Effects of the Reforms
NCERT Class 11 • Indian Economic Development • Chapter "Liberalisation Privatisation and Globalisation"
Effects of the Reforms
The reforms of 1991 changed the direction of Indian economic policy. Assessments of them differ, because the same set of changes brought a clear rise in growth and external strength while leaving several structural problems untouched. Both sides of the record have to be read together.
What the Reforms Achieved
- The rate of economic growth rose compared with the earlier decades.
- Foreign exchange reserves recovered strongly and the payments crisis ended.
- Inflation was brought under better control than in the crisis years.
- The service sector, especially software, telecom and finance, grew very fast and became a major export earner.
- Consumers gained a far wider choice of goods and services at competitive prices.
- Indian firms became more efficient under competition and some became globally competitive.
- Foreign investment and technology flowed in, raising productivity in several industries.
- Outsourcing to India grew rapidly, creating high paying urban jobs in technology and business services.
- Telecom and civil aviation, once costly and scarce, became affordable and widely available to ordinary households.
- Competition also pushed public sector firms to improve service and reduce their costs.
Criticisms and Continuing Problems
- Agriculture did not receive comparable attention, and public investment in it slowed.
- Growth was led by services rather than manufacturing, so the shift of workers out of farming stayed limited.
- Employment did not grow in proportion to output, a pattern described as jobless growth.
- Inequality between regions, and between skilled and unskilled workers, widened.
- Small producers faced competition from imports and from large firms without matching support.
- Disinvestment proceeds were sometimes used to cover the deficit rather than to build assets.
- Public spending on health and education did not rise as fast as growth in the early reform years.
- Volatile foreign portfolio investment made the economy more exposed to global sentiment.
- A large part of the workforce remained in the unorganised sector without social security.
- Reform therefore continues, with attention now on manufacturing, skills and social protection.
| Area | Outcome After Reform |
|---|---|
| Growth | Higher than earlier decades |
| Reserves and inflation | Much improved |
| Services | Very fast growth, export earner |
| Agriculture and employment | Lagged behind |
Jobless growth — a situation where output rises without a matching rise in employment.
Exam me kaise aata hai
- Output rising without matching jobs is called — jobless growth
- Which sector grew fastest after the reforms — the service sector
- Which sector is said to have been neglected after 1991 — agriculture
- Foreign exchange reserves after reform — rose strongly
UPSC/State PSC ke liye
- Services led growth is unusual for a country at India's income level, since the standard path runs from agriculture to manufacturing and only then to services.
- Reform raised efficiency but efficiency gains reach workers only where employment and skills grow alongside, which is why the distribution question remained open.
Yahan confuse hote hain
✗ Reforms failed completely | Growth, reserves and services improved clearly | ✓
✗ Reforms solved unemployment | Employment lagged behind output growth | ✓
✗ Manufacturing led post reform growth | Services led it | ✓
Ek nazar me
- Growth, reserves, inflation control and services improved after reform.
- Consumers gained choice and firms gained efficiency.
- Agriculture and manufacturing employment lagged behind.
- Jobless growth and widening inequality remain the main criticisms.
Ab practice karein
1991 ke reforms se har exam me questions aate hain. ExamAtlas ke mock test se apni taiyari abhi jaanchein.