Development and the Effect of Liberalization on Economic Development

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WHAT IS THE TRUE MEANING OF DEVELOPMENT?

In general terms, development means an improvement in the condition or level of the existing things. Globally speaking, development is basically a process that initiates growth, progress, positive changes, and creates advancement in the social, economic, environmental and physical components of the nation.

The significance of development is not only concerned with the improvement in the material things, but it is considered to be a  multidimensional process. It is related to the progress that a nation makes with respect to the various parameters governing humanitarian, social, political as well as economic aspects of the society. Common goals, sought after by various individuals, such as food, shelter, clothing, a good standard of living, employment opportunities, freedom, etc. are all included in those aspects.

It can further be explained in the sense that development has different interpretations for different countries. For instance, in case of underdeveloped countries, which lack even the basic livelihood for their population, the meaning of development will be more related to progress in providing the material benefits, such as safe food, shelter, potable water, etc. to the citizens. However, if we look at the more developed nations, who already have achieved the mark of providing these basic livelihood conditions to the citizens, we can say that the actual meaning of development for them lies in the immaterial aspects, such as job satisfaction, freedom to live their life freely, self-esteem, ensuring happiness and safety to the citizens.

On this basis, development can also be represented as the combined set of changes undergone by a social, political and economic society, which turns the basic or unsatisfactory conditions as perceived by these societies, into such a condition or set of circumstances, which is accepted by them as “something better” or “developed.”

Just as life is an emergent property of chemistry, similarly, development can be understood as an emerging property of the accumulation of economic wealth and human welfare in a country. Development is a process that expresses the interaction between the people, firms, industries, technology, organizations, etc. in the social, economic and political systems of the society. As I have mentioned before that development is a multidimensional process, thus, development also lies in capacity of these systems of the society to create such circumstances and improvements in the country to not only improve human welfare or economic growth but also to ensure that these improvements are continued and are sustained. Development is not something that can be pre-decided or deliberately constructed for a nation, but it a result of gradual and sustainable efforts of the above-mentioned systems of the society.

The essence of development lies in the fact that it is a perennial process as it cannot possibly attain a final position. When we consider the word ‘developed’ it does not refer to the ultimate stage of development, but, it connotes a certain level to which a set of circumstances has risen to, or progressed as compared to its initial position. In other words, we cannot really say that a country is fully developed, because there is always something more to achieve, whether on a micro or macro level, as development is an ongoing and gradual process. This can be understood by the old saying that ‘sky is the limit’ which means that when there is an availability of resources, such as human resource, economic, political and also an environmental resource, then there is always a scope for new ideas, innovations, discoveries etc. which lead to the road of development.

EFFECT OF ECONOMIC LIBERALISATION ON DEVELOPMENT IN INDIA

The Economic Reforms introduced in 1991 by, then Prime Minister, Dr Manmohan Singh were based on three core principles- Liberalization, Privatization and Globalization. This strategy had a great impact on all spheres of the nation. Speaking of liberalization, it has brought about a revolutionary change in the economic development of India.

Before 1991, the command of the industry was in the hands of the Public Sector Units (PSUs). Nothing could be manufactured without an industrial license, which was very difficult to obtain. However, following the policy of Liberalization, industrial licensing and registration formalities were removed. This paved a clear way for the Private Sector to establish industries (except a few, like cigarettes, liquor etc.) without having to worry about licenses or permits.  With the discontinuation of the MRTP Act, the restrictive trade practices were abolished. Allowance to the Indian industries for import and export of goods throughout the world helped create a good reserve of foreign exchange and also introduced India to the world economy.

These economic reforms, no doubt, led to a revolutionary change in the Indian Economy and ensured its development. Due to the end of licensing policy, many new industries flourished in India and the country became a hub of many start-ups and dynamic businesses. Economic liberalization not only had a great impact on the economy of India but, it greatly affected all areas of life in India. Many companies were able to invest in the Indian economy and set up their industries in the country which helped a lot with foreign exchange and paved a way for India to enter the global market and attached competition.

The country which was all drained of its wealth and was deep down in debts was able to emerge as the third-largest growing economy in the world due to the implementation of liberalization policy in India. I think that liberalization has proved to be a great step for ensuring development in an economically struggling country like India. It has led to immense profits, rapid industrialization and new avenues for development in the country. The process of liberalization in India was a very gradual, cautious and estimated step taken according to the needs of the economy. This truly helped the Indian economy to grow and develop several folds.

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