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Indian Economic Policy

Notes of the ruling coalition. However, the task of detailing the policy documents still lies with the bodies
consisting of specialists and bureaucrats within administration some of which are given below :
Planning Commission of India : The Planning Commission is an institution in the Government of
India, which formulates India’s Five-Year Plans, among other functions. After India gained
independence, a formal model of planning was adopted, and the planning commission, reporting
directly to the Prime Minister of India was established. Accordingly, the Planning Commission was
set up on 15 March 1950, with Prime Minister Jawaharlal Nehru as the Chairman. Planning
Commission though is a non statutory as well extra constitutional body, i.e. has been brought by an
executive order. The Commission has the responsibility of making assessment of all resources of the
country, augmenting deficient resources, formulating plans for the most effective and balanced
utilisation of resources and determining priorities for the country.
Disappointing Outcomes
India is a democratic country where the economic policies of local and national Governments set the
direction and parameters for the formulation of laws, Governmental programmes and budgets. When
the policy is finalised and programmes are launched, the role of bureaucracy becomes significant as
it is the implementing agency. There are various reasons due to which the outcomes of policies
enunciated by the Government were invariably disappointing. For instance, at formulation stage, the
political interests get precedence over economic reasoning. Moreover, the failure to articulate precise
and operational goals, objectives, procedures, and plans leaves enough scope for task ambiguity for
implementing agencies in the country. Sometimes, the policy-makers have poor information on the
effort the bureaucracy is making and have no mechanism to monitor performance of this agency.
Consequently, there is under-achievement of the policy goals. Moreover, the large structure of
bureaucracy also acts as a hurdle where there is enough scope for buck passing. Within administration,
there is no proper system of reward for extra efforts and/or penalty for non-performance. In addition
to all this, the multiplicity of similar type of schemes is another important reason responsible for
failure of schemes. Thus, similar kinds of benefits compete to reach to same segment of beneficiaries
and success of one programme leads other programmes to failure. For all this, the policy-makers
have to develop tools and technique to check performance and suitability of implementing agencies.
The ‘deviations’ should be easily and instantly observed. Finally, technical expertise of politicians on
economic issues should be enhanced.

Critique of Economic Reforms
Liberalisation, privatisation and globalisation are means to accelerate growth process. The aims of
economic development have been defined in the First and the Second Five-year Plan itself. The major
aims are as follows :
(i) GDP growth – 7-8% per annum;
(ii) Increasing the employment and striving for full employment;
(iii) Reduction of poverty;
(iv) Promotion of equity or distributive justice;
(v) Reduction of regional disparities; and
(vi) Human development in terms of health and education to be improved.
Below is a critique of economic reforms based on the success of economic reforms in achieving these
goals of the country.
Here, the actual growth rate achieved during the reform period, its effect on balance of trade and
balance of payments, industrial growth, foreign investment, economic and social infrastructure,
employment and poverty reduction, labour, agriculture, and its effect on in reducing regional
disparities between states have been discussed.
GDP Growth, Employment and Poverty : The reform process, say the advocates of reform, has the
potential of accelerating economic growth. However, if we compare the annual average growth rate
during the pre-reform period (1980-81 to 1990-91) which was of the order of 5.6% per annum, then

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