India in the 1980s and the 1990s: A Triumph of Reforms

Abstract

While public opinion in India continues to move toward the view that liberalization has been good, that more of it is needed, and that its pace must be accelerated, the view in some scholarly and policy circles has turned skeptical. It is being argued that the average annual growth rate of gross domestic product (GDP) hit the 5.6 percent mark in the 1980s, well before the launch of the July 1991 reforms. Moreover, the growth rate in the 1990s was not much higher. Therefore, liberalization cannot be credited with having made a significant difference to growth in India.²

Bhagwati Professor of Indian Political Economy and Professor of Economics, Columbia University I am grateful to Jagdish Bhagwati and Kalpana Kochhar for numerous helpful comments and to T. N. Srinivasan for extended e-mail exchanges that led to many improvements in the chapter. I also thank Rajesh Chadha, Satish Chand, Douglas Irwin, Raghav Jha, Vijay Joshi, Vijay Kelkar, Ashok Mody, Sam Ouliaris, Jairam Ramesh, Jayanta Roy, Ratna Sahay, Kunal Sen, N. K. Singh, and Roberto Zagha for helpful suggestions on an earlier draft of the chapter. The chapter was completed while I was a Resident Scholar at the International Monetary Fund and has benefited from comments made at the IMF-NCAER Conference, A Tale of Two Giants: India’s and China’s Experience with Reform and Growth, November 14–16, 2003, New Delhi.