Growth, Development and Equity:India's Tryst with Economic Reforms

Abstract

India took a definitive step towards market reforms in 1991 by dismantling the License-Permit Quota (LPQ) Raj. This brought in significant spurt in Gross Domestic Product (GDP) growth rates, exports, Foreign Exchange (FE) reserves and reduced percentage people Below Poverty Line (BPL) considerably. However, the human development story, in terms of Infant Mortality Rate (IMR), Maternal Mortality Rate (MMR), malnutrition of children, mean year of schooling have been quite dismal. The picture on containing income inequality is also quite disappointing in the urban segment as it shows an upward trajectory. The paper makes a strong case for opting for balanced growth where right priority is accorded to merit goods like quality primary education and health as public remit. A balanced growth strategy between economic infrastructure and social overheads would be the right cocktail for India’s policy makers. The recommendations include introducing General Anti-Avoidance Rule (GAAR) at the earliest to pre-empt illegal parking of funds in tax havens, privatisation of Public Sector Banks (PSB) to promote better financial intermediation. It also supports strongly the case for introducing a Universal Basic Income (UBI) scheme, in lieu of plethora of subsidies to guarantee a minimum standard of living for every Indian citizen. It draws comparison with China, whose growth and development story have walked hand, in hand after liberalization in the 1980s.