Reforms: an assessment

What did the reforms achieve? Gains:

• Faster growth: GDP grew about 5.6% a year in 1980-91, and faster in many later years (9.4% in 2021-22, partly a rebound after Covid).
• Foreign investment rose from about US$ 100 million to US$ 23 billion.
• Foreign exchange reserves grew from about US$ 6 billion to around US$ 646 billion (2023-24).
• India became a big exporter of auto parts, medicines, engineering goods and IT services.
• Prices were kept under control.

But the growth was uneven. It was led mainly by the services sector. Agriculture slowed down, and industry went up and down. Many villages still face long power cuts.

Criticisms:

• Agriculture: less public investment in irrigation, power and roads; costlier inputs as fertiliser subsidies were cut; competition from cheaper imports; and a shift from food crops to cash crops for export, which raised the prices of food. The book's story of the farmer Mahadeva, who switched to groundnut, shows how risky this can be.
• Industry: cheap imports hurt Indian producers; infrastructure (such as power) stayed poor; and rich countries kept non-tariff barriers against Indian goods.
• Disinvestment: critics say public sector assets were undervalued, sold too cheaply.
• Welfare: cutting taxes and tariffs reduced government income, leaving less to spend on welfare.
• The gains went mainly to some services and to high-income groups.

So the verdict is mixed: faster growth, but uneven gains.