LOGO

Economic
Reforms

Submitted by :
Group-5 ,Sec –A ,WMG-17
Amandeep Singh – 82003 ,Gagan Sharma – 82012,Kamlesh Jha –
82015 , Luv Dhingra – 82019 , Sameer Sood – 82039, Mandeep Singh -
82022 , Ravi Sethi - 82034
 Introduction
 "Economic reform" refers to policies directed to
achieve improvements in economic efficiency,
either by eliminating or reducing distortions in
individual sectors of the economy or by
reforming economy-wide policies such as tax
policy and competition policy with an emphasis
on economic efficiency, rather than other goals
such as equity or employment growth.

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 India’s growth story

 GDP growth of 7%.

 Manufacturing sector grew at 9.13% 2004-05) as against 5% in
(2000-01)
 Capital goods grew at 13.95% (2004-05)
 Consumer goods grew at 11.7% (2004-05)
 Nearly 2/3 of the population is illiterate, the average annual income
is $306.
 India has great potential: large deposits of natural resources, large
rivers for hydroelectric and other forms of power, and the second
largest population in the world!!
 Despite this potential, India remains one of the poorest countries in
the world.

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 Pre-liberalisation policies
 Indian economic policy after independence was influenced by the
colonial experience and by those leaders' exposure to Fabian
socialism.
 Policy tended towards protectionism, with a strong emphasis on
import substitution, industrialization, state intervention in labor and
financial markets, a large public sector, business regulation, and
central planning.
 Five-Year Plans of India resembled central planning in the Soviet
Union. Steel, mining, machine tools, water, telecommunications,
insurance, and electrical plants, among other industries, were
effectively nationalized in the mid-1950s.
 Elaborate licenses, regulations and the accompanying red tape,
commonly referred to as License Raj, were required to set up
business in India between 1947 and 1990.

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 Pre-liberalisation policies Impact
 The low annual growth rate of the economy of India before 1980
(stagnated around 3.5% from 1950s to 1980s).
 Only four or five licences would be given for steel, power and
communications. License owners built up huge powerful empires.
 A huge public sector emerged. State-owned enterprises made large
losses.
 Infrastructure investment was poor because of the public sector
monopoly.
 License Raj established the "irresponsible, self-perpetruating
bureaucracy that still exists throughout much of the country" and
corruption flourished under this system.

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 Economic reforms in India
 The economic liberalization in1991 is initiated by
then Indian prime minister P. V. Narasimha Rao
and his finance minister Manmohan Singh.
 They did away with investment, industrial and
import licensing and ended many public
monopolies, allowing automatic approval of
foreign direct investment in many sectors.

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 Economic reforms during the post independence
period

 The post independence period of India was marked by economic policies

which tried to make the country self sufficient. Under the economic reform,
stress was given more to development of defense, infrastructure and
agricultural sectors. Government companies were set up and investment
was done more on the public sector. This was made to make the base of the
country stronger. To strengthen the infrastructure, new roads, rail lines,
bridges, dams and lots more were constructed.

 During the Five Years Plans initiated in the 1950s, the economic reforms of
India somewhat followed the democratic socialist principle with more
emphasis on the growth of the public and rural sector. Most of the policies
were meant towards the increase of exports compared to imports, central
planning, business regulation and also intervention of the state in the
finance and labor markets. In the mid 50's huge scale nationalization was
done to industries like mining, telecommunications, electricity and so on.

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 Economic Reforms during 1960s and 1980s

 During the mid 1960's effort was made to make India self sufficient and also
increase the production and export of the food grains. To make the plan a
success, huge scale agricultural development was undertaken. The
government initiated the ‘Green Revolution’ movement and stressed on
better agricultural yield through the use of fertilizers, improved seed and lots
more. New irrigation projects were undertaken and the rural banks were
also set up to provide financial support to the farmers.

 The first step towards liberalization of the economy was taken up by Rajib
Gandhi. After he became the Prime Minister, a number of restrictions on
various sectors were eased, control on pricing was removed, and stress
was given on increased growth rate and so on.

