Kolkata, Oct 9 (IANS) Congress leader Jairam Ramesh on Friday said the course of Indian economic policy after the 1991 reforms has remained unchanged despite the country being governed by various parties.
“The trajectory of economic policy has not changed since the liberalisation period. It has enjoyed political consensus for the last 25 years,” he said at an interactive session organised by Observer Research Foundation.
The former union minister was providing insights into his latest book – “To the Brink and Back: India’s 1991 Story” – which is a first-hand account of the developments leading to a series of economic reforms and opening up of the Indian economy.
Then a bureaucrat in the union finance ministry then headed by Manmohan Singh under then prime minister P.V. Narasimha Rao in 1991 and participating extensively in the economic reforms, Ramesh recalled that when liberalisation – still as a concept – was introduced, it met with tremendous opposition both from the political and some industrial circles.
Referring to USSR leader Mikhail Gorbachov’s “glasnost (openness)” and “perestroika (economic restructuring)” policies and the abortive coup in August 1991, he said at one point of time, the Rao administration even considered not implementing the economic reforms to avoid such political unrest in India.
However, after the coup failed and Gorbachev was freed, the government decided to continue the reforms.
Asked if the then changing scenario in communist East Europe, Soviet Union, Cuba, and China made India think about opening its economic doors to the world, Ramesh said: “We were not paying heed to what was going on in these countries.”
He said liberalisation took place as India faced its “gravest economic crisis in 1991”.
Ramesh also acknowledged that the International Monetary Fund had been a catalyst in ushering the reforms.
Asked about the results of the reforms, he said on the industrial and trade front, the entire series of reforms have been implemented.
“However, over fiscal policy, it is just 30 percent,” he said.
“People used to call it (1991 reforms) LPG – liberalisation, privatisation and globalisation. While the L and G has continued over these years, P remains a point of concern,” he said answering a question over implementation and continuity of these policies.
Acknowledging that inequality has gone up post the reforms, Ramesh said poverty has been contained.
“However, inequality is the result of the failure of public systems – namely education and health – and not income inequality,” he contended.
Ramesh added although reforms ushered a new epoch in the Indian economy, it should not depend on foreign direct and institutional investment, stressing domestic capacity needs to be strengthened to drive growth.