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This article provides information about the evaluation of liberalisation of Indian economy on social sectors:
It is a decade and a half that India adopted new economic policy and fall into the path of liberalisation of economy. A drastic policy shift from that of mixed economy — the policy followed till 1990, will definitely show its impact both in the economic and social fronts. It is essential to take a stock of these impacts here. It needs to be stressed here that all these macroeconomic indicators cannot be attributed to reform programmes only.
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If we look at the positive impact in the economic front analysed, it can be observed see that after a dip in the GDP growth rate along with a sharp absolute decline in aggregate investment during 1991 -92, there was a spurt in GDP growth from 1992-93 onwards.
In the first half of the financial year 2005-06 the economy grew by 8.1 % compared to 7.1 % of the corresponding period in the previous year. Indeed not only were growth rates of GDP, per capita income and capital accumulation higher in 1992-2001 than the corresponding averages in the 70s and the 80s. There was also a considerable fall in the poverty ratio, from 36.0 per cent to 26.1 per cent, between 1993-94 and 1999-2000.
The performance of economy was quite remarkable in the external sector. There was considerable improvements in balance of payments, increase in the foreign exchange reserves, a sharp decline in the short term debt as percentage of forex reserve etc. the economy also become much more open since economic reforms and there was a rise in the country’s share of exports in world trade from below 0.5% to nearly 0.6% in over a period of one decade.
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Following are some of the major accomplishments of the financial reforms:
i. Domestic deregulation of industry, dismantling the system of industrial licensing and production controls, which enhanced the domestic competition;
ii. Liberalisation of trade and significant drop in tariff rates; and
iii. Liberalisation of financial sector.
Along with these positive growth tendencies there also had been some negative trends. After managing a rapid recovery, India economy lost its growth momentum within a few years of inception of economic reforms. The average GDP and per capita income growth during 1997-2001 was significantly lower than the in 1992-1997.
The second and no less disturbing development during the 1990s was the extremely low growth of overall employment, belying the expectation that the reforms programme, through stimulation of labour intensive activities, would help harnessing in the growth processes the country’s huge untapped human resources. As the latest Economic Survey reveals, between the periods 1983-94 and 1994-2000 the average annual growth rate of total employment recorded a steep fall from 2.04% to 0.98%.
Financial sector reforms have been much more comprehensive than reforms in other areas. However, this sector also has displayed quite a few negative developments. The most important of these are: (a) decline in bank credit to the commercial sector and increasing bank holding of SLR securities far in excess of the stipulated minimum; and (b) failure of the capital market, especially during 1995-2000, to provide finance for domestic capital formation.
Another impact of the opening up of Indian economy was that it was being subjected to external (financial) shocks to a greater extent than in 1980s or before. It is observed that liberalisation of Indian economy has both Positive as well as Negative impact over Indian economy. Unemployment due to replacement of the traditional technology by modern technology has made its negative impact, whereas availability of new opportunities in the employment market has made its positive impact. Study by SEWA Academy on the impact of globalisation on informal sector shows that globalisation of Indian economy has both positive and negative effects on the sector.
For example, introduction of machinery in construction sector has resulted a decrease in labour demand at urban areas whereas increase in rural areas. As rural areas are also going for houses made of cement and bricks rather than mud. On the other hand, increased demand of embroidered work in global market has increased the work in embroidery workers. On the other hand, garment workers have undergone through the positive as well as negative effect of globalisation.
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Increased in demand of garments has increased the work in garment sector but continuous change in fashion world has demanded a continuous upgrading of work quality, which found to be difficult with workers in informal sector. Even, the small and marginal farmers have gained from the globalisation as they are able to cultivate their land thrice in a year with the advancement of technology but excessive use of fertilizers and pesticides has decreased the overall profit of the farmers.
Due to liberalisation and globalisation advanced technologies, instruments and medicines in the field of medical science are available even in our country. Thus, with the help of telemedicine, today specialised doctors of USA and Germany can assist the ongoing operations in India. Also, India is now producing advanced equipments required for operation; this has effectively reduced the cost price of items needed during operation. After the Government of India lifted price control over drugs, tough competition has been found among the drug manufacturers.
As a result, the cost of some drugs has reduced. Despite these positive aspects, there are some negative aspects of globalisation in the health sector. For example, some essential and life-saving drugs have become expensive due to the removal of price control and also many more irrational drugs are available in the market than before. Other than this, today new high order antibiotics are prescribed for minor conditions, like cold and cough. This has in turn resulted in drug resistance.