O er caplLa lncome less Lhan a quarLer of unlLed sLaLes are underdeveloped counLrles O ueveloplng economles means counLrles Lhough sLlll undeveloped Lhe process of developmenL has been lnlLlaLed O @he lndlan economy was ln ma[or crlsls ln 1991 when forelgn currency reserves wenL down Lo $1 bllllon and lnflaLlon was as hlgh as 17 llscal deflclL was also hlgh and had become unsusLalnable lorelgn lnvesLors n8ls had losL confldence ln lndlan economy CaplLal was flylng ouL of Lhe counLry and were close Lo defaulLlng on loans @hls came as a perlod of economlc LransacLlon whlch [olLed Lhe economy ouL of Lhelr convenLlonal selfrellanL and soclallsLlc pollcles of economy AdopLlon of LlberallzaLlon rlvaLlzaLlon and CloballzaLlon (LC) ln 1991 led Lo Lhe real lnLegraLlon of Lhe lndlan economy lnLo Lhe global economy @he lndlan Lconomy % lndla ls Lhe 4 Lh largesL economy ln Lhe world as measured by purchaslng power % lndla's economy grew aL an average raLe of 73 O lndla has a consumer base of 12 bllllon people and O More number of enLrepreneurs % JlLh upper lncome and rlch classes growlng rapldly and deprlved classes acLually falllng lndla's lncome demographlcs wlll acLually be nrecognlzable by Lhe end of Lhe decade (a wlde gap b/w poor Lhe rlch) @he lndlan LconomyposL economlc reforms lndla has among Lhe hlghesL reLurns on forelgn lnvesLmenL uoo 5cbelomoo clsco 5ystem loc os tolJ to 8osloess week Aoqost 2005 uoo 5cbelomoo clsco 5ystem loc os tolJ to 8osloess week Aoqost 2005 Je came Lo lndla for Lhe cosLs sLayed for Lhe quallLy and are now lnvesLlng for lnnovaLlon" A 1 keotoey lul cooflJeoce loJex 2005 A 1 keotoey lul cooflJeoce loJex 2005 lndla ls among Lhe Lhree mosL aLLracLlve lul desLlnaLlons ln Lhe world Iock welcb Ceoetol lecttlc Iock welcb Ceoetol lecttlc lndla ls a developed counLry as far as lnLellecLual caplLal ls concerned" u5 uepottmeot of commetce u5 uepottmeot of commetce 8y 2032 lndla wlll be among Lhe Lhree largesL economles ln Lhe world 8klc kepott ColJmoo 5ocbs 8klc kepott ColJmoo 5ocbs wry lrd|a? - 0uole urquole 1tovyo kboll AcNlelseo 1tovyo kboll AcNlelseo @he lndlan markeL has Lwo core advanLages an lncreaslng presence of mulLlnaLlonals and an upswlng ln Lhe l@ exporLs" ctolq 8ottett lotel cotpototloo ctolq 8ottett lotel cotpototloo lndla has evolved lnLo one of Lhe worlds leadlng Lechnology cenLers rlvaLlsaLlon O @ransfer of ownershlp or sale of publlc enLerprlses O MeanL Lo lmprove Lhe performance of publlc enLerprlses O @rled ln counLrles llke CreaL 8rlLaln Chlna uS @urkey 8razll Mexlco !apan eLc rlvaLlsaLlon ln lndla O @wo common meLhods O Pavlng fewer conLrols and regulaLlons by Lhe sLaLe ln economlc acLlvlLles O @ransferrlng ownershlp of sLaLe equlLy ln Sus Lo prlvaLe lndlvlduals and lnsLlLuLlons 8eneflLs 1 lncreaslng overall efflclency 2 lmprovemenL ln Lhe quallLy of managemenL and declslon maklng 3 no governmenL flnanclal backlng and Lherefore caplLal markeL wlll compel Lhese enLerprlses Lo be more efflclenL 4 SubsLanLlal reducLlon ln governmenL's budgeLary supporL resulLlng ln reducLlon ln budgeLary deflclL 3 8ecovery of governmenL fund whlch could more producLlvely be used ln developmenL acLlvlLles 6 8educLlon ln pollLlcal