30 years of liberalisation in India: 30 big achievements during this period
India’s 75th Independence Day is being celebrated this year with pomp and show. The year 2021 also marks the completion of 30 years of liberalisation initiated by the then finance minister Manmohan Singh, under the guidance of the then prime minister Narasimha Rao.
Back in 1991 India was facing an unprecedented balance of payments crisis, staring at default of its external debt obligations and was reeling under high inflation.
Manmohan Singh eased imports, allowed foreign investment and started disinvestment in inefficient public sector units ushering in a series of reforms. He ended his speech quoting Victor Hugo once, ‘No power on earth can stop an idea whose time has come’.
The 1991 economic reforms have been adopted by successive governments of, both, the Bharatiya Janata Party and the Congress.
The 30 greatest achievements of India in the last 30 years of economic liberalisation have been listed below:
1. 6th largest economy
India is now an economic powerhouse. In terms of GDP, India is ranked 6th in the world. Its rank was 18 in 1991. In dollar terms India’s GDP has grown by 9 times during this period from $266 billion in 1991 to $2.7 trillion in 2020.
2. 3rd largest in PPP terms
In terms of GDP by Purchasing Power Parity, India was ranked 10th in 1991, now it is ranked 3rd after China and USA. India represented 1% of the world economy in 1992,which has jumped to 3.6% in 2020.
3. Fastest growing major economy in the world
India’s GDP growth averaged 4.4% during the 1970s and 1980s. This improved to 5.5% during the 1990s and jumped to 6.5% level during the last decade, excluding the pandemic year 2021. IMF projections for FY2022 show that India will reclaim its status of fastest growing major economy in the world.
4. Per capita income 5 times of 1991 (dollar terms)
In 2019. Per capita income which was $300 in 1991 has grown by more than 5 times to $1,900 levels today. The share of food in consumer expenditure is down from 63% to 49%, a sign of rising incomes.
5. Budget 30 times, per capita spending 18 times of 1991
The size of India’s budget has grown by 30 times during this period from Rs 1.1 lakh crore in 1991 to Rs 34.5 lakh crore in 2021. The per capita spending by the central government on social welfare schemes and infrastructural projects have increased from a meagre Rs 1,340 in 1991 to more than Rs 25,000 in 2021.
6. 5th largest forex reserves
From two weeks of foreign exchange reserves to cover imports, the coverage ratio has now swelled to 20 months. India has today the 5th largest forex reserves at $620 billion. In 1991 they were at a miniscule level of $1.1 billion.
7. Top FDI destination in the world
India has emerged as one of the most favoured FDI destinations (Top 10) due to opening up of many sectors like retail, civil aviation, defence, insurance, construction etc. India has received more than $500 billion in the last 3 decades. In 1991, FDI in India was $0.07 billion which increased to $64 billion in 2020.
8. Prices under control
Inflation used to be very high in India in double digits during the 1991 crisis. It was 16.7% in 1991. During 1980-2000, the Consumer Price Index averaged 9.05%. Post liberalisation, inflation has fallen to 6.33% levels during the past two decades, making goods and services more affordable.
9. Millions helped out of poverty
With the increase in per capita income levels and increased government support, the population below the poverty line (BPL) has been steadily declining. From around 34% in 1991, BPL population has declined to 22%.
India has pulled out at least 17 crore people out of poverty since 1990. The COVID-19 pandemic has though negated some of these gains.
10. High foodgrain stocks
The level of foodgrain stocks which were just 15.81 million tonnes in 1991, about 9% of the foodgrain output of that year have swelled to 77.2 million tonnes, which is about 25% of output. This has helped India distribute free ration to the poor during the pandemic, last year and this year as well.
11. 8th largest market capitalisation
India delivered the third-highest return among key global markets in local currency terms in the pandemic year. India has maintained its market capitalisation ranking at number 8 in 2020 and currently has a m-cap of close to $3 trillion, almost similar to its GDP.
12. People in pucca houses more than doubled
The number of people who have pucca houses have more than doubled from 32% in 1993 to 71% in 2015, for which data is available. Providing ‘Housing for All’ mission and schemes like Indira Awaas Yojana and Pradhan Mantri Awaas Yojana have contributed to this development.
13. Population growth has slowed
An improvement in living standards and levels of educational attainment have contributed to a lower population growth of 1.2% during 2010-2019 compared to 2.16% during 1981-1991.
14. Life expectancy high
Life expectancy has improved from 59 years in 1991 to more than 70 years currently. This is a result of better health facilities and availability of nutritional food for the population.
