ISSN (Print) - 0012-9976 | ISSN (Online) - 2349-8846

Montek S AhluwaliaSubscribe to Montek S Ahluwalia

The 1991 Reforms

Refuting the allegation that the 1991 reforms were thrust upon an unwilling government by the International Monetary Fund and the World Bank in return for financial assistance, it is argued instead that 1991 was the logical culmination of internal rethinking that took place well before the 1990 crisis. The reforms would have stopped within two years had they been only undertaken because of the need for the IMF's assistance. Though admittedly slowly, their continuation has been evident over successive governments.

A Response

 what may be termed as traditional wisdom (assertions?) relating to the optimal financial sector. This can be illustrated with some examples given in the article. There is a reference to the creation of the Public Debt Management Office, but a strong case is now being made to restore public debt management to central banks even in the advanced economies. Let me quote a respected authority:

Prospects and Policy Challenges in the Twelfth Plan

This paper attempts to review the recent performance of the economy and lists the priorities and challenges for the Twelfth Plan. The Indian economy will enter the Twelfth Plan period in an environment of great promise, but the next five years will also be a period of major challenges. The economy has done well on the growth front during the Eleventh Plan, but, going by the information that is at least currently available, not so well on inclusion. Much of what needs to be done to accelerate gdp growth during the Twelfth Plan will be done by the private sector, but the central and state governments have a crucial role to play in providing a policy environment that is seen as investor-friendly and is supportive of inclusive growth. Four critical challenges facing the economy in the Twelfth Plan, which are perhaps more serious than they were at the start of the Eleventh Plan, are those of (a) managing the energy situation, (b) managing the water economy, (c) addressing the problems posed by the urban transformation that is likely to occur, and (d) ensuring protection of the environment in a manner that can facilitate rapid growth. In addition, the efficiency in implementation of projects on the ground needs to be greatly improved.

Economic Performance of States in Post-Reforms Period

Liberalisation has reduced the degree of control exercised by the centre in many areas, leaving much greater scope for state level initiatives. This is particularly true as far as attracting investment, both domestic and foreign, is concerned. State level performance and policies therefore deserve much closer attention than they receive. It is particularly important to study the differences in performance among states in order to extract lessons about what works and what does not. A better understanding of the reasons for the superior performance of some states would help to spread success from one part of the country to the other.
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