There is a lot of talk about India not liberalising its foreign trade front as much as it could have "" the tariff rates are still very high (peak tariff rate in India is still around 50 per cent). There are still ample quantitative restrictions as far as our exports and imports are concerned.
However, what one needs to understand is that the solution is not simply reducing the tariff barriers and quota restrictions, etc, but by inculcating sufficient facilities that are imperative to reforms within the economy. For example, consider the case if all the carriers to trade were recovered, it would call for an increase in the volume and value of trade, which is good. But can our existing ports handle this? These ports, are already unable to handle the current volume of trade.
Therefore, it is not advisable to put the cart before the horse. It is absolutely impossible to execute reforms in one sphere, without simultaneous acting in another. For trade reforms one requires infrastructure reforms, financial sector reforms and all these further require reforms in human resource sector.
Only when this happens can we talk of sustainability of reforms and it is only then can we remove the constraints that exist on the ongoing process of metamorphosis of the Indian economy.
