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ECONOMIC POLICY REGIMES AND INDIAN ECONOMIC ACTIVITIES

ECONOMIC POLICY REGIMES AND INDIAN ECONOMIC ACTIVITIES,Hirak Ray

ECONOMIC POLICY REGIMES AND INDIAN ECONOMIC ACTIVITIES  
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India has tried some economic policy models since independence to spread the benefits of development to all her people. This paper examines the implications of economic policy shifts on economic activities in India based on select macroeconomic indicators for a period from January 1966 to January 2007. Findings suggest that, to some extent, the policy shifts positively influenced the economic activities save the industrial production. This will surely frustrate the votaries of 'free economy' in India as the policy prescriptions failed to augment the growth in real sector. SECTION I Economic policy planners around the globe primarily aspire to achieve a healthy but faster economic growth, sustain and augment that growth and spread the benefits of development to all people irrespective of their economic and social status. In a similar vein, Indian planners also have toiled hard and tried three distinct economic models since independence. In the 'controlled regime' primary focus was on 'creation of wealth' through State directed and State controlled financial system. Financial institutions, especially the banking sector was entrusted upon to mobilize and purvey surpluses generated by the economic organisms. In the 'semi-controlled' regime, they have sought to shift from the controlled model of development emphasizing the efficiency of investment accompanied by a general move away from administrative and financial control (Kohli 1989, Jha, 1984, 1982). Finally, they settled on the much publicized and optimistic model of 'free economy' from the year 1992. All the suggestions of this new model are focused on 'development by creation and distribution of wealth'. Financial and trade liberalization with 'borrowing and lending at substantial real rate of interest' and 'a stable price level' are the primary commitments of this new policy. Moreover, in the prescription of free economy, role of capital market is favored over the financial institutions, especially, in the noble job of mobilization and allocation of precious resources of the economy. The policy, grossly, entails a move towards a more market oriented system conjured up to usher halcyon days spawning a healthy living to all economic units (Kanagasapathy 2001, Reddy 2002).
Published in 2007.
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