Is the government reversing the liberalisation and globalization path that it has followed since the economic reforms of 1991? Are we going back to the import quotas and the License Raj of the pre-reform era? Recent government measures such as the curbs on imports of color television sets, air conditioners, varieties of pneumatic tires, and other products seem to suggest that. The Union Budget of 2020-21 had already announced higher customs tariffs on a range of finished goods and raw materials. Tariff quotas and non-tariff barriers are being put in place. The clarion call for Atmanirbharta has only deepened the fears.
More than one economist has pointed out that in its second term, the policy thinking of Prime Minister Narendra Modi’s government seems more in line with the governments of the 1970s than those of the post-liberalization era. The worry is that many of these measures, taken ostensibly to protect domestic manufacturing, could end up hurting exports that depend on global inputs.
The Indian experience with protectionism has been bad. After Independence, the nation may have needed to follow protectionist policies to survive and let the domestic industry find its feet. But over the next four decades, excessive protectionism, quotas, and licensing crippled economic growth, kept out new technologies and hobbled production capacities. Consumers lived with chronic shortages, shoddy quality and high prices.
This story is from the October 23, 2020 edition of The New Indian Express Chennai.
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This story is from the October 23, 2020 edition of The New Indian Express Chennai.
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