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 Economic Reforms during 1990s to the present times

 Due to the fall of the Soviet Union and the problems in balance of payment
accounts, the country faced economic crisis and the IMF asked for the
bailout loan. To get out of the situation, the then Finance Minister,
Manmohan Singh initiated the economic liberation reform in the year 1991.
This is considered to be one of the milestones in India economic reform as it
changed the market and financial scenario of the country. Under the
liberalization program, foreign direct investment was encouraged, public
monopolies were stopped, and service and tertiary sectors were developed.
 Since the initiation of the liberalization plan in the 1990s, the economic
reforms have put emphasis on the open market economic policies. Foreign
investments have come in various sectors and there has been a good
growth in the standard of living, per capital income and Gross Domestic
Product.
 Due to the global meltdown, the economy of India suffered as well.
However, unlike other countries, India sustained the shock as an important
part of its financial and banking sector is still under government regulation.
Nevertheless, to cope with the present situation, the Indian government has
taken a number of decisions like strengthening the banking and tertiary
sectors, increasing the quantity of exports
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 Economic reforms in India
 Rajiv Gandhi government (1984-1989)

 Narasimha Rao government (1991-1996)

 Post liberalization reforms

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 Rajiv Gandhi government (1984-1989)

 In the 80s, the government led by Rajiv Gandhi started light

reforms.
 The government slightly reduced License Raj and also promoted
the growth of the telecommunications and software industries.

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Narasimha Rao government (1991-1996)

 The reforms progressed furthest in the areas of opening up to

foreign investment, reforming capital markets, deregulating
domestic business, and reforming the trade regime.
 Liberalization has done away with the License Raj (investment,
industrial and import licensing) and ended many public
monopolies, allowing automatic approval of foreign direct
investment in many sectors.
 Rao's government's goals were reducing the fiscal deficit,
privatization of the public sector, and increasing investment in
infrastructure.
 Trade reforms and changes in the regulation of foreign direct
investment were introduced to open India to foreign trade while
stabilizing external loans.
 In the industrial sector, industrial licensing was cut, leaving only
18 industries subject to licensing. Industrial regulation was
rationalized.
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 Abolishing in 1992 the Controller of Capital Issues which decided the prices
and number of shares that firms could issue.
 Starting in 1994 of the National Stock Exchange as a computer-based
trading system which served as an instrument to leverage reforms of India's
other stock exchanges. The NSE emerged as India's largest exchange by
1996.
 Reducing tariffs from an average of 85 percent to 25 percent, and rolling
back quantitative controls. (The rupee was made convertible on trade
account.)
 Encouraging foreign direct investment by increasing the maximum limit on
share of foreign capital in joint ventures from 40 to 51 percent with 100
percent foreign equity permitted in priority sectors.
 Marginal tax rates were reduced.
 Privatization of large, inefficient and loss-inducing government corporations
was initiated.

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 Later reforms
 Atal Bihari Vajpayee's administration surprised many by continuing reforms,
when it was at the helm of affairs of India for five years.
 The Vajpayee administration continued with privatization, reduction of taxes,
a sound fiscal policy aimed at reducing deficits and debts and increased
initiatives for public works.
 The UF government attempted a progressive budget that encouraged
reforms, but the 1997 Asian financial crisis and political instability created
economic stagnation.
 Strategies like forming Special Economic Zones - tax amenities, good
communications infrastructure, low regulation — to encourage industries
has paid off in many parts of the country.
 The Golden Quadrilateral project aimed to link India's corners with a
network of modern highways.
 Right to Information Act (2005)
 Indo-US civilian nuclear agreement (2008)
 Right to Education Bill (2008)

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 What has been done?
 Overall acceleration of economic growth along with rapid elimination of
poverty has to be the primary objective
 injection of competition in the economy in order to induce greater efficiency
and productivity gains; and dedicated efforts are needed to build capacity
through human resource development.
 Between 1850 and 1900, there was hardly any discernible economic growth
in Indian sub-continent. Per capita income was stagnant, perhaps declining
over that whole long period.
 After independence, annual per capita was in the range of 1 to 1.5 per cent
until around 1980. After 1980 it increased to about 3-4 per cent.
 Economic crisis at the end of the 1980s: The balance of payments came
under severe pressure, fiscal deficits increased significantly over the 1980s.

