In this article we will discuss about the arguments in favor and against of new economic policy.
Arguments in Favor of New Economic Policy:
The New Economic Policy introduced by the Government of India since 1991 has been subjected to some arguments in its favour.
Following are some of the arguments in favor of such reforms:
(i) Raising the rate of economic growth of India to about 8 per cent at par with other Asian countries like Singapore, Malaysia, Hong Kong, South Korea etc.
(ii) Economic reforms is helping the country to attain growing competitiveness in its industrial sector to face global competition.
(iii) New Economic Policy aims to reduce the extent of poverty and inequality in the distribution of income and wealth.
(iv) The new policy has been taking steps to raise the efficiency and profitability of public sector enterprises.
(v) The new policy is promoting the private sector investment in important areas.
(vi) The new policy is taking steps to develop small scale industries (SSI).
(vii) The new policy is taking various steps to raise the flow of foreign direct investment in the country.
(viii) The new policy has been taking steps to contain the fiscal deficit in the budget.
(ix) The new economic policy has been able to contain the trend of growing disequilibrium in the balance of payments and has been able to raise the reserve of foreign exchange through export promotion and discouraging imports.
(x) The new economic policy has undertaken some measures to control the inflationary rise in prices by checking deficit financing, controlling the volume of public expenditure and also by better supply management. Thus the New Economic Policy has been taking some important steps for accelerating the growth rates of the economy and also to correct the maladjustments of the economy.
Arguments against New Economic Policy:
Following are some of the arguments advanced against the New Economic Policy of the country:
(i) The new economic policy has neglected the agricultural sector as compared to that of industry, trade and services sector.
(ii) The policy has introduced the policy of liberalisation and globalisation of the economy under the pressure of World Bank and IMF and leads to complete surrender of the economy to these international bodies.
(iii) The new policy has increased the dependence of the economy on foreign technology and has failed to improve the indigenous technology.
(iv) The policy has increased the dependence of the country on foreign assistance and has multiplied the volume of external debts.
(v) The new policy has led to the loss of economic sovereignty of the country by allowing the sale of equities of Indian Companies to foreign investors.
(vi) The new policy has aggravated the problem of unemployment by introducing the scheme of large scale retrenchment of workers through the introduction of its exit policy without making any adequate provision for alternative scope of employment.
(vii) The new policy has been providing too much stress on privatization neglecting the commitment to the society for the improvement of social sector.
(viii) The new policy has been encouraging a dangerous trend of consumerism by encouraging the production of luxuries and items of elitist consumption.
(ix) The new economic policy has failed to correct the macro-economic parameters as it has failed to control the rising trend in prices, check fiscal deficit, control subsidies, controlling non-plan expenditure of the Government etc..