Define third and fourth generation economic reform?
■ THIRD GENERATION ECONOMIC REFORM:
The third generation of reform were announced around the Launch of 10th Five Year PLAN jn 2002, and they commit to the cause of a fully functional Panchayati Raj Institution , so that the benefits of economic reforms, can reach to the grassroots; and has an objective to make the reform process more inclusive.
This Generation of Reform focusses on creating World Class Infrastructure and creating, encouraging and and nurturing the spirit of entrepreneurship.
After 2014 ,the reform intensified by focusing on creation ,promotion rearing of entrepreneurship .micro units,development & refinancing agency bank has been established for availability of capital to startup and small entrepreneurs. the goods and service tax came into existence on July 1st 2017.
■ FOURTH GENERATION ECONOMIC REFORM:
The 4th generation of reform is not an official proclamation.
In early 2002, some experts coined this generation of reforms which aims for a full information technology-enabled India.
It is an official concept it and we say aged economic development fully based on information technology Reform of all the above for generation are being implemented simultaneously and the indicated direction and depth of the reform.
■ TWENTY FIVE YEARS OF ECONOMIC REFORMS:
The past 25 years can be largely summed up as a story of private‐sector success and government failure, of successful economic reform tainted by institutional erosion. Although many old controls have been abolished, many still continue, and a plethora of new controls have been created in areas relating to the environment, health, tribal areas, and land. What leftist critics have denounced as an era of neoliberalism is better called neo‐illiberalism. India remains in the bottom half of countries measured by indicators of economic freedom. Social indicators of education, health, and nutrition have improved much too slowly, and India has been overtaken in some indicators by poorer Bangladesh and Nepal.
☆ GDP:
Gross domestic product is the total monetary or market value of all the finished goods and services produced within a country’s borders in a specific time period. As a broad measure of overall domestic production, it functions as a comprehensive scorecard of a given country’s economic health.GDP provides an economic snapshot of a country, used to estimate the size of an economy and growth rate.
GDP can be calculated in three ways, using expenditures, production, or incomes. It can be adjusted for inflation and population to provide deeper insights.
In India 2015 and the third largest GDP in the world in purchasing power parity terms after China and the United States.
☆ GDP GROWTH:
The gross domestic product growth rate measures how fast the economy is growing. It does this by comparing a quarter of the country’s gross domestic product to the previous quarter. GDP measures the economic output of a nation. In India’s annual gross domestic product growth rate from 3.5 percent in 1950-80 and 5.5 percent in 1980 -1992 to an average of 8 percent from 2003 to 2015, with the peak exceeding 9 percent in the three years.The rate of economic growth refers to the geometric annual rate of growth in GDP between the first and the last year over a period of time. This growth rate represents the trend in the average level of GDP over the period, and ignores any fluctuations in the GDP around this trend.
In a depressed global economy,the IMF see the United States and India as the two bright spots, as the two major economies is holding up and otherwise slowing world. per capita income is up from $375 percent in 1991 to $1,700 in 2015. As defined by the World bank India is a low income country as it is to be long ceased. It is uses a threshold of $1,045, and has become a middle income country.
In 1991 India was a member of the G77 group of developing countries. in 2016, India is a proud member of G20, which is the most powerful country in the world.
■ COMMERCIAL FINANCE:
commercial finance is the function of offering loans to businesses. Commercial financing is generally offered by a bank or other commercial lender. Most commercial banks offer commercial financing, and the loans are either secured by business assets or alternatively can be unsecured, where the lender relies on the cash flows of the business to repay the facility. Its commercial finance has been spurred by economic reforms that have attracted inflows of foreign exchange other than foreign aid. total foreign investment came to $51.2 billion in 2014 to 2015.
Foreign commercial borrowing in the same year came to $68.2 billian gross and $10.4 billion net where remittances from Indian Overseas exceeded $70 billion. The remittances boom was a consequence of globalisation ,of Indian going abroad.
