Liberalization And The Economic Growth - 2232 Words

Liberalization or the 1991 economic reforms marks 25 years this year. Debates continues on whether growth precede or followed liberalization. India has experienced unprecedented growth over the past three decades. However this growth has co-existed with increase in inequality, unemployment across the country as certain regions, sectors and social groups have disproportionately benefitted from the growth. At least 38 percent in India continue to live below the national poverty lines (Ruparelia et al 2010). It has not been able to generate employment growth, which is one of the most important cornerstones to translating economic growth into poverty reduction and promoting social equality. ‘India is and for some time will remain one of the†¦show more content†¦Section 3, will discuss the factors that decreased the demand for labour. Section 4, will discuss several factors, which decrease the effective supply of labor. Section 5, will be used for conclusions. 1.Jobless growth: The Paradox. The liberalization theory suggests in order to generate employment and achieve greater social equity in countries like India where labor is abundant and relatively cheap, significant openness to the global market is essential. The 1991 economic reforms marked ‘a clear break from the country’s socialist strategy of state-directed, heavy-industry based, and import substitution industrialization’ (Chamarbagwala 2006:1997). India implemented a range of economic policy since the mid 1980s. Reforms brought changes in the economic growth rates. Though a section of economists reject the role of liberalization in injecting growth. Neo-liberals like Panagariya claims that the most surprising myth, current among a few economists, is that growth was not a result of the post-1991 reforms and that it could be traced back instead to the 1980s(Panagariya 2012). Whereas the economic historian Delong (2003) argue that the post-1991 reforms followed, rather than preceded, the growth acceleration. Nonetheless, the Indian economy has been enjoying a relatively positive growth rate since the 1980s.The annual growth rate in the pre-reform period