In our latest release for the1991Project.com, the excellent , professor at , traces the evolution of India's #tradepolicy before and after the landmark 1991 reforms tinyurl.com/2p9fbwez (1/11)
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Until 1991, Indian #tradepolicy was dominated by strict industrial licensing controls, import substitution, severe trade restrictions, a large public sector,a bloated & powerful bureaucracy in charge of economic activity & a large welfare state with high public expenditure (2/11)
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Such #protectionism meant low economic growth, high poverty & inequality, a stifled pvt sector, low exports, high unemployment, & lack of consumer choice & welfare. 15-yr waitlist for a Bajaj Scooter & 10-yr waitlist for a landline connection were the norm (3/11)
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The Indian govt, tried to open up the economy amidst crisis before 1991. In the early 50s some import controls were liberalised, but the move was withdrawn following a foreign exchange crisis in 1956. (4/11)
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Amidst crisis in 1966, the govt. devalued the currency by 57%, relaxed import relaxations, and reduced export subsidies & tariffs. But the measures were reversed due to the strained India-US relationship. A detailed timeline of the '66 devaluation 👉tinyurl.com/ycxsfepu (5/11)
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Piecemeal reforms began again in the 80s with the govt relaxing import controls & the industrial licensing system. By 1990, 31 sectors had been removed from industrial licensing controls. This was dubbed liberalization by stealth. (6/11)
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The 1991 big-bang reforms were a consequence of yet another currency crisis. At one point the Indian govt. was left with only two weeks of foreign exchange reserves and sold 20 tonnes of gold to raise cash. A detailed timeline 👉the1991project.com/timeline/how-t (7/11)
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The currency crisis of 1991 made way for the landmark economic reforms-
👉the rupee was devalued
👉India moved towards a market-based exchange rate
👉the import licensing system was eliminated
👉tariffs were drastically reduced (8/11)
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Import delicensing had a tremendous impact on Indian trade & industry. Lower tariffs eased access to input goods, which led to an increase in domestic competition. Consequently, trade, exports and manufacturing grew. This also fostered greater consumer choice (9/11).
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Despite the monumental gains, argues that protectionism is on the rise again, and the fear of competition persists, in India. Indian trade policy needs more consistent reform. Download a copy of the essay here tinyurl.com/2p9cu3ja (10/11)
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. references work by , , , , Harsha V Singh, C Rangarajan, Jagadeesh Sivadasan, Deb K Das, , , , Petia Topalova, Amit Khandelwal, TN Srinivasan, Suresh Tendulkar, among others (11/11).
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