Manmohan Singh quoting Victor Hugo while presenting the Union Budget on 24 July 1991. And with these words started the long and painful process of economic liberalisation in India. The liberalisation was aimed at ending the licence-permit raj by decreasing the government intervention in the business, thereby pushing economic growth through reforms. The policy opened up the country to global economy. It discouraged public sector monopoly and paved the way for competition in the market.
The policy, which met with wide opposition from within the Congress and even the domestic industry, was seen as the only way out for India after the balance of payments crisis that brought the country to its knees. However, after the Congress government under PV Narasimha Rao managed to overcome all the opposition and push through the reforms, successive governments too devised similar policies to slowly and surely shed a Nehruvian legacy. As the nation marks the 25th anniversary of the economic reforms this month, here are 13 charts that will help you find out how the country moved. The size of the economy can often give the first impression of the might of a country.
GDP gives the total worth of the goods and services produced in a country in one particular year. India’s GDP stood at Rs 5,86,212 crore in 1991. About 25 years later, it stands at Rs 1,35,76,086 crore, up 2216 percent. Currently, the country is ranked ninth in the world in terms of nominal GDP. India remained the second fastest growing economy in the world, behind China until 2015. Before 1991, foreign investment was negligible. It was India’s dismal state of forex reserves that forced the government to bring in economic reforms.
Now, 25 years later, forex reserves are at a record high. Usually, import coverage of 7-8 months is considered sufficient. As the economy expanded so did the country’s external debt as companies started borrowing from the overseas markets to fund their growth. Though the figure looks huge, as a percentage of GDP the external debt has declined. Unlike FDI, FII investment is not for long term and is sensitive to domestic and international volatility.