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Economic liberalisation in India

From Wikipedia, the free encyclopedia

This article may require cleanup to meet Wikipedia's quality standards. Thespecific problem is: repeated information and poor organization. Please helpimprove this article if you can. (August 2014)

The economic liberalisation in India refers to the ongoing economic liberalization, initiatedin 11, of the country!s economic policies, "ith the goal of making the economy moremarket#oriented and e$panding the role of private and foreign investment. %pecific changesinclude a reduction in import tariffs, deregulation of markets, reduction of ta$es, and greaterforeign investment. &iberalization has been credited by its proponents for the high economicgro"th recorded by the country in the 1's and ('''s. )ts opponents have blamed it forincreased poverty, ine*uality and economic degradation. The overall direction ofliberalisation has since remained the same, irrespective of the ruling party, although no partyhas yet solved a variety of politically difficult issues, such as liberalizing labour la"s andreducing agricultural subsidies.+1 There e$ists a lively debate in )ndia as to "hat made theeconomic reforms sustainable.+(

)ndian government coalitions have been advised to continue liberalisation. )ndia gro"s atslo"er pace than -hina, "hich has been liberalising its economy since 1/.+0 The McKinsey

Quarterly states that removing main obstacles "ould free )ndia!s economy to gro" as fast as-hina!s, at 1'2 a year.+3

There has been significant debate, ho"ever, around liberalisation as an inclusive economicgro"th strategy. %ince 1(, income ine*uality has deepened in )ndia "ith consumptionamong the poorest staying stable "hile the "ealthiest generate consumption gro"th.+4 5s)ndia!s gross domestic product 678P9 gro"th rate became lo"est in ('1(#10 over a decade,gro"ing merely at 42,+ more criticism of )ndia!s economic reforms surfaced, as it apparentlyfailed to address employment gro"th, nutritional values in terms of food intake in calories,and also e$ports gro"th # and thereby leading to a "orsening level of  current account deficit compared to the prior to the reform period.+

Contents

• 1 Pre#liberalisation policies 

o 1.1 Pre#11 liberalization attempts

o 1.( )mpact

• ( First ;ound of ;eforms 611<19 

o (.1 -risis

• 0 &ater reforms

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• 3 )mpact of reforms

• 4 -hallenges to further reforms 

o 4.1 ;eforms at the state level

• %ee also

• ;eferences

• / =$ternal links

Pre-liberalisation policies

Part of a series on the

History of modern India

Pre-independence

)ndependence movement

;ebellion > ?utiny > FirstWar of )ndependence

1/4<1/4/

@ritish ;aA 1/4/<13

Partition 13

Post-independence

Political integration 13<13

 Bon#5ligned ?ovement 140<  present

%tates ;eorganisation 5ct 14

)ndo#Pakistani War  14

7reen ;evolution 1's

)ndo#Pakistani War  11

=mergency 14<1

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• 1's

• Economic liberalisation

See also

• Cistory of )ndia

• Cistory of %outh 5sia

India portal

• v

• t

• e

Further information: =conomic history of )ndia and &icence ;aA

)ndian economic policy after independence "as influenced by the colonial e$perience 6"hich"as seen by )ndian leaders as e$ploitative in nature9 and by those leaders! e$posure to Fabiansocialism. Policy tended to"ards protectionism, "ith a strong emphasis on importsubstitution, industrialisation under state monitoring, state intervention at the micro level inall businesses especially in labour and financial markets, a large public sector, businessregulation, and central planning.+/ Five#Dear Plans of )ndia resembled central planning in the%oviet Enion. %teel, mining, machine tools, "ater, telecommunications, insurance, andelectrical plants, among other industries, "ere effectively nationalised in the mid#14's.+ =laborate licences, regulations and the accompanying red tape, commonly referred to as&icence ;aA, "ere re*uired to set up business in )ndia  bet"een 13 and 1'.+1'

@efore the process of reform began in 11, the government attempted to close the )ndian

economy to the outside "orld. The )ndian currency, the rupee, "as inconvertible and hightariffs and import licencing prevented foreign goods reaching the market. )ndia also operateda system of central planning for the economy, in "hich firms re*uired licences to invest anddevelop. The labyrinthine bureaucracy often led to absurd restrictionsup to /' agencies hadto be satisfied before a firm could be granted a licence to produce and the state "ould decide"hat "as produced, ho" much, at "hat price and "hat sources of capital "ere used. Thegovernment also prevented firms from laying off "orkers or closing factories. The central

 pillar of the policy "as import substitution, the belief that )ndia needed to rely on internalmarkets for development, not international tradea belief generated by a mi$ture ofsocialism and the e$perience of colonial e$ploitation. Planning and the state, rather thanmarkets, "ould determine ho" much investment "as needed in "hich sectors.

