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See interview of Venkateswaran  Chittoor Venkatsubramanian
My father used to comment that Economics is the science of the devil. Those were my younger days and I could not have comprehended the full impact of his comment. Later on when I learnt some economics as part of my curriculum in my unsuccessful attempt to clear CFAand in my partly finished MBA ( thru distant education of IGNOU) my father has exaggerated his opinion. 

I have been reading with interest about free market economy, socialist economy and mixed economy. Nehru our first Prime Minister thrust upon us the mixed economy model wherein both the Government and Private Sector co existed in promoting industries and thereby employment. This model was frowned upon by capitalists, who resented any form of government control over private enterprise as an impediment to growth. We were managing hardly 3% rate of growth in GDP for many years euphemistically called Hindu rate of growth. Those days inflation was almost in single digits and you could safely say the real rate of growth and inflation indexed rate of growth was almost equal. We were having largest no of people in utter poverty- dharidra Narayan as Mahatma Gandhi would call them and all povery alleviation programs came a cropper with official dom pocketing most of the outlays. 

In 1991, a stage reached when our BoP reached a position that we had surplus of forex sufficient to cover 15 days of oil import.  Chandrasekar and his Finance Minister, Mr. Yashwant Sinha pawned our gold with world bank to tide over the crisis. Narasimha Rao became Prime Minister under trying circumstances with Rajiv having been blown up by a human bomb of LTTE. He handpicked Dr.Manmohan Singh as his Finance Minister- of all people this former Reserve Bank Governor who was a strict follower of Neruvian socialist ideals. World Bankand IMF mandated certain prescriptions to put the indian Economy back on wheels and he dutifully did it. Watch my words, in those days, Finance Ministers devalued Currency and our currency was steady with major convertible currencies. Now adays, our currency has a free fall hurting everyone. 

Neo liberal policies were unleashed and reforms era began dismantling the permit quota licence raj- as they were described by Rajaji. It was claimed that this will unleash the animal spirits of Indian Industry and create employment and eradicate poverty in no time. Indians could no longer beg RBI for travelling abroad, you can buy assets over seas, borrow from external agencies through ECB to avail interest arbitrage. Consumerism spread all along and white goods were allowed to be freely imported. Those days of import compression mandated every spending of forex to be compensated by export over a period of time. It is another matter that it never worked fully with most of the importers failing to compensate for the foreign exchange spent. 


The growth rates now started climbing up from 3-5%  to 7-9% but with attendant double digit inflation which would in real terms make the growth almost equal to Hindu rate of growth. But it was claimed that this has resulted in reduction of poverty to a considerable extent- not heard of hitherto and we were considered to replace US as one of the largest economies in the world in 2050. Not only India, Brazil, China and Russia also embraced market based reforms and these BRIC countries were supposed to become economic super powers. Have they become super powers? Let us analyse one by one.

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