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 Macroeconomic Reforms and Fiscal Stabilization

 Fiscal System
 Monetary Policy

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 Fiscal System
Fiscal System
 The tax system for direct and indirect taxes was very complex.
 High maximum marginal personal income tax rates, with number of rates for
different income ranges.
 Corporate tax rate was very high. Accordingly, the tax code had to be
riddled with a number of special provisions for exemption of different kinds
of income, and the corporate tax code was full of exceptions and incentives.
 High tax avoidance and evasion due to high rates and complexity, Both the
personal income tax and corporate tax rates were brought down to 30 per
cent, along with considerable simplification.
 In the case of indirect taxes, there were high levels of both domestic excise
duties and customs tariffs, with a myriad of rates for different commodities.
 This necessitated a whole range of specific provisions and exemptions for
different kinds of producers and end users, leading to great administrative
complexity.

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 Fiscal System Continued…..
 Customs duties brought down from average of 110 per cent in 1991 (with
highs over 400 percent) to a non agricultural peak of 12.5 per cent in 2006.
Excise, which is levied at the manufacturing stage, is now essentially levied
as a VAT (Value Added Tax) so that cascading is avoided.
 Introduction of service tax in order to tax the whole economy more fairly and
to reduce the excessive burden on one sector.
 Transformation of state level sales taxes to the Value Added Tax (VAT),
which introduced a large measure of rationality and uniformity in the state
tax system.

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 Monetary Policy
 Monetary policy during 1970s and 1980s, become almost non-existent: with
a system of credit allocation, administered and different interest rates for
different purposes; automatic monetization of fiscal deficits; and financial
repression through pre-emption of banks’ resources.

 Measures taken included:

 Elimination of automatic monetization, reduction of statutory pre-
emption of the lendable resource of banks, and interest rate
deregulation.
 
 Result:
 Consequent movement from direct to indirect instruments of monetary
policy. These changes significantly reduced of inflation.

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 Micro Economic Reforms
 Major economic reforms took place in areas like Industrial
deregulation, infrastructure reforms, financial sector strengthening,
capital market, deepening and agriculture.

 Industrial Policy
 Infrastructure
 Financial Sector

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 Industrial Policy
 Massive deregulation of the industrial sector constituted the first major
package of reforms in July 1991. The obsolete system of capacity licensing
of industries was discontinued; the existing legislative restrictions on the
expansion of large companies were removed; phased manufacturing
programmes were terminated; and the reservation of many basic industries
for investment only by the public sector was removed.

 Restrictions that existed on the import of foreign technology were

withdrawn, and a new regime welcoming foreign direct investment, hitherto
discouraged with limits on foreign ownership, was introduced.

 With this massive reform introduced in one stroke in 1991, the stage was
set for a policy framework that encouraged new entry, introduced new
competition, both domestic and foreign, which thereby induced the
attainment of much greater efficiency in industry over a period of time.

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 Infrastructure
 With deregulation, introduction of the private sector and formation of the
Telecom Regulatory Authority of India (TRAI),

 The major reforms in roadways were: imposition of a fuel acess to finance

highway construction; the commissioning of the National Highway
Development Project and PMGSY (Prime Minister's Gram Sadak Yojana or
the Rural Roads Programme).

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 Financial Sector
 Introduction of competition enhancing measures.

 Introduction of operational autonomy and partial disinvestment of public

ownership in public sector banks, entry of new private and foreign banks
and permission for FDI and portfolio investment in banking are some the
major reform measures in this area.
 
 Listing of almost all public sector banks is another major reform in this
regard.
 
 Introduction of partial private sector ownership in public sector banks and
their consequent listing has been extremely important for market orientation
of these banks and transparency in their accounts and operations.