  @@- +11

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Pre-!! liberalization attempts

5ttempts "ere made to liberalise the economy in 1 and 1/4. The first attempt "asreversed in 1. Thereafter, a stronger version of socialism "as adopted. The second maAorattempt "as in 1/4 by prime minister ;aAiv 7andhi. The process came to a halt in 1/,

though 1 style reversal did not take place. +1(

)n the /'s, the government led by ;aAiv 7andhi started light reforms. The governmentslightly reduced &icence ;aA and also promoted the gro"th of the telecommunications andsoft"are industries.+citation needed 

The Gish"anath Pratap %ingh 61/<1'9 and -handra %hekhar %ingh government 61'< 119 did not add any significant reforms.

Impact

• The lo" annual gro"th rate of the economy of )ndia before 1/', "hich stagnated

around 0.42 from 14's to 1/'s, "hile per capita income averaged 1.02.+10 5t thesame time, Pakistan gre" by 42, )ndonesia  by 2, Thailand by 2, %outh Horea  by1'2 and Tai"an by 1(2.+13

• Inly four or five licences "ould be given for steel, electrical po"er and

communications. &icence o"ners built up huge po"erful empires.+11

• 5 huge private sector emerged. %tate#o"ned enterprises made large losses. +11

• )ncome Ta$ 8epartment and -ustoms 8epartment became efficient in checking ta$evasion.

• )nfrastructure investment "as poor because of the public sector monopoly.+11

• &icence ;aA established the irresponsible, self#perpetuating bureaucracy that still

e$ists throughout much of the country+14 and corruption flourished under this system.+1

The fruits of liberalisation reached their peak in ('', "hen )ndia recorded its highest 78P

gro"th rate of 2.+1

 With this, )ndia became the second fastest gro"ing maAor economy inthe "orld, ne$t only to -hina.+1 The gro"th rate has slo"ed significantly in the first half of('1(.+1/ 5n Irganisation for =conomic -o#operation and 8evelopment 6I=-89 report statesthat the average gro"th rate .42 "ill double the average income in a decade, and morereforms "ould speed up the pace.+1

"irst #ound of #eforms $!!%!!&

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The former prime minister P G Barasimha ;ao, "ho spearheaded economic liberalisation policies in the early 1's. ;ao "as often referred to as Chanakya for his ability to steer

tough economic and political legislation through the parliament at a time "hen he headed aminority government.+('+(1

Crisis

?ain article: 11 )ndia economic crisis

@y 11, )ndia still had a fi$ed e$change rate system, "here the rupee "as pegged to thevalue of a basket of currencies of maAor trading partners. )ndia started having balance of

 payments problems since 1/4, and by the end of 1', it "as in a serious  economic crisis.The government "as close to default,+((+(0 its central bank had refused ne" credit and foreigne$change reserves had reduced to the point that )ndia could barely finance three "eeksJ "orthof imports. )t had to pledge (' tonnes of gold to Enion @ank of %"itzerland and 3 tonnes to@ank of =ngland as part of a bailout deal "ith the )nternational ?onetary Fund 6)?F9. ?ostof the economic reforms "ere forced upon )ndia as a part of the )?F bailout.+(3

5 @alance of Payments crisis in 11 pushed the country to near bankruptcy. )n return for an)?F bailout, gold "as transferred to &ondon as collateral, the rupee devalued and economicreforms "ere forced upon )ndia. That lo" point "as the catalyst re*uired to transform theeconomy through badly needed reforms to unshackle the economy. -ontrols started to bedismantled, tariffs, duties and ta$es progressively lo"ered, state monopolies broken, the

economy "as opened to trade and investment,  private sector enterprise and competition "ereencouraged and globalisation "as slo"ly embraced. The reforms process continues today andis accepted by all political parties, but the speed is often held hostage by coalition politics andvested interests.

  )ndia ;eport, 5staire ;esearch+1

(ater reforms

This list is incomplete you can help !y e"panding it .

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• The @haratiya Kanata Party 6@KP9#5tal @ihari GaApayee administration surprised many

 by continuing reforms, "hen it "as at the helm of affairs of )ndia for five years.+(4

• The @KP#led Bational 8emocratic 5lliance -oalition began privatising under#

 performing government o"ned business including hotels, G%B&, ?aruti %uzuki, and

airports, and began reduction of ta$es, an overall fiscal policy aimed at reducingdeficits and debts and increased initiatives for public "orks.

