Extended Essay Pointers on Research Articles

Article 1 : Wikipedia Economic liberalisation in India
Resulted due to India's failing central economy. Reached a point in 1990 where india had only 3 weeks worth of Foreign reserves.
Bailout made india give 67 tonnes to the Union Bank of Switzerland and the Bank of England
IMF conditions for the bailout were responsible in making Indian government change its policy,
Prior to 1991, the system was Licence Raj-

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Gist of Licence Raj
Government wanted to reduce foreign goods sale in order to boost the indian economy because at the time there was a large amount of unemployment thus the government introduced Licensing of foreign companies which basically was a means of protectionism.
On average at least 80 agencies had to be gone through to acquire a license and even then the government controlled what, how much and how you produced as well as the selling price thus effectively killing any foreign interest in the indian market.
A guiding pillar was import substitution industrialisation. (Essentially a type of growth in which a country should reduce foreign dependency by promoting local production of industrialised goods).

The overall impact of this was that corruption flourished in pre 1991 india.

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Economic Liberalisation of 1991
Prime Minister Narasimha Rao, along with his finance minister Manmohan Singh, initiated the economic liberalisation of 1991

Around 1991 india adopted several policies that helped make its' economy more market oriented
-> Foreign Direct investment (FDI) was increased and automatically approved in several sectors such as :Railways, steel, retail and
-> No government since 1991 has tackled the trade unions and agricultural unions, which some say, hinder india's economic growth.

 Impacts of the new policies

FDI has increased from US$132 million in 1991–92 to $5.3 billion in 1995–96

Indias GDP has increased to 9.6% (2013) and is at a stable rate of ≈ 7.5% per annum.

OECD SUMMARY OF NEEDED CHANGE IN INDIA –––
OECD summarised the key reforms that are needed:

In labour markets, employment growth has been concentrated in firms that operate in sectors not covered by India's highly restrictive labour laws. In the formal sector, where these labour laws apply, employment has been falling and firms are becoming more capital intensive despite abundant low-cost labour. Labour market reform is essential to achieve a broader-based development and provide sufficient and higher productivity jobs for the growing labour force. In product markets, inefficient government procedures, particularly in some of the states, acts as a barrier to entrepreneurship and need to be improved. Public companies are generally less productive than private firms and the privatisation programme should be revitalised. A number of barriers to competition in financial markets and some of the infrastructure sectors, which are other constraints on growth, also need to be addressed. The indirect tax system needs to be simplified to create a true national market, while for direct taxes, the taxable base should be broadened and rates lowered. Public expenditure should be re-oriented towards infrastructure investment by reducing subsidies. Furthermore, social policies should be improved to better reach the poor and—given the importance of human capital—the education system also needs to be made more efficient.