Regional business helped regional parties grow after 1991 and vice versa

Much of the economic changes of the last 25 years can be understood if we look at the political alignments since 1991, and studying this period will give us pointers to deal with the world going forward. Regional parties and businesses have grown in tandem, said former media adviser to Prime Minister Manmohan Singh Sanjaya Baru at a session on 25 years of economic reforms at the Times Lit Fest Delhi on Sunday.
Twenty-five years later is a good time to examine the forces and the factors that took India down the path of liberalization, and four experts who were in the thick of things during the rollout of the 1991 reforms, talked about the significance of that moment in India’s economic history. Baru was sharing the stage with former chief economic advisor Ashok Lahiri, former national security adviser Shivshankar Menon and Harsha Vardhana Singh, former deputy director-general of the World Trade Organisation.
Baru explained that between 1990 and 1950, there were changes in the Indian economy that led to the emergence of new business groups in peninsular India and Punjab. “But the politics of the country was still dominated by north India and the licence permit raj meant power was centralized in Delhi. A businessman from the south could wait in Delhi for days and not enter Udhyog Bhavan while the old business houses could go have tea with the PM,” he said. So regional businesses, after liberalisation, contributed to the growth of regional parties and vice-versa.
Former chief economic advisor Ashok Lahiri said that India was a bit late to the game and hadn’t read the signs in the world around it. “In 1979, when China was following the economics of Adam Smith and the politics of Marx, India was still following the economics of pluralism and the policies of Marx,” he said. Singh concurred, saying that if you protect a market for too long it becomes uncompetitive and trade policy needed change if India was to engage with the world.
Reforms weren’t just a domestic affair, they coincided with huge geopolitical shifts and the end of the rigidities that the Cold War imposed on countries. “In those years, Narasimha Rao recognised the reality of a unipolar world and brought an economic aspect to foreign policy,” said Menon. “He forced us to think of an India integrated into the world in much wider ways than we had before. He saw opportunities everywhere and forced us to chase them at a time when no one knew where the world was going.”
Menon pointed out that the lessons from that period when both India and the world were going through radical changes can be applied to India’s engagement with the world going forward. “Today, we are in a period of fundamental change again, not just because of the demagogues who are in power everywhere but also in the way we are witnessing the fragmentation of economics —de-globalisation, in a sense,” said Menon.