The Government of India affirmed to implement the
economic reforms in consultation with the international bank and in
accordance of its policies. Successive coalition governments from 1996 to
2004, led by the Janata Dal and BJP, adopted faithfully the economic policy of liberalization.
With Manmohan Singh returned to power as the Prime Minister in 2004, the
economic policy initiated by him has become the lodestar of the fiscal outlook
of the government.
The Bright Side of Globalization
The rate of growth of the Gross Domestic Product
of India has been on the increase from 5.6 per cent during 1980-90 to seven per
cent in the 1993-2001 period. In the last four years, the annual growth rate
of the GDP was impressive at 7.5 per cent (2003-04), 8.5 per cent (2004-05),
nine per cent (2005-06) and 9.2 per cent (2006-07). Prime Minister
Manmohan Singh is confident of having a 10 per cent growth in the GDP in the
Eleventh Five Year Plan period.
The foreign exchange reserves (as at
the end of the financial year) were $ 39 billion (2000-01), $ 107 billion
(2003-04), $ 145 billion (2005-06) and $ 180 billion (in February 2007). It is
expected that India will cross the $ 200 billion mark soon.
The cumulative FDI inflows from 1991
to September 2006 were Rs.1, 81,566 crores (US $ 43.29 billion). The sectors attracting
highest FDI inflows are electrical equipments including computer software and
electronics (18 per cent), service sector (13 per cent), telecommunications (10
per cent), transportation industry (nine per cent), etc. In the inflow of FDI, India has surpassed South Korea to become the fourth largest recipient.
India controls at the present 45 per cent
of the global outsourcing market with an estimated income of $ 50 billion.
In respect of market capitalization (which takes into account
the market value of a quoted company by multiplying its current share price by
the number of shares in issue), India is in the fourth position with
$ 894 billion after the US ($ 17,000 billion), Japan ($ 4800 billion) and China ($ 1000). India is expected to soon cross the trillion dollar mark.
As per the Forbes list for 2007, the
number of billionaires of India has risen to 40 (from 36 last year)more than those of Japan (24), China (17), France (14) and Italy (14) this year. A press report was jubilant: This
is the richest year for India. The combined wealth of the Indian
billionaires marked an increase of 60 per cent from $ 106 billion in 2006 to $
170 billion in 2007. The 40 Indian billionaires have assets worth about Rs.
7.50 lakh crores whereas the cumulative investment in the 91 Public Sector
Undertakings by the Central Government of India is Rs. 3.93 lakh crores only.
The Dark Side of Globalization
On the other side of the medal, there is a long list
of the worst of the times, the foremost casualty being the agriculture sector.
Agriculture has been and still remains the backbone of the Indian economy.
It plays a vital role not only in providing food and nutrition to the people,
but also in the supply of raw material to industries and to export trade. In
1951, agriculture provided employment to 72 per cent of the population and
contributed 59 per cent of the gross domestic product. However, by 2001 the
population depending upon agriculture came to 58 per cent whereas the share of
agriculture in the GDP went down drastically to 24 per cent and further to 22
per cent in 2006-07. This has resulted in a lowering the per capita income
of the farmers and increasing the rural indebtedness.
The agricultural growth of 3.2 per cent observed from
1980 to 1997 decelerated to two per cent subsequently. The Approach to the
Eleventh Five Year Plan released in December 2006 stated that the growth rate
of agricultural GDP including forestry and fishing is likely to be below two
per cent in the Tenth Plan period.
The reasons for the deceleration of the growth of
agriculture are given in the Economic Survey 2006-07: Low investment,
imbalance in fertilizer use, low seeds replacement rate, a distorted incentive
system and lo post-harvest value addition continued to be a drag on the
sectors performance. With more than half the population directly depending on
this sector, low agricultural growth has serious implications for the
inclusiveness of growth.