What was it about that early evening moment in June 1991, when a hush descended on Parliament and a soft-spoken sardar stood up to read out his first Union Budget? That moment, when 900 million people teetered on the edge of the pit, that moment when this former academic-bureaucrat launched this vast and complex nation on one of the most stunning economic adventures in history. And transformed our lives.
We who have lived through the economic reforms are often unable to clamber onto the conceptual ledge that offers the elevation and distance to appreciate how our lives have changed in the last five years. But changed they have, in a huge variety of ways: from the things we eat to the careers our children aspire to, from the way we dispose of our incomes to perhaps even our fundamental value systems. Every day, for five years, pre-liberalisa-tion life has receded flickeringly in the distance like the lights of a lost city in the rearview mirror.
In 1994, private airlines carried 36 lakh passengers, as much as half of the number of people that erstwhile monopoly Indian Airlines flew that year. Today, there are an incredible—for those who remember pre-reforms India—35 industries, from agricultural machinery to software, from ceramics to soya products, which get automatic approval of 51 per cent foreign equity holding. This in a country where Nestle was forced to masquerade as Food Specialities Ltd, and Cadbury’s as Hindustan Cocoa Products! And Philips was allowed to make TV sets, but not name them Philips! In 1991-92, foreign direct investment (FDI) cleared by the Government was Rs 1,170 crore. Between March and November 1995, it was Rs 25,927 crore. For the first time in post-Independence India, the number of jobs being created every year—7.2 million—is higher than the number of people coming into the job market—seven million.
But there are a lot of things too which have not changed. Government spend remains ruinously high and a drain on the whole economy. Few sick industries are still allowed to close down and end their torment. The reforms have hardly touched the agricultural sector. And there is the niggling suspicion that notwithstanding government statistics, a disproportionately high part of the fruits of reforms have gone to the upper middle classes and the rich, and the rich-poor divide has widened.
Also, it may be more appropriate to talk about the three-and-a-half years of reform rather than five. For the day the Congress turned in disastrous results in the four assembly elections of 1994-95, the reforms seem to have been put on hold. In a few cases, one can even discern a slight retreat. This is wrong and may prove to be dangerous. The need of the hour is to expand liberalisation into areas untouched by it, and speed it up across the board. The effects of the halting of reforms can be seen all around us, in the perilously weak rupee, slowing foreign investments, stagnant stockmarkets and the suffocating credit squeeze industry is being subjected to.
To take a definitive look at the first five momentous years of liberalisation, we commissioned market research agency MODE to poll senior business executives on the achievements of liberalisation in eight areas, ranging from industry to the rich-poor divide. In the meantime, Outlook spoke to dozens of economists, politicians and chief executives to get their detailed impressions of the economic reforms as also liberalisation’s unfinished agenda. We caught up with World Bank Vice-President Joseph Wood in London to get the Bank’s assessment of Manmohanomics, while correspondents fanned out across India in an attempt to understand liberalisation at its most visceral level: how lives of people from all walks of life have changed as Manmohan Singh stood the country’s traditional economic thinking on its head. What follows is the story of the great experiment that we are living through: how things have changed, and often, how they have not.