PM’s woods, FM’s trees

Context – Prime Minister has pushed to make India self-reliant, self-confidant for sustainable growth in future.

Significance of Economic reforms of 1991 

• Based on four policy measures: the end of licence-permit Raj, steep cuts in fiscal deficit and tariffs, and devaluation of the Rupee.
• Its macro policy articulation pulled the economy out of a crisis and placed on a new growth path.

PM vision statement for self-reliance India.

• It does not support isolationism and inward orientation but greater confidence in the people by reducing dependence on other nations. Its key elements are

1. Step up in public spending and investment ???? Boost in demand and generate employment and add new infrastructure (Short- and medium-term approach)
2. Policy reforms to make domestic economy globally competitive. (Medium term approach)
3. Long-term structural shift making the economy more “self-reliant” and less dependent on the world economy.

India’s current dependency on outside world

• Oil and gas imports – dependency specially towards West Asian Countries.
• Foreign exchange inflows (remittances from West Asia and USA and financial flows from capital markets from Western Countries)
• Defence equipment dependence on Russia, USA, Israel, France.
• Electronic goods and pharmaceuticals products dependency mainly from China.

What needs to be done

• Import and Export should grow together. (China demonstrated the geo-economic power by making trade partners dependent on it on both counts)
• Expanded focus: Making India less dependent on China cannot be the only measure of self-reliance.
• For India to be truly self-reliant and self-confident, public investment in education, human capability and research and development has to increase.

• It is not trade dependence that makes India vulnerable but the inadequacy of its human capital, so all the future programmes and policies must be centred around it.