• The Enited Front government attempted a progressive budget that encouraged

reforms, but the 1 5sian financial crisis and political instability created economicstagnation.

• To"ards the end of ('11, the 7overnment initiated the introduction of 412 Foreign

8irect )nvestment in retail sector. @ut due to pressure from fello" coalition partiesand the opposition, the decision "as rolled back. Co"ever, it "as approved in

8ecember ('1(.+(

Impact of reforms

The C%@- 7lobal Technology -entre in Pune develops soft"are for the entire C%@- group.+(

The impact of these reforms may be gauged from the fact that total foreign investment 6including foreign direct investment, portfolio investment, and investment raised oninternational capital markets9 in )ndia gre" from a minuscule E%L10( million in 11<( toL4.0 billion in 14<.+(/

-ities like -hennai, @angalore, Cyderabad, BI)85, 7urgaon, 7haziabad, Pune, Kaipur ,

)ndore and 5hmedabad have risen in prominence and economic importance, become centresof rising industries and destination for foreign investment and firms.

5nnual gro"th in 78P per capita has accelerated from Aust 1M per cent in the three decadesafter )ndependence to N per cent currently, a rate of gro"th that "ill double average incomein a decade. +... )n service sectors "here government regulation has been eased significantlyor is less burdensomesuch as communications, insurance, asset management andinformation technologyoutput has gro"n rapidly, "ith e$ports of information technologyenabled services particularly strong. )n those infrastructure sectors "hich have been openedto competition, such as telecoms and civil aviation, the private sector has proven to bee$tremely effective and gro"th has been phenomenal.

  I=-8 +1

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=lection of 5@ GaApayee as Prime ?inister of )ndia in 1/ and his agenda "as a "elcomechange. Cis prescription to speed up economic progress included solution of all outstanding

 problems "ith the West 6-old War related9 and then opening gates for F8) investment. )nthree years, the West "as developing a bit of a fascination to )ndia!s brainpo"er, po"ered by)T and @PI. @y (''3, the West "ould consider investment in )ndia, should the conditions

 permit. @y the end of GaApayee!s term as prime minister, a frame"ork for the foreigninvestment had been established. The ne" incoming government of 8r. ?anmohan %ingh in(''3 is further strengthening the re*uired infrastructure to "elcome the F8).

Today, fascination "ith )ndia is translating into active consideration of )ndia as a destinationfor F8). The 5 T Hearney study is putting )ndia second most likely destination for F8) in(''4 behind -hina. )t has displaced E% to the third position. This is a great leap for"ard.)ndia "as at the 14th position, only a fe" years back. To *uote the 5 T Hearney %tudyO)ndia!s strong performance among manufacturing and telecom utility firms "as drivenlargely by their desire to make productivity#enhancing investments in )T, business processoutsourcing, research and development, and kno"ledge management activitiesQ.

C)allenges to furt)er reforms

For ('1', )ndia "as ranked 1(3th among 1 countries in )nde$ of =conomic Freedom World;ankings, "hich is an improvement from the preceding year.

• %lo" gro"th of the agricultural sector , "here half of )ndians earn most of their

income+(

• Cighly restrictive and comple$ labour la"s.+0'+1+01+0(+00+03+04+0+0

• Cigh inflation +(

• Cigh poverty+(

• -orruption and graft+(

• &ack of political consensus and "ill+(+0/

I=-8 summarised the key reforms that are needed:

)n labour markets, employment gro"th has been concentrated in firms that operate in sectorsnot covered by )ndia!s highly restrictive labour la"s. )n the formal sector, "here these labourla"s apply, employment has been falling and firms are becoming more capital intensive despite abundant lo"#cost labour. &abour market reform is essential to achieve a broader#

 based development and provide sufficient and higher productivity Aobs for the gro"ing labour force. )n product markets, inefficient government procedures, particularly in some of thestates, acts as a barrier to entrepreneurship and need to be improved. Public companies aregenerally less productive than private firms and the privatisation programme should berevitalised. 5 number of barriers to competition in financial markets and some of theinfrastructure sectors, "hich are other constraints on gro"th, also need to be addressed. Theindirect ta$ system needs to be simplified to create a true national market, "hile for directta$es, the ta$able base should be broadened and rates lo"ered. Public e$penditure should be

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re#oriented to"ards infrastructure investment by reducing subsidies. Furthermore, social policies should be improved to better reach the poor andgiven the importance of humancapitalthe education system also needs to be made more efficient.

