Until the early 1990s the ' Political Economy of India ' was in a state of sorry affairs. Till the end of 1980s ' Political Economy of India' was protected and strictly regulated economy, both internally and externally.
The dramatic and pragmatic shift in reforms started taking place from the 1991s onwards. It was marked with speedy reforms and its subsequent successful implementation. The Government took measures which were more rational than their previous ones. Its paradigm shift from strong government holdings to market liberalization marks the ' Revival of Indian Economy '. Although, skeptic had their reservations but still the march went on for globalization and liberalization.
The period from 1991-1997 marked sea-of-changes in the ' Structure of Political Economy of India' covering both internal and external arena. The ' Steps of Economic Reform ' that was initiated for ' Political Economy of India ' renaissance were -
External -
- Rupee was sharply devalued by about 20% and made fully convertible on the current account but not on capital account.
- Licensing was almost abolished for imports and tariffs were substantially curtailed.
- FDI was allowed to the tune of 51% which resulted influx of wide range of industries and portfolio investments.
Internal -
- Industrial license was abolished except in the case of 15 industries of strategic or environmental importance.
- Antitrust legislation was amended to facilitate expansion and diversification.
- Number of industries reserved for the public sector was reduced to six.
- Taxation system was rationalized and tax rates were made at-par with ASEAN countries.
- Banking system was overhauled.
Although, not all that was intended was achieved by amending ' I ndia Economic Policy' , but a substantial and positive shift took place. The greatest change in ' Political Economy of India ' has been in the 'attitude. T he World Bank was quick to recognize the change in the out look of ' Political Economy of India ' and commented that "India has fundamentally altered its development paradigm" and that the reforms "have ended four decades of planning and have initiated a quiet economic revolution”.
