Pre-1991, India was a closed, uncompetitive and a highly protected economy. It was marked by high tax rates and an overvalued exchange rate. Thanks to its policies, the country had stood on the brink of defaulting on its international loans. But at that time, it was helped out of its abysmal situation by the liberalization policies of the Finance Minister.
Many question if liberalization was truly effective. It definitely was. In the past 20 years, the country's household income has grown by nearly three folds. The slashing of tariffs, removal of industrial licensing and opening up of the economy has brought about a revolution in the economy. One that most people take for granted today. Trivial things like owning a mobile phone or having a ceiling fan in every house are all results of the liberalization policies. The demand for basic consumer goods has been rising and has fuelled the consumption story, which in turn has driven economic growth in recent times.
However, one thing that has not reformed is the political situation. Political parties still use subsidies and anti-government policies to vie for the votes. Unfortunately, the voter communities support these policies and happily grant them the votes. The unfortunate result being that there is no leadership which can take care of the loopholes of the previous reforms and drive new reforms for the countries.
Few results of the loopholes of previous reform policies are painfully obvious in the lack of adequate public facilities. There are people who do not even have drinking water available to them. Lack of sanitation facilities. Poor infrastructure. Logistic bottlenecks. These are just some of the issues that still stand unresolved.
To add to this are the constant flurry of governance issues that keep coming up. Each political party goes out of its way to blame the ruling party for its misgivings. More interest and time is spent in unearthing the skeletons in the current party's closet. But little time is spent in trying to think up of the reforms that are so essential to drive the future growth.
Unless our country's leaders resort to the same dramatic moves that they adopted back in 1991, the progress of the country would come into question. The badly needed reforms need to come through to drive another stellar decade of growth as witnessed over the past 20 years.