Slides

1. Private sector
More competition
More efficiency
More productivity
World
economy
Economic
Growth
GOVT become
regulator
Social sector
Poverty decline
Increase in social sector
spending by govt.
Post 1991 reforms : more open
economy
Agriculture
2004-05 to
2014-15
average annual
growth rate
has been 7.6
per cent.
Annual decline in the poverty ratio in
percentage points (according to Suresh
Tendulkar committee’s methodology)
1993-94 to 2004-05 was 0.74
2004-05 to 2011-12 was 2.18 .
Govt role increased

2. • 1991 reforms —
• the objective of improving the productivity and efficiency of the economy
by injecting a greater element of competition. By removing the barriers to
entry and growth.
• This has led to the dismantling of various controls and licenses. Many
areas which were exclusively reserved for the state are now open to the
private sector. As a consequence, the role of the state as a producer of
marketable goods and services has gone down.
• State’s role as a regulator and as a provider for public goods and
services has increased, even though with respect to the provision of
public goods, several mixed models are available.
• The touchstone of reforms is, therefore, improved efficiency which
comes from improved competition.

3. Private sector was
under license raj
Govt monopoly and control in key
sectors of economy
World
economy
Economic growth
Closed economy
Import restriction
High
tariffs
Private sector Govt sector
Social sector spending
Prior to 1991 economic reforms
Until the end of the 1980s, development was state-directed and state-driven.
Key sectors of the economy were to be under state control. The private sector was
kept in check through an elaborate scheme of licences and controls. In foreign
trade, ‘import substitution’ was the guiding principle and this meant quantitative
controls on imports and high import tariffs.
Less govt spending
in social sector

4. What C. rangarajan suggest : Efficiency + Equity = Reform
Economic sector Social sector
EQUITY
Health etceducationJob
enhancement
Reducing poverty
Economic growth
EFFICIENCY
Efficiency --- High growth rate---Increase
social sector expenditure
How to increase efficiency?
1 Goods and Services Tax (GST) ,
2 create competitive markets with
minimal barriers to entry to all sectors,
3 Improve agricultural productivity
social sector expenditure
Equity: Non-economic factors also play a
key role.
Social sector expenditure must be
prioritized to reflect needs of the society.
Efficiency in the use of resources. Here
good governance comes in.
Reforms, to be credible, must not only
result in higher growth but also benefit all