Liberalisation: The 21st Century Fix

'SHOCK THERAPY' may be the buzzword for the 90s, but the fixation with the mantra of liberalisation is already a decade-old affair. All through the 80s, especially the latter half, we have seen the government relax and scrap one after another the so-called controls it had imposed on domestic industry and foreign trade over the first thirty years of independence. What has been the net outcome? The self-congratulatory official answer is that the country has notched up an impressive 5.6% average annual growth rate in the 80s, which is almost double the 3.1% that marked the stagnant 70s.

But like most economic data, this general graph of growth too conceals more than what it reveals. On a closer sectorwise view we find that this overall growth rate of 5.6% splits up into

• an agricultural growth rate of just 3.7% and a foodgrains growth rate of only around 2%, the net result being a stagnant or even declining per capita availability of cereals and pulses,


• an average 6.3% annual swelling of the largely unproductive but highly decorative services sector comprising categories like defence, administration, trade, transport, banking, insurance, travel, tourism and so on,


• an annual rise of 6.9% in industrial output, propelled primarily by consumer durables (23.9%), while machine tools and transport equipments reported as lower growth in the latter half of 80s, cotton textiles stagnated with a 'growth' rate of 1%, and


• what is most alarming, employment recorded an average annual growth rate of less than 2% in the public sector and an average annual fall of 0.12% in the private sector.

For a more comprehensive picture let us look at some more details.
The chart below will tell its own story.