■ INDIA HAS BECOME A DONOR COUNTRY:
In 1991, India was not so famous it was as the world’s biggest beggar, India was a bottomless pit for foreign aid it soaked up 40 percent of the fund of the international Development Association, the soft loan window of the world bank. But today India is as much as a Donor as a recipient it is still a substantial aid a recipient in gross terms . India itself has become a substantial Donor including a line of credit of $10 billion to Africa, $2 billion to Bangladesh.
■ INDIAN COMPANIES BECAME MULTINATIONAL:
In 1991, Indian politicians and Indian Industrialists feared that economic liberalization would mean the collapse of Indian industry or its conversion into subsidiaries of multinational companies.
Before twenty five years, Indian companies not only have held their own but also have become multinational in their own right. through acquisitions. arcelor Mittal become the biggest Steel company in the world. the TATA Group acquired corus steel and Jaguar Land Rover and in the process become the largest private sector employer in the United Kingdom.
■ IMPORTS AND EXPORTS:
Imports and exports are the components of international trade. If the value of a country’s imports exceeds the value of its exports, the country has a negative balance of trade also known as a trade deficit. Imports and exports of both good and services have soared as a proportion of GDP because of India’s opening up and consequent globalization.
■FOREIGN EXCHANGE RESERVES:
Foreign exchange reserves are also called as forex reserves or FX reserves .
Foreign exchange reserves assets and can comprise banknotes,deposits, bonds, treasury bills and other government securities of the reserve currency. Some countries hold a part of their reserves in gold, and special drawing rights are also considered reserve assets. In June 1991,at the height of the balance of payment crisis India’s Foreign Exchange Reserves had dipped to a Mere $1 billion just sufficient for two weeks of imports requirements .one of the highest in the world .remittances into the country from abroad and Software Exports two major benefits of globalisation contributed to the accretion in foreign exchange reserve.
■ FDI:
A foreign direct investment is an investment made by a firm or individual in one country into business interests located in another country. Generally, FDI takes place when an investor establishes foreign business operations or acquires foreign business assets in a foreign company. However, FDIs are distinguished from portfolio investments in which an investor merely purchases equities of foreign-based companies. Liberalization of FDI leds to sustained increase in FDI. in 2015 to 2016, India emerged as the largest recipient of foreign direct investment among emerging Nations with forest direct investment inflows of $55.56 billion. Foreign direct investment inflows along with foreign portfolio investment enabled India to finance her current account deficit.
■ SPURT IN SOCIAL SECTOR:
A major benefit of the high growth was the spurt in tax: GDP ratio from 8 percent in 1991 to 11.5 percent by 2008. This tax buoyancy enable the government to undertake ambitious social sector projects like MGNREGS, Bharat Nirman etc. The annual outlay of MGNREGS is higher than the total tax revenue of the central government in 1990 to 1991.
Sustaining Such ambitious social sector programs it is very important that India should sustain a high growth rate for a long time.
■ POVERTY DECLINE :
India has become a global hub for computer software development. There is now a low cost commercial satellite launcher. It had launched 51 satellites for foreign countries by october 2015, with payloads of less than 1,600 kilograms. India’s economic success after 1991 has spurred the creation of thousand of private engineering colleges, with estimated admissions of 1.5 million every year.
■ CHALLENGES AHEAD :
India’s spectacular economic performance since liberalization is indeed a great achievement. India was among the few large economic of the world which did not experience recession aur sharp economic slowdown during the Great recession of 2009. A major deficiency of India spectacular growth is that the growth has not been adequately e inclusive large number of poor marginalised vulnerable sections of society has been left out of the growth process . This deficiency has to be address and growth has to be made on inclusive .
Another major deficiency is the infrastructure deficit which is becoming a major constraint on Sustainable high growth. The deficiencies too are glaring and need to be addressed seriously though India has a long way to go in achieving stable sustainable and inclusive growth, of the economy is on the right path.