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 Current Economic Scenario
 Per capita income more than 6.4% per year, against 1.5% per year up to
1980
Indian Growth Experience (Sector Wise)

Agriculture:
 1951-52 to 1960-61: 3.1%
 2002-03 to 2005-06: 1.9%

Industry:
 1951-52 to 1960-61: 6.1%
 2002-03 to 2005-06: 8.3%

Services:
 1951-52 to 1960-61: 4.6%
 2002-03 to 2005-06: 8.7%

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 Current Economic Scenario Cont..
GDP:
 1951-52 to 1960-61: 3.9%
 2002-03 to 2005-06: 7.0%

Per Capita National Income:

 1951-52 to 1960-61: 1.9%
 2002-03 to 2005-06: 5.6%

Percentage of People below Poverty Line

Rural:
 1987 to 88 – 39.1
 2007 (Projection) – 21.1
Urban:
 1987 to 88 – 38.2
 2007 (Projection) – 15.1

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 GDP Per Capita (1990 International Dollars): 1700-
1998 and 2003

1700 1820 1870 1913 1950 1973 1998 2003

China 600 600 530 552 439 839 3117 4980

India 550 533 533 673 619 853 1746 2880

Source for: 1700-1998: Maddison, Angus. 2002. Growth and

Interaction in the World Economy: The West and the Rest over
the Past Millennium, OECD Observer.
Source for 2003: World Bank, 2005, Table 1.1.

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Foreign Capital Inflows and Reserves (US$ Million)

1990- 1997- 2003- 2004- Cumulati

1991 1998 2004 2005 ve
FDI 97 3525 4673 5535 44,5112

Portfolio 6 1828 11,377 8909 55,4672

TOTAL 103 5353 16050 14444 99,9782

Reserves 1000* 29367 112959 1415142 143,7743

External Debt 83801 93531 98488 104551 122,1474

(Total)
Short Term 8544 5046 2745 4569 7,2754
Debt Service (%) 35.3 17.8 14.1

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 Real GDP Growth

1950- 1980- 1991- 1992- 1997-

Period 2002-03 2004-05 2005-06*
1980 1990 1992 1997 2002

Average Annual
Growth Rate (%)

Real GDP 3.50 5.9 1.3 7.1 5.5 4.0 6.9 7.0-7.5

Population 2.2 2.1 2.0 1.9 1.7 1.7 1.6 1.6

Read GDP
1.3 3.8 -0.7 5.2 3.8 2.3 5.3 5.9
per capita

Sources: MOF (2005a), Annex Table 1.6, * RBI, (2005c)

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PERCENTAGE OF POPULATION LIVING IN POVERTY

RURAL URBAN NATIONAL

August 1951 – November 1952 47.4 35.5 45.3

September 1961 – July 1962 47.2 43.6 46.5

July 1973 – June 1974 56.4 49.0 54.9

July 1977 – June 1978 53.1 45.2 51.3

1983 45.7 40.8 44.5

July 1987 – June 1988 39.1 38.2 38.9

July 1993 – June 1994 37.3 32.4 36.0

July 1999 – June 2000 27.1 23.6 26.1

Target for 2007 21.1 15.1 19.3

(Tenth Five-Year Plan)

Sources: World Bank (2000), Annex Table 1.1 and MOF

29 (2005a), pp.225-227 Group-5
Fiscal Deficit (% of GDP)

Centre States Consolidated

1990-91 6.6 3.3 9.4

1996-97 4.1 2.7 6.4

2002-03 5.9 4.7 10.1

2003-04 4.8 4.4 8.4

2004-05
4.5 3.8 8.3
(Revised)
2005-06
4.3 3.7 7.7
(Budget)

Source: Rao (2005), Table A4, RBI (2005a), Table 11

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 Savings and Investment Rates
Sources: Central Statistical Organization (CSO), National Accounts Statistics, 2004 and earlier issues

1990-1991 1995-1996 2001-2002 2003-2004

Gross Domestic Savings 23.1 25.1 23.5 28.1

Public 1.1 2.4 -2.8 -0.3
Household: 19.3 18.2 22.8 24.3
Financial 8.3 8.9 11.2 11.4
Physical 11.0 9.3 11.6 12.9
Corporate 2.7 4.5 3.5 4.1
TOTAL PRIVATE 22.0 22.7 26.3 28.4
Net Capital Inflow 3.2 1.7 -0.4 -1.8
Gross Domestic Investment (Adjusted for 26.3 26.8 23.1 26.3
errors and omissions)
(0.1) (0.2) (-1.0) (3.3)

