Economic Reform in India

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Submitted By panna
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Economic Reforms in Asia: The Indian Case Study
The Asian economy has seen a rapid rise over the past decade with countries such as China, India and South Korea making major headways. China, being the leader of the group, has been largely tipped by many economists to overtake the US as the world’s superpower by 2025. Asian GDP Performance (1997-2005)

Source: http://www.treasury.gov.au
The success of these nations came on the back of major economic reforms which transformed these sleeping giants into what it is today. China went through a major economic reform in 1979 and soon thereafter success followed. India, followed the same path, but much later than China, and it was not until the turn on the 1990s that India went on the path of economic liberalisation.
This paper will focus on the economic reforms that took place in India and its impact on the country in terms of trade and macroeconomics growth and the birth of new economy. A section of this paper will also be comparing the growth of India in comparison to its Chinese counterparts as well as discuss reasoning behind critics who believe liberalisation was not the main contributor to the growth India is achieving today.
Pre-Reform Period
Post independence, India saw the need to move from an agrarian economy to an industrial one and as such building its competency in crucial sectors of the economy was important. The role of government therefore included economic management of the country resources and planning of how the country’s resources were to be used, that is, operating as a planned economy.
The underlying strategy used by the government was import substitution and the government attempted to close the Indian economy as much as possible with self-reliance being the principle objective. The tools used to achieve this were high tax rates, import controls,…...

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