What Is India News Service
Thursday, November 08, 2007


Economy | Disinvestment

Foreign Direct Investment

   Economic Reforms


Economic reforms began in earnest only in July 1991.  The reforms of the last 10 years have gone a long way toward freeing up the domestic economy from state control.  Progress has also been made in many areas that were previously off limits to reforms.  Insurance has been opened to private investors, both domestic and foreign.  Diesel oil and gas prices have undergone some increases.  At least symbolic reductions have also been made in fertilizer and food subsidies.  The value-added tax has undergone substantial rationalization.  These reforms have paid handsomely. T he economy has grown at more than 6 percent coupled with full macroeconomic stability. 

Economic reforms of the last decade have virtually bypassed agriculture.  Besides fertilizers among others, farmers need adequate supply of water and electricity.  Financial sector reforms, particularly the reform of banking, remain a distant goal. 

While foreign banks are now allowed freely to open branches in India, they have not yet moved in aggressively.  Banking sector privatization will take time but large efficiency gains could be achieved if labor laws are reformed to restore the hire and fire policy.


The most important area of reforms is perhaps India’s power sector.  Virtually no sector of the economy — industry, agriculture, or services — can achieve successful transformation without adequate supply of power.  Infrastructure is another important area of reforms.  Roads, railways, and ports all need expansion as well as improvement in the quality of service.  Fertilizer and food subsidies pose yet another challenge.  As much as 0.7 percent of GDP goes into fertilizer subsidies.  Finally, the reform of bureaucracy is essential.  The problem of a bloated bureaucracy and the need for downsizing it is well recognized.  Moreover, the success of the reforms in delivering growth and poverty reduction must make the road to future reforms less bumpy.

Scale to Next Economic Level - by Aravind Sitaraman


The Vilasrao Deshmukh government’s new industrial policy has made a host of multinational companies rush to invest in the State. (Revving Up Growth, Frontline, Amit Mitra, Nov 08, 2007)

The 17th National Congress of the Communist Party of China re-elects Hu Jintao as general secretary and amends the party constitution. (The Chinese Dream, Frontline, P. S. SURYANARAYANA, Nov 07, 2007)

As someone who is convinced that Indian Communists serve as a Chinese fifth column in our beloved Bharat Mata, I look for every chance to expose their treasonous behaviour. Generally, it’s hard to catch our comrades red-handed. (To China, With Love, Indian Express, Tavleen Singh, Nov 05, 2007)

The suggested parliamentary debate on the 123 agreement will be among the most important discussions held in Parliament in Independent India. It will be a test for all political parties in terms of their approach to India’s national interest. (Coming Up: Floor Test, Indian Express, K. Subrahmanyam, Nov 03, 2007)

German Chancellor Angela Merkel’s announcement of a shift in her government’s Asia policy towards New Delhi — ahead of the just concluded state visit — should set the tone for the future of bilateral ties, already underpinned by the 2006 . . . . (Germany’S India Focus, Hindu, Editorial, The Hindu, Nov 02, 2007)

In introducing a Bill to check organised crime in her state -- when passed, it will be called the Uttar Pradesh Control of Organised Crime Act (UPCOCA) -- Chief Minister Mayawati has taken a step towards fulfilling a key election promise. (Maya Versus Mafia, Pioneer, Correspondent or Reporter, Nov 02, 2007)

There is no better proof of the rising global confidence in India’s economic success story than the Sensex breaching the 20,000 mark. (Happy Times, Indian Express, Rajeev Shukla, Nov 02, 2007)

Prime Minister's abiding image is that of a leader with no strength or fixed ideology - jettisoning economic reforms one day and embracing land reforms another (Pm Dons Left Avatar , Pioneer, Anuradha Dutt, Nov 02, 2007)

The latest Communist Party of China Congress saw Hu Jintao emerge for his second five-year term as a stronger leader. (Skirting The Border, Hindustan Times, Correspondent or Reporter, Nov 02, 2007)

What is happening in Karnataka for the last few weeks is not only bizarre, but also extremely sordid. The results that were thrown up during the last assembly elections led to a completely fractured legislature. (Karnataka Crisis: Perils Of Coalition Politics , Deccan Herald, Nilotpal Basu, Nov 02, 2007)

Prime Minister Manmohan Singh, in yet another hint that the government is determined to move ahead on the civil nuclear energy agreement with the United States, told the delegates of the Global Fortune Forum here on Monday that India . . . . (Pm: India Has Never Reneged On A Deal, Asian Age, Seema Mustafa, Oct 30, 2007)

Prime Minister Manmohan Singh, in yet another hint that the government is determined to move ahead on the civil nuclear energy agreement with the United States, told the delegates of the Global Fortune Forum here on Monday that India "has never . . . . (Bjp Still ‘Totally Opposed’ To N-Deal, Asian Age, Seema Mustafa, Oct 30, 2007)

NOT AN arm-chair ideologue, Brinda Karat with her extensive on-the-field experience presents a realistic picture of poor and working-class women. (Crusader For Women’S Rights, Hindu, Sarojini Premchand, Oct 30, 2007)

Coalition governance has been around for 20 years and while the last two Governments have mastered the art of survival, the issue of effective governance has been a serious casualty. (It's Advantage Congress, Pioneer, Arun Nehru, Oct 29, 2007)

India will have to “work through its internal, political decisions” regarding the civilian nuclear deal. The U.S. government has been “encouraging it to go forward [with the deal] as quickly as possible,” U.S. Secretary of the Treasury . . . . . . (U.S. ‘Encouraging India’ To Go Ahead With Nuclear Deal, Hindu, Correspondent or Reporter, Oct 29, 2007)

Those who see India's growing closeness to the US as an indication that New Delhi has mortgaged the independence of its foreign policy should feel reassured by Sonia Gandhi's visit to China, which followed close on the heels of . . . . . (Romancing The Dragon, Times of India, Correspondent or Reporter, Oct 29, 2007)

Visiting US Treasury Secretary Henry Paulson urged India on Sunday to quickly implement a landmark civilian nuclear energy deal with the United States. (India Must Move Ahead On Nuclear Deal: Us , Daily Times, Correspondent or Reporter, Oct 29, 2007)

Having given up on the nuclear deal and with elections in the not-to-distant future, the Congress (in particular the prime minister) has turned its attention to economic reform and governance, which should have been priorities at the beginning of . . . . (Carbon Blueprint, Indian Express, Editorial, Indian Express, Oct 29, 2007)

The Prime Minister is sad, and competitive politics and fractured mandate have been formally identified as the culprits. (Despair And Despondence, Pioneer, JS Rajput, Oct 27, 2007)

The claim, at first, was that restrictions on participatory notes (PNs) were motivated by a desire to reduce capital flows. But the government quickly recanted and sang another tune. (Reforming?, Indian Express, Editorial, Indian Express, Oct 27, 2007)


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