SCHOLAR: INDIA'S LPG FOREIGN POLICY

    India is an emerging power and has made significant progress in their economy.  They have ongoing disagreements China and Pakistan.  Regardless India has made tremendous strides despite these.  In the early nineties, India was struggling with a very serious crisis involving foreign exchange which brought the Indian economy to nearly default on loans.  They had foreign exchange reserves which they used to revive the economy.  Reform in economic policy at this time was referred to as “liberalization” (Legal 2019).  Manmohan Singh was the political leader that came to shape the economic policy of India in the modern age.  He was an economist with a “distinguished academic record in Oxford Cambridge and Delhi, and prestigious appointments with the Reserve Bank of India and the World Bank” (Powel 2012 page 604). 

    On July 24, 1991, the government announced a new model for economic reform. Referred to as the “LPG,” or “Liberalization, Privatization and Globalisation model”.  The reforms reduced tariffs and interest rates and terminated several public monopolies, which allowed approval of foreign investments (Legal 2019).  The main objective of this reform was to form India’s economy.  The policy was considerate of the fact that “Macro-economic stabilization and fiscal adjustment” (Legal 2019) were not enough to bring India to prosperity.  These had to be supported with essential reforms in policy and economic management.  Singh aimed to improve efficiency and productivity.  Liberalization refers to creating policies that were less restrictive.  Privatization is the ownership of property by the private industry.  And, globalization refers to the expansion of economic activity to the world.  The LPG policy specifically enacted changes as abolishing industrial licensing, allowing free entry of foreign investment and commenced privatization.  As a result of these changes India’s GDP continued to grow along with per capita income.  According to trading economics India’s GDP is worth 2875.14 billion US dollars in 2019.  India’s average economic growth between 1970- 1980 was %4.4 but between 1990- 2000 it has been %5.4.  This was the time when the LPG was implemented.  Their growth became steady and resilient as industries started to boom.  On the other hand, when looked at from the perspective of everyday citizens, in 1990 the GNI per capita or gross national income per capita in the 1990’s before the policy was enacted was $380.  However by 2000’s it became $440.  And, presently it is at $2130.  This data was obtained from macrotrends and serves as an eye opener as to the economic success of India resulting from policy such as the LPG.  With this increase it is expected that the living standards and conditions in India have risen.

    Foreign policy plays a major role in changing not only relations with other nations but the very fabric of societies.  The example in India, show that this countries is making changes which appeal to the international community.  With these changes, this countries can have a greater influence in the world stage. 

 

WORK CITED

Powel, Bingham, “Comparative Politics Today,” Pearson (2012). 

Legal Desire, “How Former PM Manmohan Singh revolutionized Indian Economy in 1991 – 92,” Legal Desire (2019).  Retrieved from:  https://legaldesire.com/how-former-pm-manmohan-singh-revolutionized-indian-economy-in-1991-92/

Macro Trends., “India GNI Per Capita 1962 – 2021,” Macro Trends (2021).  Retrieved from:  https://www.macrotrends.net/countries/IND/india/gni-per-capita

Trading Economics, “India GDP,” Trading Economics (2021).  Retrieved from:  https://tradingeconomics.com/india/gdp