When we look at the economy of the India before1990, our financial problems were in plain sight and fairly simple to understand. Firstly, there was the problem of rising unemployment and a low rate of growth. Secondly, we had a huge budget deficit, an adverse balance of payment situation and a continuously falling rupee. Thirdly, License-Permit-Quota Raj was posing a problem which was abolished gradually.
As far as the common man’s life is concerned, due to the budget deficit, the possibilities of introducing welfare schemes were becoming very limited for the government. Gold had to be given on mortgage to manage our Balance of Payments and, we did not have funds to import petrol and other commodities. Our biggest weakness was our dependency on foreign imports. A major chunk of our foreign reserves were expended for importing fertilizers and oil, the other part was utilized in importing defence hardware. Conclusively, as a result of license-permit-quota raj, the only source of employment was the government, as the employment opportunities in the private sector were limited and lacked growth.
Consumer commodities for example, kerosene oil, were rationed at fixed shops and one could even see small kids selling it in the streets. People could not expect to have two gas cylinders; it was not easy to get gas for consumption. No one had even heard of gas pipelines. A similar situation was faced in the health and the education sector. Private hospitals existed in very less numbers, and were inaccessible for the common public. In education, most schools were government owned, though there were a few military and private schools, but government schools were dominant. So in n terms of education also people had limited views. They thought of getting admitted into a government school then a government college and then a government job. The government used to play pivotal role in lives of the public from economic to societal aspects. An important parameter for anyone’s status or success was whether they had a government job, and if yes then what was their position. The thought that there could be alternates to the government was something not thought of by the common man.
My father was a lecturer in a higher secondary school and throughout the year, the biggest anxiety he used to have was regarding his transfer- when would he be transferred and where would his next posting be. Drawing from my father’s experience, I feel that all the government employees, apart from work, were always under a continuous pressure and stress because of the uncertainty regarding their next transfer.
Talking about the impact of reforms, before 1991, Balance of Payments (BoP) was the responsibility of the government and the Reserve Bank of India. Post-1991, when Dr. Manmohan Singh became our Finance Minister, BoP became the responsibility of the country’s people and not just the government, this was because we liberalized our currency. Imported commodities were available easily in India, if people wanted they could buy it or leave it. Similarly, a large part of our budget deficit was due to subsidies and expenses on social sector, which were gradually reduced after liberalization. Even now, the word ‘subsidy’ has a very negative perception in the minds of people and arguments for eliminating it are going on. Due to reduction of subsidies, public had to spend more from their own pockets (it has led to public spendiing more 'Out of the Pocket' (OOP)).
This caused hardships for the public because now he had to bare more responsibilities however at the same time, the benefit was that more and more employment was being generated. Even though, no major growth was recorded, the employment opportunities had increased and government is not seen as the sole employer. Also, agriculture sector took a hit due to liberalization as well as external liberalization. For example, today we pay Rs 30 or 35 for milk, but at that time the production was in the hands of government and cooperatives so neither the prices soared so high nor there was any milk crisis. Later on, though there has been no crisis but the prices did increase rapidly.
(Gyanendra Bartaria is a senior journalist)