and bureaucraLlc lnLerferences 8eLLer lndusLrlal relaLlons managemenL eLc ShorLcomlngs O A slzable number of Sus have been lncurrlng and reporLlng losses on a conLlnual basls ConsequenLly a large number of Sus have already been referred of 8ll8 O MulLlpllclLy of auLhorlLles Lo whom Lhe Sus are accounLable O uelay ln lmplemenLaLlon of pro[ecLs leadlng Lo cosL escalaLlon and oLher consequences O lneffecLlve and wldespread lnefflclency on managemenL O Many Sus are operaLlng wlLhouL Lhe leader (le chlef execuLlve or chalrman) ShorLcomlngs (cnLd) O JlLh a vlew Lo provlde opporLunlLles for more and more unemployed youLhs more number of people Lhan requlred were recrulLed and Lherefore many Sus are oversLaffed resulLlng ln lower labour producLlvlLy bad lndusLrlal relaLlons eLc O unremuneraLlve prlclng pollcy O A number of slck companles (40 companles) whlch were ln Lhe prlvaLe secLor was Laken over by publlc secLor malnly Lo proLecL Lhe employees @hese slck unlLs are causlng a blg draln on Lhe resources of Lhe sLaLe eLc MeLhods of rlvaLlzaLlon O lour lmporLanL modes of prlvaLlzaLlon a) lranchlslng b) ConLracLlng c) Leaslng d) ulslnvesLmenL ulslnvesLmenL O MeeL Lhe growlng budgeL deflclL O @ransfer of govL ownershlp when Lhe dlluLlon ls 31 O 8rlng down Lhe govL equlLy Lo 26 or lower Cb[ect|ves O 8educe flnanclal burden on govL O lmprove publllc flnance O lnLroduce compeLlLlon 8easons for Slow rogress O no clear framework or pollcy O used Lo meeL Lhe flscal deflclL O lallure Lo aLLracL Lhe forelgn buyers CloballsaLlon O lnLegraLlng domesLlc economy wlLh Lhe world economy O ulverse world unlfled lnLo a slngle socleLy O Cpenlng up of world Lrade O @he lnternotiono/ Monetory lund deflnes globallzaLlon as Lhe qtowloq ecooomlc lotetJepeoJeoce of cooottles wotlJwlJe tbtooqb locteosloq volome ooJ votlety of ctoss botJet ttoosoctloos lo qooJs ooJ setvlces ftee lotetootloool copltol flows ooJ mote toplJ ooJ wlJespteoJ Jlffosloo of tecbooloqy teps 1aken to G|oba||ze Ind|an Lconomy 1 Deva|uat|on @o solve Lhe balance of paymenL problem lndlan currency were devaluaLed by 18 Lo 19 2 D|s|nvestment @o make Lhe LC model smooLh many of Lhe publlc secLors were sold Lo Lhe prlvaLe secLor 3 A||ow|ng Iore|gn D|rect Investment (IDI) lul was allowed ln a wlde range of secLors such as lnsurance (26) defense lndusLrles (26) eLc 4 NkI cheme @he faclllLles whlch were avallable Lo forelgn lnvesLors were also glven Lo n8ls LffecLs CloballsaLlon O Plgh economlc growLh O LxporLs have boomed O lndlas companles are seLLlng up companles abroad O lndla has beLLer Lechnologlcal developmenL for Lhe beneflL of Lhe common man ( moblles road LransporL cheap cloLhes eLc) resulLed ln reverse braln draln ln developlng counLrles O CreaLer and fasLer flow of lnformaLlon beLween counLrles and greaLer culLural lnLeracLlon has helped Lo overcome culLural barrlers #Je hove everythinq by q/obo/itotion we hove nothinq by q/obo/itotion" O 9kC O 8aLe of growLh of Cu of lndla O lorelgn exchange lncreased O Share ln world exporLs lncreased O CN O Share of agrlculLure ln gdp wenL down O number of rural landless famlly lncreased O lssues ln publlc secLor corrupLlon lack of efflclency ln work lneffecLlve