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The Return of the Congress

The Return of the Congress. What future for economic reforms?. Questions. How has the Indian economy fared in the 1990s? Did economic factors play a role in the BJP’s loss? Have economic reforms run their course? Will the Congress stall or roll back reforms?

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The Return of the Congress

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  1. The Return of the Congress What future for economic reforms?

  2. Questions • How has the Indian economy fared in the 1990s? • Did economic factors play a role in the BJP’s loss? • Have economic reforms run their course? • Will the Congress stall or roll back reforms? • What will India’s role be in the international economic arena under the Congress?

  3. Economic Growth

  4. Inflation

  5. Investment

  6. Foreign Direct Investment

  7. But rural-urban inequality has increased And within-urban inequality And most significantly, regional inequality India Shining?

  8. The neglect of village India

  9. Rhetoric and Reality • The Fiscal Responsibility Act 2000 • But the combined fiscal deficit of the state and Central governments in 2001-2002 was 10 per cent of GDP, higher than it was in 1990-1991 before the economic crisis. • Public consumption as a ratio of GDP is the highest that it has ever been in post-independence India

  10. What of the Future? • Manmohan Singh, the present PM, was the architect of India’s reforms in 1991 • The present Finance Minister, P. Chidambaram, was the Commerce Minister in 1991 • All policy statements suggest so far that reforms will not be rolled back • But will they move forward?

  11. Reforms: Unfinished Business • The growing deficits of Indian states • Labour law reforms • Doing away with small scale sector reservation policy • Reform of bankruptcy laws • Infrastructural reforms • Agricultural trade reforms • Privatisation of loss-making public sector enterprises

  12. Reasons for Pessimism - significant populist elements in the Congress and its allied parties - Each member of the coalition want its share of the cake -the Left parties may block any further reforms - Trade unions have started to ‘flex their muscles’ Reasons for Optimism - the most significant economic reforms in India’s history took place under a minority Congress govt in 1991-1996 - Manmohan Singh is the most reformist PM India has ever had - the Left parties dislike the BJP and Hindutva more than they dislike economic reforms Will the 21st century be India’s?

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