15. India inching closer to 100% literacy
Literacy levels in India were low at 52.21% in 1991. Improvement in education infrastructure, increase in number of teachers, and with an improvement in enrollments of children in rural areas, literacy levels have increased to 77.7%. The Gross enrollment ratio for higher education has increased from 6% in 1991 to 27% in 2020.
16. Healthy India, fit India
The number of doctors has jumped three times to 9.59 lakh from 3.65 lakh in 1991. The Infant Mortality Rate has declined from 86.56 in 1991 to 22.71 in 2021. The Maternal Mortality Rate has declined from 437 per 1,000 in 1991 to 113 in 2021. India is now open defecation free and we have achieved nearly 100% toilet coverage.
17. Improvement in yield and irrigated area
Improving road and power generation infrastructure, knowledge gains and reforms have allowed India to increase farm productivity (yield) from 1,380 kg/hectare in 1991 to 2,325 in 2020. The gross irrigated area has also increased from 632 lakh hectares in 1991 to 966.2 in 2021.
18. On path to becoming an EOU
India’s exports have risen sharply since 1991 from $23 billion in 1991 to $500 billion in 2021 and the country is ranked 12th globally. The IT sector has been the torchbearer of our exports.
India’s exports journey (www.macrotrends.com)
19. Financial inclusion
The number of bank branches has increased by 150% from 60,220 in 1991 to 149,775 in 2020. India’s banking population has more than doubled from 2011 to reach more than 80% currently due the launch of no-frills Jan Dhan accounts.
20. Higher earnings have led to higher savings
Increase in per capita income has led to an increase in savings. Savings rate peaked at 35% in 2012 before moderating to 30% levels currently. In 1991, the savings rate was around 21%. The time deposits in banks has increased from Rs 1.92 lakh crore in 1991 to Rs 135 lakh crore in 2021.
21. Significant rise in capital issues fuelling entrepreneurship
Capital Issues by public limited companies (excluding those owned by the government of India) have increased from Rs 4,312 crore in 1991 to Rs 79,910 crore in 2020. These companies have raised Rs 5.1 lakh crore in the last 30 years.
22. Mutual Funds Sahi Hain
Investments in mutual funds were at a nascent stage in 1991 with people preferring fixed deposits. Over the years, MF investments have increased from Rs 7,509 crore in 1991 to Rs 84,297 crore in 2020.
23. Increase in bank credit fuelling growth
Credit (loans / advances) provided by banks to companies and individuals has increased from Rs 1.16 lakh crore in 1991 to Rs 103.7 lakh crore in 2020.
24. Improvement in fiscal position
The fiscal deficit position of the central government has improved in the last 30 years. The fiscal deficit as % of GDP was 7.6% in 1991 which reduced to half to 3.7% in 2020. The pandemic has resulted in a temporary spike to 9.3% in 2021. The government has set a target of lowering the fiscal deficit to 4.5% by 2026.
25. Decline in external debt
In 1991, the country’s external debt stood at $83.8 billion. The rise has been steady with the figure in 2021 hitting $558.5 billion. As a percentage of GDP the external debt has declined from 38% in 1991 to 21% in 2020.
26. Labour force and employment
The labour force in India currently stands at 47 crore. In 1991, it stood at 33.7 crore. The employment in the public and organised private sector has increased from 346.3 lakh in 1991 to 424.4 lakh in 2018 for which date is available.
27. Electricity consumption
Electricity consumption is considered as a proxy for growth. Post-reforms, per-capita power consumption in India has quadrupled from 291.8 KWh in 1991 to 1,208 KWh in 2020.
28. Car sales
With the prosperity of the middle class, the car sales in the country have increased from just over 2 lakh cars in 1991 to 27 lakh units in 2021 despite the pandemic.
29. Telecom subscribers and broadband
The telecom revolution in India can be called the biggest legacy of the post-1991 economy. As of March 2021, the number of telephone subscribers in India were 120 crore, up from a meagre 50 lakh in 1991. Internet penetration rate in India went up to nearly around 45% in 2021, from just about 4% in 2007 with more than 60 crore users.
30. India is largest producer of many items
India is today, world's largest producer of milk, pulses and jute, and ranks as the second largest producer of rice, wheat, sugarcane, groundnut, vegetables, fruit and cotton. It is also one of the leading producers of spices, fish, poultry, livestock and plantation crops.
To conclude, from fulfilling the basic needs of roti, kapda aur makaan, the reforms have lifted millions out of poverty, unleashed the spirit of free enterprises, and catapulted India into a near $3 trillion economy.
The pandemic era has thrown many challenges to economies around the world and India has not been left untouched. As Robert Frost says, we have promises to keep and miles to go to make India a vishwaguru.
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