managemenL O uecreased lul O lncreased gap beLween rlch and poor Maln Challenges lndla faced afLer Lhe economlc reforms O Low growLh ln AgrlculLure SecLor O Cap beLween Lhe rlch and Lhe poor O lncreased consumpLlon behavlour Cap beLween 8lch and poor O ptlmoty objectlves of tbe ecooomlc pollcles of most cooottles lo tbe wotlJ bos beeo ecooomlc epoollty epool poy fot epool wotk O lndla has always wlLnessed a wlde gap beLween Lhe rlch and Lhe poor O @here's been greaL economlc developmenL and lndusLrlallzaLlon buL lL has served Lo beneflL only Lhe enLrepreneurs O @he salarled employed have noL been able Lo rlse above Lhe mlddle class O @he lncome of Lhe rlchesL 1 of people ls Lhe same as LhaL of Lhe pooresL 60 (Source 88C) CA 8L@JLLn 8lCP Anu CC8 AgrlculLure SecLor O Lven afLer globallzaLlon condlLlon of agrlculLure has noL lmproved @he share of agrlculLure ln Lhe Cu ls only 17 @he number of landless famllles has lncreased and farmers are sLlll commlLLlng sulclde AgrlculLure SecLor O @he Lconomlc Survey reporLs released Llll 1991 conLalned Lhe ChapLers ln Lhe followlng order (1) lnLroducLlon (2) AgrlculLural roducLlon (3) lndusLrlal erformance and ollcles (4) lnfrasLrucLure (3) Puman 8esources (6) rlces rlce ollcy and ubllc ulsLrlbuLlon SysLem (7) llscal ollcy and CovernmenL 8udgeL (8) MoneLary and CredlL uevelopmenLs (9) @he LxLernal SecLor and (10) roblems and rospecLs O ln Lhe Lconomlc Survey 199192 llnance MlnlsLer Manmohan Slngh recasL Lhe ChapLers ln Lhe followlng order (1) lnLroducLlon (2) ubllc llnance (3) Money and CredlL (4) rlces and ulsLrlbuLlon (3) 8alance of aymenLs (6) lndusLry (7) AgrlculLure (8) lnfrasLrucLure and (9) Soclal SecLors AgrlculLure SecLor O AgrlculLure has been and sLlll remalns Lhe backbone of Lhe lndlan economy O ln 1931 agrlculLure provlded employmenL Lo 72 per cenL of Lhe populaLlon and conLrlbuLed 39 per cenL of Lhe gross domesLlc producL O @he share of agrlculLure and Allled secLors ln gdp ls esLlmaLed Lo be 142 ln 20102011 O 8esulLed ln a lowerlng Lhe per caplLa lncome of Lhe farmers and lncreaslng Lhe rural lndebLedness Plgh lnpuL CosLs O Seeds@he blggesL lnpuL for farmers ls seeds 8efore llberallsaLlon farmers across Lhe counLry had access Lo seeds from sLaLe governmenL lnsLlLuLlons @he seed markeL was well regulaLed and Lhls ensured quallLy ln prlvaLely sold seeds Loo JlLh llberallzaLlon seed prlces shoL up and fake seeds made an appearance ln a blg way LxpecLlng hlgh ylelds farmers lnvesL heavlly CuLpuL ls noL commensuraLe wlLh Lhe heavy lnvesLmenL ln Lhe seeds and farmers are pushed lnLo debL @he abundanL avallablllLy of spurlous seeds ls anoLher problem whlch leads Lo crop fallures LlLher LempLed by Lhelr lower prlce or unable Lo dlscern Lhe dlfference farmers lnvesL heavlly ln Lhese seeds and agaln low ouLpuL pushes Lhem lnLo debL Larller farmers could save a parL of Lhe harvesL and use Lhe seeds for Lhe nexL culLlvaLlon buL some geneLlcally modlfled seeds known as @ermlnaLor prevenL harvesLed seeds from germlnaLlng hence forclng Lhe farmers Lo lnvesL ln Lhem every season lmbalance ln ferLlllzer use O Cne measure of Lhe llberallsaLlon pollcy whlch had an lmmedlaLe adverse effecL on farmers was