THE TECTONIC SHIFT IN INDIA'S ECONOMIC POLICY

THE NEW ECONOMIC THINKING IS BASED ON THREE KEY PRINCIPLES: GROWTH AND EFFICIENT WELFARE; ETHICAL WEALTH CREATION; AND A VIRTUOUS CYCLE FOR ECONOMIC DEVELOPMENT. TOGETHER, THESE WOULD LEAD TO A DECADE OF INCLUSIVE GROWTH

- KRISHNAMURTHY SUBRAMANIAN

The Indian economy witnessed a V shaped recovery last year after the pandemic-induced decline in the first quarter as India was the only large country that experienced two consecutive quarters of positive growth; see this year’s Economic Survey and Monthly Economic Report (MER) May 2021 for evidence. After the Covid-19 second wave halted this recovery for a couple of months, the Indian economy is geared up for fast growth. This confidence stems from the fact that India is the only country to have launched path-breaking reforms and radically altered its economic thinking amidst the pandemic. As developed over the last three Economic Surveys of the Government of India, the new economic thinking for India relies on three key principles to achieve the objective of “Minimum Government, Maximum Governance.”

While we all romantically reminisce about the 1991 reforms today, we must remember that the then government faced stringent opposition from all corners, including the ruling party itself. Many did not foresee the enormous impact that the reforms were to create. The full import of the change in economic thinking was realised over time. Similarly, the benefits of the radical change in India’s economic thinking post Covid will manifest in India’s growth path over the coming decades.