Indian Economic

Reforms – An
Unfinished Agenda
 The Project Presenters
 Maharshi Sen
 Payel Sengupta
 Saurav Roy
 Nupur Ganguly
 Jayanta Majumdar
 Contents
 Indian Economic Reforms
 The Pre – British Era
 The British Period
 India’s Growth Story
 Agriculture
 GDP Quarterly Growth
 FDI
 Progress on VAT
 Economic Diplomacy
 Concerns about Implementation, Not Policy
 Infrastructure
 Financial Sector
 The Indian Economic Reform (The Unfinished Agenda)
 Indian Economic Reforms

 Economic reforms in India should be

viewed in terms of a number of
distinct eras. Under normal
conditions, economic reform in India
describes the post-1991 consequences
of various economic practices. 
 The Pre – British Era
 The most significant event of this era is
the fact that an appreciable amount of
land areas were brought under the control
of a single entity, such as the Suris, the
Lodhis or the Mughals. The G.T. Road
(Grand Trunk Road) and structures like
the Taj Mahal and Fatehpur Sikri were
built during this era. Urbanization started
growing from this era.
 The British Period
 The British government in India formulated
some economic policies to enhance the trading
activities with foreign countries. This led to
large scale trading with other countries and
subsequently developed industries like steel
and textiles. An oil refinery in Assam was also
set up in this period. The development of
industry started on an extensive scale in
notable places, including Calcutta (presently
Kolkata), Bombay (presently Mumbai) and
Madras (presently Chennai).
 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)
 Agriculture
 FDI in retail and food processing on
the anvil.
 Barriers to movement of agricultural
products are going down
 Phenomenal growth in commodity
markets
GDP Quarterly Growth
 FDI
 FDI primarily coming through mergers
and acquisitions in small and medium
enterprises.
 Example: Hemendra Kothari at 500
million, Sunil Mittal at 1.2 billion
 Progress on VAT
 14.6% growth in tax revenues of
states which have implemented
 BJP led states finally agreeing to
implementing VAT
 The barrier of the CST to be taken off
in the coming months
 Economic Diplomacy
 "Look East" policy
 SAFTA and ASEAN initiatives
 Indo Pak, Indo China, Indo US, and
Indo Russia relations on a high
 Concerns about Implementation, Not
Policy
Infrastructure
 Roads
– Decision about type of contract to be
awarded for road development has taken
14 months. Finally BOT model chosen.
– Less than 400 km of road work has been
tendered out since May last year as
against 4500 km over a similar period
earlier.
build-operate-transfer (BOT) is a form of project financing, wherein a private entity
receives a concession from the private or public sector to finance, design, construct, and
operate a facility stated in the concession contract. Afund, usually used by wealthy
individuals and institutions, which is allowed to use aggressivestrategiesthat are
unavailable to mutual funds.
Corporatization refers to the transformation of state assets or agencies into 
state-owned corporations in order to introduce corporate management techniques to their
administration.
Participatory notes (PNs / P-Notes) are instruments used by investors or hedge funds
 that are not registered with the SEBI (Securities & Exchange Board of India) to invest in 
Indian securities.
A government bond is a bond issued by a national government, denominated in the
country’s own currency. In the primary market, bonds are sold in auctions. 
Secondary market trading in bonds occurs in the over-the-counter (OTC) market
 Infrastructure
Airports
 Delhi-Mumbai privatization not taken up
even after 18 months, though no policy
hurdles
 No road-map of further airport development
available
Railways
 Fast-freight corridor approved in principle 8
months ago. No progress
 Financial sector
 Confusion in policy interpretation by SEBI & RBI
1. Corporatization of stock exchanges
2. Participatory notes
3. OTC trading in government bonds
4. Private sector banking and new bank
licenses.
5. Recognition of hedge funds as an entity
6. Asset reconstruction companies – equity
holding.
 The Indian Economic Reform (The
Unfinished Agenda)
 Privatisation of state-run companies
 Liberal labour policies for corporate sector
 Foreign equity in multi-brand retailing
 Higher equity for foreign companies in single-
brand retailing
 Higher foreign equity for foreign companies in
insurance sector
 Development of a vibrant corporate bond
market
 Easier norms for foreign banks to set up
operations in India
 Contd..
Removal of 10 percent cap on voting rights for investors in
non-state banks
 Relaxation of land ceiling for foreign realty developers
Easier entry norms for credit rating companies
Higher foreign equity in asset reconstruction companies
Higher equity for foreign firms in state-run refining projects
Higher foreign equity in newspapers and current affairs
periodicals
Permission for news and current affairs programming in
FM radio
 More liberal policies for foreign equity in commodity
exchanges