India's Reform Journey Revisited

Introduction by Shruti Rajagopalan, Senior Research Fellow, Mercatus Center at George Mason Univerisity

Welcome to The 1991 Project at the Mercatus Center. I'm Shruti Rajagopalan, and I'm a Senior Research Fellow at the Mercatus Center. I also lead the Indian Political Economy Research. One of our flagship projects traces the history of the structural transformation of India, which happened at a very pivotal moment in 1991. But, the ideas started brewing almost a decade before that.

There were a number of technocrats, bureaucrats, policymakers, opinion editorial writers, columnists, and people who were at international multilateral agencies, all participating in the kinds of economic ideas that India needs to pursue to pull itself out of what was pejoratively dubbed the "Hindu rate of growth" and start growing much faster. In 1991, when India actually dismantled the License-Permit Raj system, started reducing tariffs, liberalized the trade sector, adjusted its foreign exchange, and also started building its reserves, India saw a monumental shift. Suddenly, the Indian economy started growing at a much higher rate of growth. Over the last 30 years, India has grown at almost 6% per annum, and almost a quarter of a billion people have been lifted out of poverty. These are fantastic achievements.

So, one important part of our project is to actually understand how India pulled this off—how Indian policymakers actually managed to change and reform bad economic policies that were holding Indians back, one step at a time. But a lot of work needs to be done. A very large part of India is still trapped in unproductive areas, especially since almost half of the Indian population is trapped in agriculture. We need to start pulling our manufacturing out of very, very small scale and moving it towards larger scale, some of the most innovative, highest productivity sectors. India’s services sector has always taken off, but how can we give that an even bigger boost given its current demographic?

These are some of the challenges before us. A lot of people were hit by COVID, and now India needs to actually push its growth rates higher, make its growth more inclusive, employ a very, very large pool of its youth who still can't find jobs easily, and much more. We try to talk about all these reforms in this new video series where some of the smartest policymakers, academics, bureaucrats, and technocrats talk about what happened in 1991, which reforms were missed out, and now what are the sorts of reforms that India needs to pursue right away so that it can move towards higher and more inclusive growth rates.

We are presenting this in June 2024, when a new government has just come in. Many of these videos were recorded last year in 2023 in Chennai at the Ideas of India Conference, which, according to me, was one of the most fantastic gatherings of the smartest minds in economic policy in India. I hope you enjoy and learn from this series, and I hope you come back and check out the other parts of The 1991 Project at the1991project.com, where we have a massive public repository of all the reports that led to the reform movement. We have essays, interviews, and a fantastic video series that I've done with Professor Arvind Panagariya, where we talk about trade liberalization. I hope you come on this fantastic journey with us on how we can transform India.