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# System prepended metadata

title: Lecture 2

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# Lecture 2

## Moderate Growth [1975-90]

* Green revolution in 1965
* *4th Five year plan* - emphasis on rapid economic growth
	* Quick yield and light industries
* Shift to liberalization
* Steady private sector orientation
	* Met with large pushback
* Priority on poverty elimination and area development plans followed
	* Previous plans were argued against that poverty elimination requires more than growth


### Major shifts:
	* Nationalization of banks
	* Insurance nationalization
	* Nationalization Coal industry
	* Foreign exchange Regulatory Act

* Software sector as an export oriented sector
* 5th to 7th plans were setting up economic liberalization
* *Political shift* - Structural and functional changes in government

### Political Instability

* Excessive central dominance over Private industries and state governments led to industries not performing and political tensions.
* **Political Decay** - State governments were unable to satisfy demands of marginalized groups
* *"Garibi Hatao"* - Political awakening due to the government trying to eliminate the poor instead of poverty


## High Growth

* **Macroeconomic crisis**- Due to:
	* High Inflation
	* Rising cost of food
	* account deficit
	* Huge debt
	* fall in forex
	* Gulf Crises of 1990

* Other major causes
	* Industrial inefficiences
	* Lack of industrial competition
	* License raj
	* Sick public sector due to State interference

* Economic Liberalization:
	* Following global trends--
		* Following the collapse of USSR, neoliberalism reigned
	* Clear visible shift from early model
	
* **Liberalization, Privatization, and Globalization** - Under the framework of democracy


### Elements of Reforms

1. Macroeconomic Stablization - Short term programme
	* Free market
2. Structural reforms - Medium and Long term programme
	1. Liberalization of trade and investment
	2. Exports
	3. Industrial deregulation
	4. Public sector reform
3. Redefined role of the state

### A New Debate: State vs Market

* Are they substitues or complements
* Who was watching who?
* **Could there be a people-friendly market?**

#### Changing role of state

* State was:
	* Producer
	* Investor
	* Regulator
* It became:
	* Facilitator
	* Agency for


### Impact

* Mixed impact
	* Soft war
	* Remittances
* Growth not inclusive
	* Unequal growth distribution
	* Would result in huge wealth inequality in 21st century
