Reforms set the stage for growth: FM

The economic reforms in the early 1990s gave a boost to India’s journey to high growth and created an environment in which Indian companies could grow within and outside the country, Finance Minister Pranab Mukherjee said here on Tuesday.

“We are fully aware of the growth scenario of this country. Till 1979, the GDP growth rate was about 3.5 per cent, which people used to describe as the Hindu rate of growth. Even in the 80s it was a little more than 5 per cent. It was the reforms of the 90s that opened up the economy in which Indian entrepreneurship could flourish not only domestically but also globally… The fruits of reforms had emerged,” Mukherjee said.

He added that as the deputy chairman of the Planning Commission (from 1991 to 1996) he had targeted 5.2 per cent growth for the Eighth Five-Year Plan, but the economic reforms, started by then finance minister Manmohan Singh, helped the country achieve a slightly higher growth rate.

The finance minister was speaking at an event jointly organised by Business Standard and the Confederation of Indian Industry (CII) to launch The Sudoku of India’s Growth, written by Arvind Virmani, who completes his tenure as the chief economic advisor in the finance ministry on Wednesday. The book has been published by BS Books, a division of Business Standard Limited.

Describing Virmani as an unconventional economist, Mukherjee said his book offered a key to the puzzle of India’s growth. Even as one who used to write the Economic Survey, Virmani showed that he was unconventional in his approach. “Many people asked me in July about the differences between the Economic Survey’s approach to economic issues and the proposals I had introduced in my Budget in July,” Mukherjee said.

The differences arose because the Survey talked about policies that should be introduced and the Budget talked about the proposals that could be implemented, he said.

The finance minister pointed out that growth should be inclusive and sustainable. He said economic growth should be an instrument for development and not an end in itself. He emphasised the need to improve the availability of resources to bridge the gaps. “In the last five years, we have been steadfastly moving into that direction,” Mukherjee added.

In his book, Virmani has explained India’s journey to high growth and identified areas which are crucial to the future such as good governance, labour and education reforms, and the introduction of a multi-application smart card. The book also analyses independent India’s chequered growth history. Beginning from the environment that preceded the market reforms phase, he scrutinised policies, strategies and the reasons why some worked while others failed.