UNIVERSITY OF MARYLAND. CENTER FOR INSTITUTIONAL REFORM AND THE INFORMAL SECTOR (IRIS)
Industrial and trade policy reforms in India
This paper presents an overview of steps taken by the Government of India since 1991 to liberalize the country"s trade and industrial policies, finding that the reorientation of India"s industrial and trade policy regimes since the balance of payments crisis in 1991 has significantly raised the growth rate of GDP from 1% to 5% per annum by 1994.
Ahluwahlia, Isher · 1996
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Abstract
Foreign exchange reserves increased to over $15 billion from $1.2 million over the same 3-year period, while inflation was halved from a peak of 17% in August 1991. Exports have responded to the liberalized environment, growing in dollar terms by 21% by 1994. Finally, India has seen a growth in both foreign direct investment and foreign portfolio investment. However, despite domestic deregulation and delicensing in the industrial sector, industrial growth in India has been slower than expected. The paper concludes that a higher and sustainable path towards industrial growth requires an increase in both public and private investment. Resistance by established industry to the prospect of increased competition, the poor fiscal position of the government and some of the major public sector enterprises, and problems in the government"s exit policy, it is concluded, are the major impediments to future reforms in the industrial sector. Includes references. (Author abstract, modified)
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