  I=-8+1

#eforms at t)e state le*el

%ee also: =conomic disparities in )ndia

5ccording to an I=-8 survey of the )ndian economy +1 states that had more liberalregulatory regimes had better economic performance. The survey also concluded that "erecomplementary measures for better delivery of infrastructure, education and basic servicesimplemented, they "ould boost employment creation and poverty reduction.

Prevention of Corruption Act, 1988

From Wikipedia, the free encyclopedia

Prevention of Corruption Act,

1988

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An Act to consolidate and amend the law

relating to the prevention of corruption and formatters connected therewith

Citation Act !o "9 of 1988

Territorial

extent

 #he whole of $ndia e%cept &ammu

and 'ashmir Applies also to all

citi(ens of $ndia outside $ndia

Enacted

byParliament of $ndia

Date

enacted9 )eptem*er 1988

The Pre*ention of Corruption +ct, ! 6Bo. 3 of 1//9 is an 5ct of the Parliament of

)ndia enacted to combat corruption in government agencies and public sector businesses in

)ndia.+1

Contents

• 1 Provisions 

o 11 Chapter $+ Preliminary 

111 )ection + Appointment of special &udges

11- )ection "+ Cases tria*le *y special &udges

11 )ection .+ Procedure and powers of special &udge

o 1- Chapter $$$+ /0ences and penalties

o 1 Chapter $+ $nvestigation

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• - Prominent cases 

o -1 -2 )pectrum )cam

• Analysis

• " )ee also

• . 3eferences

Provisions

The act consists of 4 chapters spread across 01 sections.+(

Chapter $+ Preliminary

This chapter contains sections describing title, territorial e$tend, basic definitions, etc.Follo"ing are some sections:

Section 3: Appointment of special Judges

Po"er To 5ppoint %pecial Kudges: The -entral and the %tate 7overnment is empo"ered to

appoint %pecial Kudges by placing a Botification in the Ifficial 7azette, to try the follo"ing

offences: R 5ny offence punishable under this 5ct. R 5ny conspiracy to commit or any attempt

to commit or any abetment of any of the offences specified under the 5ct. The *ualification

for the %pecial Kudge is that he should be or should have been a %ession Kudge or an

5dditional %ession Kudge or 5ssistant %ession Kudge under the -ode of -riminal Procedure,

10

Section 4: Cases triable by special Judges

The offences punishable under this act can be tried by special Kudges only. When  trying any

case, the special Kudge is empo"ered to try any offence other than an offence punishable

under this act, "ith "hich the accused may be charged at the same trial. )t is recommended

that the special Kudge should hold the trial daily.+0

-ase Trial @y %pecial Kudges: =very offence mentioned in %ection 0619shall be tried by the

%pecial Kudge for the area "ithin "hich it "as committed. When trying any case, a %pecial

Kudge may also try any offence other than "hat is specified in %. 0, "hich the accused may

 be, under -r.P.-. be charged at the same trial. The %pecial Kudge has to hold the trial of an

offence on day#to#day basis. Co"ever, "hile complying "ith foretasted, it is to be seen that

the -r.P.-. is not bifurcated.

Section 5: Procedure and powers of special Judge

The follo"ing are the po"ers of the %pecial Kudge: Ce may take cognizance of the offences

"ithout the accused being commissioned to him for trial. )n trying the accused persons, shall

follo" the procedure prescribed by the -r.P.-. for the trial of "arrant cases by ?agistrate. he

may "ith a vie" to obtain the evidence of any person supposed to have been directly orindirectly concerned in or privy to an offence, tender pardon to such person provided that he

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"ould make full and true disclosure of the "hole circumstances "ithin his kno"ledge or in

respect to any person related to the offence.

=$cept as for %. (619, the provisions of -r.P.-. shall apply to the proceedings before a %pecial

Kudge. Cence, the court of the %pecial Kudge shall be deemed to be a -ourt of %ession and the

 person conducting a prosecution before a %pecial Kudge shall be deemed to be a public

 prosecutor. The provisions of secs. 0( and 34of the -r.P.-. shall apply to the proceedings

 before a %pecial Kudge and for purpose of the said provisions, a %pecial Kudge shall be

deemed to be a magistrate.

