LIBERALIZATION OF THE ECONOMY

 

Since the early 1990s, the buzzword 'liberalisation' has dominated political discussions and ideas in India. Although it has gained widespread usage, its implications are exceedingly complicated, to the point where they frequently conflict and are difficult to understand. To put it another way, liberalisation has varied meanings for many people. While some see it as a blessing or a positive change, others see it as a self-inflicted burden. However, it is safe to say that no other policy has transformed political objectives and thinking in as little time as liberalisation has. Ironically, given that its true shape has not yet materialised in practise, it has been able to do so.

The necessity of liberalisation made it important. It was initially thought of as a solution for the crises that followed a period of extravagant spending. The decline and disintegration of the Soviet Union, as well as the resulting shifts in political allegiances around the world, were other causes that contributed to the crises. One of India's main commercial partners and the former Soviet Union had a special relationship with India. Payments made in money were immaterial because organised barter constituted a large portion of the trade with that nation. We handed the Soviets gasoline and military equipment in exchange for shiploads of cosmetics and costumes. Whenever a small transaction involving the exchange of money, the currency was frequently the rupee.

Thus, there was barely any loss of valuable foreign currency in India's commerce with the USSR. There was no need for strong or creative marketing campaigns because the trade products and their quantity were set bilaterally by the relevant governments. In general, India's international trade during the period resembled a relaxing voyage through tranquil waters. Even though there were plenty of stormy weather warnings, both the government and the general population conveniently disregarded them. Even the warnings failed to stop the government from engaging in particularly wasteful behaviour at that time. The Indian economy was on the point of collapse when the signal became too dire to ignore due to a distressingly large trade deficit and rapidly depleting foreign exchange reserve.

The administration was compelled to think in terms of liberalisation as a result of the economy's collapse, which provided ample evidence of official blunders and inefficiency. In a sense, the government's optimism over the private sector's ability to contribute to economic development and its invitation to do so served as the precursors to India's most recent economic liberalisation process. Even though the government also engaged in other recommended actions, such as devaluing the currency and borrowing from the IMF to restock foreign exchange reserves, it is questionable whether liberalisation has been successful in resolving the nation's economic issues after all these years.

There are concerns about the outcome since India's problems are so complicated and one-of-a-kind that they cannot be solved by making simple changes to policies. As such, policies simply offer suggestions and directives. How their concepts and directives are interpreted and put into practise determines how policies will turn out. Only after the possibility of economic collapse became a serious concern for the government did the need for the current liberalisation programme become apparent. But was such a possibility unfamiliar to the nation and its populace as a whole? For a sizable portion of the population, ruin and despair had long been expected outcomes, long before liberalisation was considered required. If they were aware of a decline in foreign exchange reserves or a balance of payments issue, those who are below the poverty line would not be overly concerned. They have a lot of issues as a result, so they won't worry too much about a few new ones. Therefore, measures like liberalisation cannot have much of an impact on India as long as a sizable portion of the populace is oblivious to these new issues. Thus, liberalisation can only be said to be a solution to the problems that wealthy individuals who have the means to do so themselves have. It cannot make the kind of general claim that its creators would like.

In the context of India, liberalisation has not yet resulted in advancement and development. It has mostly meant loosening a number of strict and ambiguous restrictions that stifle innovation and business. Therefore, determining how effective a policy is extremely challenging. Liberalization holds out great promise, despite concerns about its viability, as it will result in a wider range of individuals participating in the development process and encouraging initiative and enterprise. Some indications, such as an increase in exports and the emergence of industries, portend well for wealth generation and general prosperity if they are maintained. There is no reason why the prosperity that might follow liberalisation should not spread to all facets of society if greed and insensitivity to social issues can be restrained. Hopefully, economic liberalisation will enhance employment prospects for both skilled and unskilled labour, which will act as a powerful tool for disseminating such riches.

Any social policy must be evaluated to see if it has positively impacted "all" segments of society, not just the fortunate few, in order to be considered successful. Liberalization should be promoted if it results in private enterprise producing riches without compromising morality and ethics and offering that wealth for distribution to "all" the members of society in order to promote their general welfare.