English Quiz for Bank Exams 2016 – Set 16

It is difficult to imagine the extraordinary number of controls on
Indian industry before 1991. Entrepreneurs needed permission to invest and
could be penalised for exceeding production capacity. Even with the given
investment capacity they had, entering certain areas was prohibited as these
were reserved for the public sector. If they had to import anything, they
required licences. To get these licences was tough. They had to persuade a
bureaucrat that the item was required but even so permission was unavailable if
somebody was already producing it in India. The impact of the reforms was not
instantaneously and permanently wonderful. In India’s case it began to show
after about a year-and-a-half. After 1993 there came three years of rapid
industrial growth of about 8% or so. But, in the second half of the 90s, there
was a tapering of industrial growth and investment. After 1997 and the East
Asian crisis there was global slowdown, which had an impact on the Indian
industry. But, in the last few years there has been a tremendous upturn. With
the rise of investment industrial
growth has reached double digits or close.

However even during the period
when industrial growth was not that rapid, there is a lot of evidence that
positive results of the reforms were seen. There were companies that didn’t
look at all internally but instead performed remarkably in the highly
competitive global market. For instance, the software sector’s performance was
outstanding in an almost totally global market. Reliance built a world-class
refinery. Tatas developed an indigenously designed car. The success of the
software sector has created much higher expectations from and much higher
confidence in what Indian industry can do. On the government’s side it’s a
vindication that liberalisation of both domestic and external policies,
including the increased inflow of Foreign Direct Investment, has created an
environment in which industry can do well, has done well and is preparing to do
even better. What they need is not sops, but good quality infrastructure. For
the 11th Plan an industrial growth rate of around 12% is projected. It will have methods of developing infrastructure, which
will close the deficit. This can be done through increased investment in public
sector for those infrastructure areas, which cannot attract private investment, and through efforts to improve private
participation in different ways of public-private participation.

In the early stages of reforms,
the liberalisation of trade policies and a shift to a market-determined
exchange rate had the effect of removing constraints on agriculture in terms of
depressed prices. The removal of protection on industry helped to produce a
more level playing field, because the earlier system was extremely unfair to
agriculture. The lesson to be learnt from the reforms process is to persevere in reforming the strategic
parts of the economy, which will lead to even higher growth rate. India has to
do better than its current average growth rate of 8% and ensure that benefits
from this higher growth go beyond industry and urban areas and extend to
agriculture.