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Economy Studies






Reports, data and articles on the economy and related subjects will be posted here.


(An Amrok Group Concern)
H-1 Sudharshan Gardens,102-Velachery Road,
Guindy,Madras-600032. India.
Tel: 91-44-2353610,2353612,2352200,2350133.
Fax: 91-44-2350485.
BBS: 91-44-2351238.
Email:amrok@makroindia.com

23rd April, 1996.

Economy, Election and Reforms.

It's election time again. Like earlier times its implications on the country's economic future is preponderous but with a different flavour. This time around it will be different in the sense that it will no longer be unpredictable as in the old ballad "Que Sera, Sera, whatever will be , will be..... the future is not our's to see....." instead it is a definitive "Quo Vadis ?" - where do we go from here ? Narasimha Rao's liberalisation policy initiated in 1991 is a success at least in the sense that it is definitely irreversible - the only question is what happens next ?

We have to discuss each of these issues as they form the logical nexus to what has hapened uptill now. The other side of the coin is when is it feasible ? The knife of liberalisation cuts both ways and it is a moot point who will succeed - the ones who will be negatively affected or the ones who are to be benefited. The election results and the new economic policy will let us know and till then we wait in bated breath.

In 1991 when Narasimha Rao took charge of the country's leadership the economy was in shambles. The country was only 30 days away from defaulting on its external borrowings committments. The new government went into action. On 27 th June 1991 the new liberalisation policy was announced. The MRTP policy was diluted, subsidies cut, a new trade policy announced. The ruppee was devalued in two phases 9.5% on 1st July and another 10.6% on 3rd July 1991. Almost 47 tonnes of gold is shipped to the Bank of England and it was then that the The World Bank and the IMF start their resuciating inflows of money. It was touch and go since then but within the first two years the positive effects of the policies started taking hold and the negative aspects we found could be tolerated. If we look at it now we find that:

It's not all that rosy actually- far from it. If we look at the negative aspects it's almost scary.

Though we are proud to be the largest democracy, in terms of economic freedom India is rated very low. There is a general feeling that a grassroots approval for the continuance of reforms is building up. India when compared to what happened in other countries like the Latin American countries , Poland , and the Russian confederation when the liberalisation policy was implemented, looks better -the impact on the general polity has been not so severe. But neither has the country taken the drastic step of an outright total change as advocated by the Jeffrey Sachs school. So what is in store for us when we go the full hog of liberalisation ? How many of our industries are truly competitive and will survive in the long run ? Will there be social upheavals because of increased disparities ? Que sera , sera ...? We are far more hopeful.

( We the MAKROINDIA team feel that while our site is primarily a business and commercial site economic and political issues for some more time will have to be considered in any long term business decision. There are are many more points to be discussed and we invite your responses. )


21st July, 1996.

The Election Mandate.

" Parties may come and
Parties may go but
Reforms will go on forever."

The 96 Lok Sabha elections have come out with a decisive mandate in favour of the reforms process. More than 75% of the voters have favoured Parties which had promised to continue with the reforms in their economic agenda. A pointer to the fact that the reforms is gaining support at the grass root level, Viva la Manmohanomics. The results have come out with the clear message that no longer exist the question of reversing the reform process. The verdict has a deeper meaning in it - reforms with a cleaner face. The electorates have come out openly against corruption seeking transparency. A coalition government has been forced on us. If the government manages to hold on to power for a reasonable period of time say 3 years atleast it means that Indian politics is on strong ground. Mature, resilient and getting responsive to the needs of the masses and the times. The 13 party coalition has marked the begining of a new political set up which is churning out while it represents the pluralistic nature of our society. More importantly the elections have broken the myth of atomising Indian society and has reconstituted our faith in "Unity in Diversity". Though decentralisation of power has forced its way into our political system it has been long advocated by politician and more so by economists. With decentralisation, states will enjoy more autonomy which will help them implement their policies faster. While regional interests will be safe guarded it will also result in bettter centre-state and state- state relationship. The political bottlenecks involved with the reforms will be weeded out leading to faster implementation of the process. Thus the economy is well poised for taking a quantum leap in the coming periods.


21st July, 1996.

Some of the salient features of the Common Minimum Program.



(An Amrok Group Concern)
H-1 Sudharshan Gardens,102-Velachery Road,
Guindy,Madras-600032. India.
Tel: 91-44-2353610,2353612,2352200,2350133.
Fax: 91-44-2350485.
BBS: 91-44-2351238.
Email:amrok@makroindia.com