<div><div><em><strong>Sutanu Guru</strong> explains how economic reforms actually started in the 1980s</em></div><div> </div><div>Most young Indians would have no memories of July, 24, 1991. That was when Dr Manmohan Singh presented his first Union Budget as Finance Minister. The consensus now is that the 1991 Budget is both a milestone and a watershed that showcases how a "socialist" and "controlled" economic regime called the "license-permit raj" gave way to liberal economic policies. There are many myths surrounding that Budget; as there are many facts too. One myth is that India had experienced no "economic reforms" or seen no liberal economic policies till the 1991 Budget. That is indeed a myth as facts point otherwise. </div><div> </div><div>Here is a list of some sectors, now called verticals, that actually saw reforms and liberal policies long before Dr Singh presented his "historic" Budget.</div><div> </div><div>In Januray 1982, the late A. R Antulay was forced to resign as the chief minister of Maharashtra because of the notorious "cement scam" exposed by The Indian Express. In those days, the cement industry was tightly controlled and regulated and both individuals as well as builders needed to apply for a "quota" for cement to be allocated. Inevitably, this had seeded mammoth corruption and a flourishing black market for cement. While the government controlled price for a bag was Rs 40, the black market price was in excess of Rs 150. It was alleged that Antulay was collecting cash in return for cement quotas from builders. This scam did ensure a chief minister lost his job. But it also prompted the then Indira Gandhi government at the centre to do something unusual. It announced that it was completely deregulating the cement industry where market forces, rather than the state would determine prices and production. Numerous cement plants came up across the country and the black market vanished in just a few years. It took more than 15 years then for the "market" pride of cement to reach the "black market" price of 1982. This one decision to deregulate provided proof that markets perform better than government bureaucrats. </div><div> </div><div>The year 1982 also saw two other policy moves that transformed the respective industries. India hosted the 1982 Asian Games and colour TV made its appearance. The government announced a policy whereby private companies were given full freedom to import, assemble, manufacture and market colour TV sets in India. This literally gave birth to the consumer electronics revolution in India that is still going on. Brands like Onida, Videocon and BPL became household names. There was another industry that was transformed in 1982. Till then, the two-wheeler market in India was dominated completely by Bajaj Auto, with a few other ailing state run units and some private players like LML trying to play catch up. The government announced a policy that allowed joint ventures between Indian companies and foreign automobile companies to manufacture and market two wheelers in India. In 1982, a consumer had to wait for about three years to get delivery of a Bajaj scooter after paying the full amount in advance. How things changed. All four Japanese auto majors, Yamaha, Suzuki (which had already started making the Maruti cars in a separate joint venture), Kawasaki and Honda signed up with Indian companies. The game changer was the venture between Honda and Hero, then a small company making bicycles and mopeds. Hero has gone on since then to become the largest motorcycle company in the world and India is now certainly emerging as a a manufacturing and export hub for automobiles and auto components.</div><div> </div><div>One argument of the "socialists" who opposed the entry of private and foreign investment was that the move would lead to a massive loss of jobs and widespread unemployment. This argument was used as a handy tool by employees of the Indian postal department to vehemently protest the decision of the then Rajiv Gandhi government to allow private companies to launch courier services. There were widespread protests and strikes. But look at the courier industry. Since then, it has become one of the largest source of employment for -semi skilled and skilled- Indian youth. No postal department employee has lost his or her job. But literally millions of jobs have been added directly and indirectly by large and small courier companies across India.</div><div> </div><div>In effect, 1991 and the Dr Singh Budget remains a landmark. But the fact is that liberal economic policies were being implemented systematically since 1982. Dr Singh made it "official" in 1991! </div><div> </div></div>
