Q. It has been more than 25 years since India opened up its economy through LPG reforms and it has led to remarkable progress on various fronts. However problems of the past continue to plague along with emergence of new complexities. In this context analyse India's progress due to these reforms and areas where the country lags behind.

Progress post LPG reforms

1. Acceleration in growth – Indian GDP growth rate remained at higher levels of 7% in spite of slag in global economy. This is a remarkable achievement from a point of time since independence where for 35 years growth hovered between 3 to 3.5%

2. Reduction in poverty – India had experienced high reduction in poverty rates especially since 2000 in line with the framework of Millennium Development Goals.

3. Entrepreneurship – Surge in entrepreneurship energy in the country especially with the technological boom wherein the incumbents had to recalibrate their ways to remain competitive.

4. Opening up to external sector – Current account has been made fully convertible and flexibility in capital account convertibility has led to influx of FDI replacing China as top FDI destination in 2015.

5. Privatisation in few areas like telecommunications and airlines have been proved as success stories that needs replication in other areas.

6. Per capita income – between 1991 and 2016, per capita income rose from Rs. 6270 to Rs. 93293 with nearly 1400% jump. 

7. Increase in self-confidence of nation as a whole which is visible in its foreign policy conduct and dealing with internal issues like naxalism, poverty etc.

Challenges plaguing Indian economy

1. Service driven economy – Unlike western model Indian growth trajectory moved into service sector from primary sector surpassing manufacturing driven economy.

2. Jobless growth – Majority of Indian workforce is present in informal economy, more than 5 crore by 2016 youth registered with employment exchanges with just 0.57% being provided with a placement opportunity.

3. Agriculture sector remains highly stressed with failure of State to adopt a strategic policy for enhancing and sustaining growth ever since the success of Green Revolution.

4. Rise in inequality-Credit Suisse report, 2017 on inequality shows that top 1% population in India owns nearly 60% of its wealth and India fares poorly on Gini Coefficient

5. Rising NPAs – Indian banking system is under stress with huge rise in NPAs and rise in default on the balance sheets of corporate companies.

6. Exposure to global shocks – Increased exposure to economic downturns like global financial crisis of 2008 and 1997 Asian financial crisis. 

7. Urban governance – With nearly 50 cities having a million plus population and limited capacity of municipal bodies and inadequate planning to rising urbanism has been putting stress upon urban resources.

8. Generalists in bureaucracy – With economy getting more developed and complex there is a need for domain experts in every sector but there is little expertise in many ministries as key positions are manned by generalists.

Way Ahead

Some areas that needs to be worked upon are enumerated below-

1. Beyond GDP – Development of any country should be measured not only in GDP terms but it should also include environmental, human development indicators like health, education and livelihood.

2. Low skill manufacturing jobs- NITI Aayog report recommends a shift towards emphasis on low skill industries like textiles, food processing and leather with focus on export market to generate employment for millions of youth.

3. Agriculture- Government’s resolve to double farmer’s income by 2022 is a step in the right direction to distress the sector and provide security to half of India’s population.

4. Women empowerment- Women constitute nearly half of working age population but the declining participation in the labour force is predicted to dent India’s economic potential, so it is crucial to make women active participants in the economy.


Though economic opportunities created through LPG reforms had provided with enormous opportunity to rejuvenate Indian economy but these reforms should be a continuous process as emphasized by Finance Minister of India who recently called for another round of economic reforms. 

Skewed nature of outcomes of economic reforms benefitting only a few sections needs correction and fruits of economic development should be extended to all as adopted in the Sustainable Development Goals framework of United Nations.







Dr Khan

Dr. Khan began his career of teaching in 1988 as lecturer in a college of University of Delhi. He later taught at Delhi School of Economics, University of Delhi. He has several research papers and books to his credit.

Dr. Khan has been teaching General Studies since February 1992 to IAS aspirants and is very proud of the fact that almost every State and Union Territory in India has some civil servants who personally associate with him.



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