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India in TransitionFreeing the Economy$
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Jagdish Bhagwati

Print publication date: 1993

Print ISBN-13: 9780198288473

Published to Oxford Scholarship Online: October 2011

DOI: 10.1093/acprof:oso/9780198288473.001.0001

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What is to be Done?

What is to be Done?

(p.70) (p.71) 3 What is to be Done?
India in Transition

Jagdish Bhagwati

Oxford University Press

This chapter discusses the reforms that had to be undertaken in the Indian economy, mainly in the country's microeconomic framework, requiring ‘structural’ reforms that would free the economy and improve its functioning. However, the reforms were precipitated by the macroeconomic crisis. The chapter explains that the failure to produce adequate returns from public enterprises both contributed to low income and growth and helped to create the fiscal crisis by undermining public savings. It notes that without an option to further foreign funds to moderate the costs of adjusting out of the serious macroeconomic crisis, the political costs of recovering stability were simply too high. However, these funds could not be procured without finally undertaking the reforms that had proven elusive so far. The chapter evaluates the reforms made by Rajiv Gandhi and their impact on India's economy.

Keywords:   reforms, Rajiv Gandhi, Indian economy, microeconomic framework, macroeconomic crisis, income, economic growth, public savings, foreign funds, political costs

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