The process of liberalization and industrialization, fast gained importance in India in the 1980s. However it was only in 1990s, after the phenomenon of globalization gaining momentum in India, that the Indian economy truly opened up. Globalization has led to increased opportunities to the average Indian - an increase in employment opportunity, income, output, investment and also to a rapid expansion of the banking and financial sector, telecom sector, growth in export potential and social sector projects.
The government implemented the new industrial policy in 1991 with the regard that the benefits of policy implementation would trickle down to the lower sections of the population. This was an idea borrowed from the Ronal Reagan-Alan Greenspan led economic policy that somehow managed to save US from a possible recession in the late 80’s with George W.Bush Snr being the chief culprit, with a strong implicit view that “What works in US would work everywhere as the World has become a subset of US post-cold war era”.
Two decades to the historic policy change, trickledown economics is yet to flow down. Only the comparative degree of English grammar has proved its logical viability...The ‘rich’ getting ‘richer’ and the ‘poor’ getting ‘poorer’.Rather,its the middle class that has reaped the maximum benefit from this opening up.
Indian economic structure is a tricky one, where a modern economy exists side by side with a traditional one. The rural economy comprises 70% of the total population of India. Agriculture and allied activities are the main sources of rural income and contributes to almost 25% of India's GDP. There has been no evidence of positive growth in the unorganized sector of the economy.Infact, a recent study by Nobel Laureate Noam Chomsky actually reveals that the number of people under poverty line has actually increased since post-liberalization era
The opening up of the economy signifies cheaper imports in a country where agricultural prices are constantly fluctuating. This hampers the crop producers and leads to further losses. The producers might be hesitant to produce the same crops next year and also, multiple cropping is not common in India. Thus, farmers cannot shift from food grains to more marketable crops.
India is a labor surplus country facing an acute problem of rural unemployment. Increased investment and growth in capital or adopting technology that is capital intensive will lead to unemployment. Governmental schemes and measures to control poverty and unemployment in rural India are deficient due to perforated bureaucracy and widespread corruption. Thus, inequalities in rural India are exceedingly difficult to tackle.
Farmers, artisans, unskilled labor and workers bear the impact of losses due to increased competition and comparative advantage enjoyed by the more developed countries. The recent spate of suicide of farmers in the Vidharbha region and the attacks on retail outlets in rural areas bears testimony to this ugly reality. Without adequate improvement in the government's delivery mechanism, the despair of the average rural Indian will be prolonged.