5 %pecial Kudge may pass a sentence authorized by la" for the punishment of the offence of

"hich a person is convicted. 5 %pecial Kudge, "hile trying any offence punishable under the

5ct, shall e$ercise all po"ers and functions e$ercised by a 8istrict Kudge under the -riminal

&a" 5mendment Irdinance,133.

Po"er to try summarily: Where a %pecial Kudge tries any offence specified in %ec. 0619,

alleged to have been committed by a public servanet in relation to the contravention of any

special order referred to in %ec.1(#5619 of the =ssential -ommodities 5ct, 144 or all orders

referred to in sub#section 6(96a9 of that section then the special Audge shall try the offence in a

summarily "ay and the provisions of s. (( to (4 6both inclusive9 of the said code shall as

far as may be apply to such trial. Provided that in the case of any conviction in a summary

trial under this section this shall be la"ful for the %pecial Kudge to pass a sentence of

imprisonment for a term not e$ceeding one year. Co"ever, "hen at the commencement of or

in the course of a summary trial it appears to the %pecial Kudge that the nature of the case is

such that a sentence of imprisonment for a term e$ceeding one year may have to be passed or

it is undesirable to try the case summarily, the %pecial Audge shall record all order to that

effect and thereafter recall any "itnesses "ho may have been e$amined and proceed to hear

and re#hear the case in accordance "ith the procedure prescribed by the said code for the trial

of "arrant cases by ?agistrates. ?oreover, there shall be no appeal by a convicted person in

any case tried summarily under this section in "hich the %pecial Kudge passes a sentence of

imprisonment not e$ceeding one month and of fine not e$ceeding ;s. ('''.

Chapter $$$+ /0ences and penalties

The follo"ing are the offences under the P-5 along "ith their punishments:# Taking

gratification other than legal remuneration in respect of an official act, and if the public

servant is found guilty shall be punishable "ith imprisonment "hich shall be not less than

months but "hich may e$tend to 4 years and shall also be liable to fine. R Taking gratification

in order to influence public servant, by corrupt or illegal means, shall be punishable "ith

imprisonment for a term "hich shall be not less than si$ months but "hich may e$tend to five

years and shall also be liable to fine. R Taking gratification, for e$ercise of personal influence

"ith public servant shall be punishable "ith imprisonment for a term "hich shall be not less

than si$ months but "hich may e$tend to five years and shall also be liable to fine. R

5betment by public servant of offences defined in %ection / or , shall be punishable "ith

imprisonment for a term "hich shall be not les than si$ months but "hich may e$tend to five

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years and shall also be liable to fine. R Public servant obtaining valuable thing "ithout

consideration from person concerned in proceeding or business transacted by such public

servant, shall be punishable "ith imprisonment for a term "hich shall be not les than si$

months but "hich may e$tend to five years and shall also be liable to fine. R Punishment for

abetment of offences defined in %ection or 11 shall be punishable "ith imprisonment for aterm "hich shall be not less that si$ months but "hich may e$tend to five years and shall also

 be liable to fine. R 5ny public servant, "ho commits criminal misconduct shall be punishable

"ith imprisonment for a term "hich shall be not less than one year but "hich may e$tend to

years and shall also be liable to fine. R Cabitual committing of offence under %ection /, and

1( shall be punishable "ith imprisonment for a term "hich shall be not less than t"o years

 but "hich may e$tend to years and shall also be liable to fine.

Chapter $+ $nvestigation

)nvestigation shall be done by a police officer not belo" the rank of: a )ncase of 8elhi, of an)nspector of Police. b )n metropolitan areas, of an 5ssistant -ommissioner of Police. c

=lse"here, of a 8eputy %uperintendent of Police or an officer of e*uivalent rank shall

investigate any offence punishable under this 5ct "ithout the order of a ?etropolitan

?agistrate or a magistrate of first class, or make any arrest therefore "ithout a "arrant.

)f a police officer no belo" the rank of an )nspector of Police is authorized by the %tate

7overnment in this behalf by general or special order, he may investigate such offence

"ithout the order of a ?etropolitan ?agistrate or ?agistrate of First class or make arrest

therefor "ithout a "arrant.

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4#he government5s recent policy measures, such as diesel price deregulation, a

greater focus on local manufacturing, as well as the 3eserve 6ank5s e0orts to

contain in7ationary pressures and raise *anking system eciency, could

increase savings, investment and productivity in the economy,4 oody5s said

the recent steps are augmented with additional steps ne%t year to address

infrastructure gaps and attract foreign direct investment in7ows, government

policies can support the sovereign credit pro:le through higher medium term

2;P growth