Discuss the Concept of Economic Reforms.
The word ‘reform’ means to ‘form again’. It also means ‘to make better by making necessary changes’. For instance, we say that a very good teacher can reform the delinquent and truant students in a school, Applied to the society or economy, it means much the, same thing. Thus we know that certain ‘religious and social reforms took place in Indian society in the 19th century.
Economic reforms, in a similar vein we mean that certain changes are necessary to improve‘the performance of the economy and give it a new fillip. Very often, the difference between these necessary changes and the earlier situation is of kind rather than of degree. A mere tinkering with existing instruments and policies will not do what is required is to give the economy a new path, steer a new course, and provide a new framework.
Reforms can be of many types, and there is no reason to think that the kind seen in India and elsewhere is the only one possible. But for historical reasons, it so happened that since the 1950s when several developing nations embarked on their journey of development, a great faith was placed on the state in most of these nations for steering the economy.
India is ‘mixed economies’, with a, large private sector, but’ with pervasive state presence in the economy, and a host of controls and regulations. In all Of these nations, it began to be felt by the late 1970s, that the performance was not matching the promise.
So, in. almost all countries, the state began to lessen its control over the economy and open more areas of economic activity to the private sector. In some cases the process of privatization was imitated with selling part, or sometimes all, of ownership of state-owned companies. Another important feature of these reforms has been increased integration of the nation with the international economy. One of the earliest to carry out such reforms was China, which started reforms in 1978.
There could be other types of reforms. Policymakers in some country might feel that the presence of the private sector’ too high. Hence, some industries ought to be taken over by the state.. Also, that the state ought to increase its presence in the economy. Indeed such events have taken place in many countries in the 1940s, 1.950s and 1960s.
The policy steps could also be called ‘reforms’ but this term was not in vogue then. Thus, reforms came to acquire a specific connotation, and synchronously have come be called liberalization, the classical notion of ‘liberal’. It means greater faith in individualism; in individual enterprise, and individual liberty.
The role of the state is lessened. The suffix ‘isation’ suggests that it is a process, an intensification of a trend. Thus liberalization, simply put, is increasing the process of making the economy more. liberal. This entails a two-fold process. First, the private sector and private enterprise is given greater play in the economy, and the role of the state is reduced. The role of the market is enlarged. Secondly, the economy is integrated more with the global or international economy, with increased. foreign trade and investment.