india's transformation-case study

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1. Compare between the economic featu res of pre r eform a nd post reform India. Answer: Pre reform and post reform India has different specific. features. The economic system that developed in India after 1947 was a mixed economy and in 1991 the overnment of India too! the economic reform proram. ". #valua te the perfor mance o f pre refor m and p ost r eform India. Answer: The pre reform economic system of India which is more of a closed economic system was incapable of deliverin the proress. In the meantime many $outheastern %sian countries had started to en&oy their economic proress. India's ()P per capita was *+1,- less than half of India's population could read only / million could access the telephones and only 140 of the  population had access to clean sanitation. orld 2an! estimated that some 4,0 of the world's desperately poor lived in India. The lac! of proress of the pre reform economic system led the Indian overnment to initiate an ambitious economic reform proram in which state owned enterprises was privati3ed private sector inv estment was enco ura ed in electrici ty ene rat ion- oil indust ry - steel ma! in- air transportation and telecommunication. Tarif f was reduced from 4,,0 to on ly /0. Corporate tax decl ined to onl y +0 in 1997 fr om 7. 0. The result of this econo mi c reform has been impressive. The economy expanded at an annual rowth rate of about /.+0 from 1994 to ",,4- Pre reform India 1. $t at e own ed e nt er pr ises. ". Centrali 3ed p lannin. +. $ub si di es by over nment. 4. Constrained in the rowt h of priv ate sector. . 5i h import duty . /. )i ff icul t l abor law. 7. %ccess to forei n excha ne s ys tem was limited. 6. orein investment was res tri cted. 9. 8ar !et pri ce of produc ts was determined by the overnment. Post reform India 1. Pri vati3e d sta te owned enterprises. Private sector rowth in electricity- steel industry- air transport and telecommunication industry. ". )ecent ra li 3ed pla nni n. +. $ubs idie s by ove rnment. 4. Inc rea sin rowth of pri vat e sect or. . Impor t duty was dec rea sed. aw materials and many industrial oods could be freely imported. /. :e w labor la w was i ntroduced. 7. Inc rea se in ore in dire ct inves tment . 6. or ei n e;uit y st a!e s up to 10 by forein investors was approved. 9. 8or e op en mar !et econ omy whi ch determines the mar!et price throuh demand and supply.

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Page 1: India's Transformation-Case Study

8/10/2019 India's Transformation-Case Study

http://slidepdf.com/reader/full/indias-transformation-case-study 1/2

1. Compare between the economic features of pre reform and post reform India.

Answer:

Pre reform and post reform India has different specific. features. The economic system that

developed in India after 1947 was a mixed economy and in 1991 the overnment of India too!the economic reform proram.

". #valuate the performance of pre reform and post reform India.

Answer:

The pre reform economic system of India which is more of a closed economic system was

incapable of deliverin the proress. In the meantime many $outheastern %sian countries had

started to en&oy their economic proress. India's ()P per capita was *+1,- less than half of 

India's population could read only / million could access the telephones and only 140 of the

 population had access to clean sanitation. orld 2an! estimated that some 4,0 of the world's

desperately poor lived in India.

The lac! of proress of the pre reform economic system led the Indian overnment to initiate an

ambitious economic reform proram in which state owned enterprises was privati3ed private

sector investment was encouraed in electricity eneration- oil industry- steel ma!in- air 

transportation and telecommunication. Tariff was reduced from 4,,0 to only /0. Corporate tax

declined to only +0 in 1997 from 7.0. The result of this economic reform has been

impressive. The economy expanded at an annual rowth rate of about /.+0 from 1994 to ",,4-

Pre reform India1. $tate owned enterprises.". Centrali3ed plannin.+. $ubsidies by overnment.4. Constrained in the rowth of private

sector.. 5ih import duty./. )ifficult labor law.

7. %ccess to forein exchane system waslimited.

6. orein investment was restricted.9. 8ar!et price of products was

determined by the overnment.

Post reform India1. Privati3ed state owned enterprises.

Private sector rowth in electricity-steel industry- air transport andtelecommunication industry.

". )ecentrali3ed plannin.+. $ubsidies by overnment.4. Increasin rowth of private sector.

. Import duty was decreased. awmaterials and many industrial oodscould be freely imported.

/. :ew labor law was introduced.7. Increase in orein direct investment.6. orein e;uity sta!es up to 10 by

forein investors was approved.9. 8ore open mar!et economy which

determines the mar!et price throuhdemand and supply.

Page 2: India's Transformation-Case Study

8/10/2019 India's Transformation-Case Study

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and then accelerated to 90 annually durin ",,<",,6. orein investment &umped from *1,

million in 1991 to *+/.7 billion in ",,6. India's software development sector emered with sales

of *, billion in ",,7- which is about .40 of India's ()P. India's pharmaceuticals industry was

also flourished and emered as credible players on the lobal mar!etplace.

+. elate the lesson to 2anladesh.

Answer:

2anladesh followed a socialist economy by nationali3in all industries after independence it

experiences a slow rowth of producin experienced entrepreneurs- manaers- administrators-

enineers and technicians. orein exchane system was not developed enouh. 2anladeshi

 people were larely illiterate- uns!illed and underemployed. %fter 197- 2anladeshi leaders

 bean to turn their attention to developin new industrial capacity and rehabilitatin its economy-

the pre reform economic model resulted in inefficiency and stanation. 2einnin in the late

197- the overnment radually ave reater scope to private sector participation in the

economy. 8any state owned enterprises have been privati3ed- li!e ban!in- telecommunication-

aviation- media- and &ute. In the mid 196,'s there were encourain sin of proress. #conomic

 policies aimed at encourain private enterprise and investment- privati3in public industries-

and liberali3in the import were accelerated.

2anladesh's economy is characteri3ed as poor and developin- despite several improvement

efforts at the national and international level. In ",1+- the per capita income of the country stood

at *1-,"4- while the world averae is *1,-",,. %s of ",1"- the literacy rate in the country is

about 7.7,0. The poverty rate is still very hih. orld 2an! report in =uly ",, states that the

 poverty has seen a decline of ",0 since the early 199,s. 2anladesh has experienced a rowth

rate of 0 since 199,. %ccordin to the orld 2an- 2anladesh has achieved rowth of .70 in

>",,9.