Public 10.4 7.7 6.0 5.6

Household 11.2 9.3 12.6 12.9
Corporate 4.6 9.6 5.1 4.5
TOTAL PRIVATE 15.8 18.9
31 18.1 17.4 Group-5
 External Sector

1948 1983 1993 2004

Share in World Merchandise 2.2 0.5 0.6 0.8

Exports (0.9)* (1.2)* (2.5)* (6.5)*
30
Rank
(3)*
Share in World Commercial 1.9
Services Export (2.9)*
16
Rank
(9)*
*China
Source: International Trade Statistics, Tables I.5, I.7 and II.2, Geneva, World Trade Organization,
2005.
32 Group-5
 Where do we go?
 As per the data published by CSO, we need to achieve a steady GDP
growth of more than 8.5% per annum per year, and thereby see at least a
doubling every decade.

 The main organizing principle of most reforms carried out so far has been
that of freeing the private sector from the myriad government controls that
had existed for a long time. Whereas this process itself still has some
distance to go, the consequence of this widespread deregulation and
introduction of competition in most segments of the economic sphere has
been the very visible unleashing of entrepreneurial energies at all levels and
in most parts of the country.

 Have we reached the limit of private sector led acceleration in investment

and output growth? Will this now be increasingly constrained by the lack of
public investment, both physical and social? There is a major lack of
adequate delivery of public services in both quality and quantity, which
needs to improve extensively.

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 India vs. China
 In the past two decades China has grown at 10%+.
India at less than 6%
 China has outperformed India in all the three sectors of
the economy
 In 1980 India’s GDP ($155 bn) was higher than China
($141 bn)
 In 2001 China’s GDP ($1117 bn) was more than twice
that of India ($492 bn)
 In 1980 China’s per capita income ($167) was lower
than that of India ($228)
 In 2001 China ($878) was well ahead of India ($477)

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AREAS OF CONCERN
Per Capita
State GDP (Rs.)
AP 11293.4
Assam 6605.5
REGIONAL Gujarat
Haryana
15040.8
15711.7

IMBALANCE HP
Karnataka
Kerala
12563.3
13067.9
12074.6
MP 8194.4
Maharashtra 16110.7
Orissa 6531.2
Punjab 16923.5
Rajasthan 9196.8
Tamil Nadu 14592.9
West Bengal 10694.9
Bihar 3649.8
UP 6573.6
All India 11625.2
 AREAS OF CONCERN
Cumulative Per Capita
State (Rs.)
AP 7982.9

DEVELOPMENT Assam 6587.3

Gujarat 12047.7
AL Haryana 9520.1
EXPENDITURE HP 16251.9

(2000-2) Karnataka
Kerala
8195.9
7377.6
MP 5766.5
Maharashtra 7619.8
Orissa 5431.5
Punjab 9467.9
Rajasthan 6083.1
Tamil Nadu 7561.4
West Bengal 6095.4
Bihar 3206.0
UP 3786.3
All India 6748.5
 AREAS OF CONCERN
BALANCE OF PAYMENT
INDICATORS ($ BN)

Indicator 2000-01 2001-02 2002-03 2003-04

Exports 37.5 44.9 44.9 52.5
Imports 55.4 59.3 57.6 65.4
Trade Balance -17.9 -14.4 -12.7 -12.9
Invisibles 13.1 10.8 13.5 17
Current a/c bal -4.7 -2.6 0.8 4.1
 AREAS OF CONCERN
POWER SITUATION
97-98 98-99 99-00 00-01
Req. MU’s 424,505 446,584 480,430 507,216

Available 390,330 420,235 450,595 467,400

MU’s
Shortfall 8.1% 5.9% 6.2% 8%
Subsidy Rs.30345 crs Rs.33814 Rs.36319 crs Rs.36713
crs crs
Loss Rs.18081 crs Rs.24920 Rs.24237 crs Rs.27306
crs crs

ROR -27.5% -41.2%

38 -37.9% -38.2%
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GROWTH OF URBANIZATION

