Impressive only by Indian standards

EducationWorld August 2021 | Editorial

Thirty years after the defining Union budget of July 24, 1991 announced overdue liberalisation and deregulation of the Indian economy by abolishing industrial licensing and anti-monopolies legislation, slashing import duties, relaxing rules relating to international trade and substantially released the animal spirits of the country’s millions of natural entrepreneurs, cabined, cribbed and confined by half a century of licence-permit-quota raj, this anniversary has received huge coverage in the media.

Undoubtedly substantial gains by way of higher per capita income, living standards, industrial and agriculture production have been made during the past 30 years since liberalisation. But as usual, the tendency of public commentators is to compare this country’s performance on these and other development metrics with pre-1991 data. The proper metric is to measure the impact of the reforms by making international comparisons.

It’s a bitter truth that in 1978, when communist China rejected socialist economics and took the capitalist road, the national and per capita GDP of China and India were on a par. A mere four decades later — in our own lifetime — PRC’s national GDP is $16 trillion and $10,000 per capita cf. India’s $3 trillion and $2,000. True, the economic reforms of 1991 have benefitted the Indian economy, but insufficiently.

That’s because the reforms are as yet unfinished. Arguably the world’s best natural entrepreneurs, India’s businessmen continue to be shackled and bound by a corrupt bureaucracy steeped in obsolete socialist control-and-command ideology.

In particular, there is obstinate refusal within the establishment and middle class to acknowledge the vital importance of quality education for all, as the precondition of national development. Despite the country grudgingly hosting the world’s largest child and youth population, annual government (Centre plus states) expenditure on public education has averaged a mere 3.5 percent of GDP for the past seven decades cf. the global average of 5 percent and 7-10 percent in developed OECD counties. Indeed, the liberalisation and deregulation reforms of 1991 have completely by-passed the education sector, and instead of raising the country’s 1.20 million dysfunctional government schools to private school standards, government educrats are overly preoccupied with reducing India’s 450,000 private schools — overwhelmingly preferred by the middle class — to public schools level. Regrettably, most of the essays written by eminent industry and academy leaders on this anniversary, also accord peripheral importance to critically important education upgradation and reform.

This is why India’s accelerated development after the 1991 reforms is impressive only when compared to its own dismal record. A reform-resistant establishment that attaches low importance to developing our abundant human capital, and an apathetic middle class, has ensured this high-potential country remains an international also-ran.

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