Lhe devaluaLlon of Lhe lndlan 8upee ln 1991 by 23 (an expllclL condlLlon of Lhe lMl loan) lndlan crops became very cheap and aLLracLlve ln Lhe global markeL and led Lo an exporL drlve larmers were encouraged Lo shlfL from growlng a mlxLure of LradlLlonal crops Lo exporL orlenLed cash crops llke chllll coLLon and Lobacco @hese need far more lnpuLs of pesLlclde ferLlllzer and waLer Lhan LradlLlonal crops LlberallsaLlon pollcles reduced pesLlclde subsldy LlecLrlclLy Larlffs have also been lncreased ow pr|ce of Cutput O JlLh a vlew Lo open lndlas markeLs Lhe llberallzaLlon reforms also wlLhdrew Larlffs and duLles on lmporLs whlch proLecL and encourage domesLlc lndusLry As a resulL cheap lmporLs flooded Lhe markeL pushlng prlces of crops llke coLLon and pepper down O kerala whlch ls world renowned for pepper has suffered as a resulL of 0 duLy on lmporLs of pepper from SAA8C3 counLrles epper whlch sold aL 8s 27000 a qulnLal (Auu 771) ln 1998 crashed Lo 8s 3000 (Auu 142) ln 2004 a decllne of 81 As a resulL lndlan exporLs of pepper fell 31 ln 2003 from Lhe prevlous year (SalnaLh 2003) Comblned wlLh Lhls droughL and crop fallure has hlL Lhe pepper farmers of kerala hard and have forced Lhem lnLo a debL Lrap Close Lo 30 of sulcldes among keralas farmers have been ln pepper produclng dlsLrlcLs Lack of credlL faclllLles and dependence on prlvaLe money lenders O ln 1969 ma[or lndlan banks were naLlonallzed and prlorlLy was glven Lo agrarlan credlL whlch was hlLherLo severely neglecLed Powever wlLh llberallsaLlon efflclency belng of uLmosL lmporLance such lendlng was deemed as belng low proflL and lnefflclenL and credlL exLended Lo farmers was reduced dramaLlcally falllng Lo 103 ln 2001 agalnsL a recommended LargeL of 18 O A lack of rural lnfrasLrucLure deLers prlvaLe banks from seLLlng up rural branches wlLh Lhe responslblllLy falllng on Lhe governmenL whlch has reduced rural spendlng as a resulL of lLs llberallsaLlon pollcles O @hls aL a Llme when agrlculLure was golng Lhrough a crlsls proved dlsasLrous for farmers who Lurned Lo prlvaLe money lenders who charge exorblLanL raLes of lnLeresL someLlmes up Lo 24 a monLh O JlLh lnpuL cosLs and ouLpuL prlces belng whaL Lhey are coupled wlLh crop fallures and droughL Lhey are pushed lnLo debL whlch ls lmposslble Lo repay O Andhra radesh had Lhe hlghesL percenLage of lndebLed farm households 82 644 of keralas farm households and 348 of MaharashLras farm households were lndebLed lndebLedness had been ldenLlfled as Lhe slngle ma[or cause of sulcldes ln boLh Andhra radesh kerala and MaharashLra -Dl- O lndla should pay lmmedlaLe aLLenLlon Lo ensure rapld developmenL ln educaLlon healLh waLer and sanlLaLlon labor and employmenL essenLlal for Lhe soclal pollLlcal and economlc developmenL of Lhe counLry O our progress ln educaLlon has been slow and superflclal wlLhouL depLh and quallLy Lo compeLe Lhe lnLernaLlonal sLandards O lmmedlaLe sLeps Lo lncrease agrlculLural producLlon and creaLe addlLlonal employmenL opporLunlLles ln Lhe rural parLs Lo reduce Lhe growlng lnequallLy beLween urban and rural areas agrlculLure ls sLlll Lhe largesL lndusLry provldlng employmenL Lo abouL 60 per cenL of Lhe workforce ln Lhe counLry