel that I may have been largely responsible for the defeat of my party in the 2004 elections" and adds that he can never forget the lessons he learnt in that election. Mr Sinha notes that as finance minister, he had raised the prices of kerosene oil from Rs 2.50 to Rs 9.50.
When he went campaigning in a remote village in his constituency and asked an old woman for her vote, the old woman held him responsible for raising kerosene prices which had made her life difficult. Such nuggets make this book an interesting read.