Year % of Total
Population
1951 17.3
1961 18.0
1981 23.3
1991 25.7
2001 33.4
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 Where do we go? (Cont…)
Area which require immediate attention for
development:

 Agricultural development,
 Urban development,
 Human Resource Development,
 Management of Public Services

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 Agricultural Development
 With about 60 per cent of the population still largely dependent on
agriculture, the deceleration has clearly had a significant impact on slower
reduction in poverty levels

 For aggregate annual GDP growth to exceed 8.5 per cent on a sustainable
basis, it will be difficult if agricultural growth itself does not exceed 4 per cent
annual growth.

 Supply Side Growth: After prolonged drought of mid 1960s; government

launched a crash emergency program to accelerate the production of basic
food grains cereals, accompanied by discovery of high yield rice and wheat
varieties. However, in recent years, production growth in cereals has
stagnated significantly, with the productivity gains difficult to achieve.

 Demand Side Growth: Increasing incomes leading to progressive shift in

diets of urban areas and rural areas from cereals to non-cereals.

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 Agricultural Development Cont..
 Therefore, it is necessary to understand that even though there are
technological limitations to continued production of cereals from supply side,
there are also limitations to growth of cereals from demand side.

 Need for a second green revolution: There is great potential for acceleration
in growth of non-cereal foods. These areas constitute dairying, horticulture,
aquaculture and pisciculture, poultry, meat, and even wineries. This can be
done by designing national programmes applicable country wide with
relatively easy regional variations

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 Urbanization and Urban Development
 The public sector has to be empowered to make appropriate knowledge
based policy that is city and people friendly; and also to build capacity to
manage cities in a progressive framework.

 Overall industrial policy and industrial location policy both have to be rid of
their anti-labour using bias; and industrial location policy has to provide for
the conscious development of urban industrial parks.

 Many Asian cities, for example, including a high income city state like
Singapore, have a profusion of flatted multi-storied factories that house a
host of non-polluting labour using manufacturing facilities.

 There has to be recognition of the virtue of industrial clusters and facilitation

of associated facilities such as industrial training institutions, educational
and health facilities. Many such activities can be supplied by the private
sector but it is enlightened public management that can bring them about.

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 Strengthening of city management is a key requirement for the healthy
growth of Indian cities. This needs a massive programme for financial
strengthening of local bodies including revamping of their local tax systems
so that they become buoyant. Ways and means will also have to be found
for credit enhancement of urban local bodies so that they become credit
worthy and can then raise the resources necessary for urban infrastructure
investment.

 Overall, cities are huge public management systems that have been largely
neglected. With the opening of the Indian economy, Indian industry and
enterprise of all kinds have to be competitive with the best in the world.
They will be handicapped if the cities that they inhabit are themselves not as
efficient as their counterparts elsewhere.

 Hence, the acceleration in growth of Indian enterprise will be constrained

without adequate empowerment of the public sector in terms of
management of Indian cities. This is a job that the private sector clearly
cannot do.
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 Human Resource Development
Primary and Secondary Education
Vocational Training
Higher Education
Health
Public Sector Management

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 Primary and Secondary Education
 The performance of public primary schools has been widely brought into
question. There is also increasing evidence of a shift from public to private
schools, even by the poor, and often their quality is no better.

 Even poor parents spending a lot of money on primary education, which

should really be provided for by the state, there is a clear demand for it and
recognition of its utility for upward mobility. The expansion of government
programmes will certainly expand the quantity of education being offered.
 
 The quality of education, which would emerge if there is greater local
accountability of the school system and greater local involvement in general.
Teachers themselves need to be in centivised and better trained; and
teaching materials have to be provided and improved. Clearly, these
problems are the most pronounced in the poorest parts of the country that
are also underserved in terms of basic infrastructure like power, rural roads
and communications.

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 With the success is achieved in the expansion of primary education and
reduction in drop out rates after primary schooling, the next thrust will be the
burgeoning demand for secondary education.

 As we progress, incomes increase and production processes need greater

and greater skills to be competitive, primary education will no longer be
adequate for performing lower skill tasks.

