Liberalization of India’s Foreign Policy |
India - the founder member of the Non-aligned Movement (NAM), raised its voice representing collective aspirations and interests of all the developing nations of the world. India Foreign Policy covers vital issues of development, peace and stability. India was the first country to raise the question of racial discrimination. It also aims at eradicating colonialism. Indian foreign policy has been voicing the need for complete disarmament of nuclear weapons. India has taken several initiatives within the United Nations and outside, like Disarmament - an action plan for ushering in a nuclear weapons free ...view middle of the document...
The primary objective of this model was to make the economy of the seventh largest country in the world the fastest developing economy in the globe with capabilities that help it match up with the biggest economies of the world.
Liberalization refers to the slackening of government regulations. The economic liberalization in India denotes the continuing financial reforms which began since July 24, 1991.
Privatization and Globalization
Privatization refers to the participation of private entities in businesses and services and transfer of ownership from the public sector (or government) to the private sector as well. Globalization stands for the consolidation of the various economies of the world.
LPG and the Economic Reform Policy of India
Following its freedom on August 15, 1947, the Republic of India stuck to socialistic economic strategies. In the 1980s, Rajiv Gandhi, the then Prime Minister of India, started a number of economic restructuring measures. In 1991, the country experienced a balance of payments dilemma following the Gulf War and the downfall of the erstwhile Soviet Union. The country had to make a deposit of 47 tons of gold to the Bank of England and 20 tons to the Union Bank of Switzerland. This was necessary under a recovery pact with the IMF or International Monetary Fund. Furthermore, the International Monetary Fund necessitated India to assume a sequence of systematic economic reorganizations. Consequently, the then Prime Minister of the country, P. V. Narasimha Rao initiated groundbreaking economic reforms. However, the Committee formed by P.V. Narasimha Rao did not put into operation a number of reforms which the International Monetary Fund looked for.
The period after 1991 has been marked by a substantial liberalization of the trade policy. While some liberalization measures were the result of the conviction among government circles that they were necessary to make exports competitivein the international market, some were undertaken under the pressure of theinternational agencies, as a part of the stabilization and structural adjustment programmed. Moreover, with India joining the WTO (world trade organization) in1995 as a founder member, it is under an obligation to strike down all quantitative restrictions on imports and reduce import tariffs so as to ‘open up’ the economy to world trade and the forces of globalization.
While the first burst of reforms, signalling a systemic shift to a more open economy with greater reliance on market forces and a larger role for private sector and foreign investment was swift and radical, they were carried on for the past 20 years in bits and pieces. It is hard to find notable reversals, but reforms have usually stalled and resumed. The delay, often a byproduct of India’s chaotic political economy, cost the country even faster growth, but also helped absorb the pain of reforms. Reforms went wrong too, like in the power sector for the...