 We will need to expand the supply of secondary school teachers very

significantly, invest large resources in school buildings and in the
preparation and distribution of education materials.

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 Vocational Training
 Technical training has essentially been provided by Industrial Training
Institutes (ITIs) but they are not many, and often do not turn out students
with the relevant skills.

 It is interesting that in India there are 175 defined trades that can be subject
to organized training; in Germany there are 2500 such defined trades and
occupations, each with its organized training syllabi, training certification,
and availability of training institutions.

 The famed German vocational training system involves a very complex web
of interaction between the federal government, state governments, local
chambers of

 A beginning has been made in seeking the up gradation of 500 ITIs with
industry participation, but much more needs to be done to ensure regular
skill up gradation in all vocations.

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 Higher Education
 The success of a few elite institutions such as the Indian Institute of
Science, Indian Institutes of Technology (IITs), Indian Institutes of
Management (IIMs), the National Institute of Design, the more recent
National Law Schools, have masked the general lack of quality in Indian
higher education.

 Among the elite institutions, only three were included in the top 500 higher
education institutions in the world as ranked on objective criteria by a group
of Chinese researchers. Because of the good quality of Indian secondary
schooling on a relatively wider scale, competitive processes lead to the
emergence of a large number of very bright Indian students who can then
excel despite the poor quality of instruction and environment in higher
educational institutions.

 There is a severe shortage of resources: tuition fees are extremely low and
the government is strapped for resources. There are legitimate competing
claims for scarce resources for primary and secondary education, not to
mention vocational education.
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 We need to search for new systems of governance that can allow for
diversity in delivery. While providing appropriate incentives for the
achievement of excellence with the great increase in compensation levels in
the private corporate sector, and the lack of even basic facilities in colleges
and universities, attracting brighter students to take up teaching careers has
become even more difficult than it was hitherto.

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 Health
 There are significant issues related to the delivery of public health,
particularly the availability of clean water and sanitation but there are
equally important issues to do with the delivery of curative health.

 There is widespread evidence of the deterioration of public medical systems

which are being replaced by private providers. Given the availability of new
techniques, new drugs, and diagnostics, the less well off are increasingly
finding it difficult to access these services at any semblance of affordable
cost, and health insurance is in its infancy.

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 Public Sector Management
 Make public service prestigious again: not for the exercise of power and
authority, but for tackling challenges for efficient public service delivery.

 Most public service delivery operations, including those run by the civil
service, need the injection of outside expertise at different levels. Each of
our public authorities discourages lateral entry and therefore tends to
become inward looking and suspicious of new ideas. Lateral entry of outside
experts would do much to inject new energy and even public
entrepreneurships.

 Public private partnerships are not easy to foster, as one is non-profit while
the other is profit seeking. Overall there has to be a search for innovative
forms of public service delivery. This would also involve realignment of
compensation levels. If individuals of high levels of competence are sought
to do the most complex tasks they will need to be compensated adequately.

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 We thus need a nationally generated focused programme to improve public
administration and management at all levels of government and public
authorities so that the delivery of public services becomes efficient. This
cannot be done by the private sector and if it is not done the private sector
will itself suffer from the emerging inadequacies of health, education, rural
and urban infrastructure, and all other physical infrastructure.

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 Conclusion
 Yes, we need to step up the pace .we can achieve this by following
 The economic reforms process carried out in India over the last 15
years has brought forth a burst of new entrepreneurial energies
across the board in almost all sectors. As a consequence, the
country is now recording substantial economic growth in excess of 8
per cent. This growth could possibly be constrained by the lack of
both quality and quantity of public services supplied by the
Government and its various authorities.

 Hence there has to be all-round improvement in investment in and

delivery of public services.

 The new focus of economic reforms has to be the empowerment of

the public sector to do what it is supposed to do: public services.

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SUBMITTED BY:
Group -5
 Amandeep Singh – 82003
 Gagan Sharma – 82012
 Kamlesh Jha – 82015
 Luv Dhingra – 82019
 Sameer Sood – 82039
 Mandeep Singh Gulati – 82022
 Ravi Sethi - 82034

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