14.
Explanation
India’s trade policy since 1990 has undergone significant changes, transitioning from a largely protectionist regime to a more open and liberalized approach. Here’s a critical evaluation of this policy:
Positive Aspects:
1. Economic Growth: Trade liberalization has contributed to India’s impressive economic growth over the past few decades. Opening up to global trade has provided access to new markets, technology, and investment.
2. Export Growth: India’s exports have expanded considerably, with sectors like information technology, pharmaceuticals, and services achieving global competitiveness.
3. Diversification: Trade policy reforms have led to diversification of trade partners and products, reducing dependence on a few key markets.
4. FDI Inflows: Liberalization attracted significant foreign direct investment (FDI), helping in the development of infrastructure and industries.
5. Consumer Benefits: Lower tariffs and increased competition have led to lower prices and increased choices for consumers.
Challenges and Criticisms:
1. Trade Imbalances: India has faced persistent trade deficits due to a surge in imports, especially of crude oil and electronic goods, which can strain the balance of payments.
2. Income Inequality: The benefits of trade liberalization have not been equally distributed, and income inequality has widened.
3. Agriculture: Many argue that trade policy has not adequately supported the agricultural sector, which remains vulnerable to international price fluctuations.
4. Dependency on Services: India’s overreliance on services, particularly IT and BPO, can create vulnerability to shifts in global demand.
5. Non-Tariff Barriers: Non-tariff barriers and trade restrictions in other countries have hindered Indian exports.
6. Challenges in Regulatory Environment: A complex regulatory environment and inconsistent policies can deter foreign investment.
7. Trade Disputes: India has been involved in several trade disputes, which could have a negative impact on its international trade relations.
8. Trade Agreements: The effectiveness of trade agreements and negotiations in opening up new markets and addressing trade barriers has varied.
In conclusion, India’s trade policy since 1990 has brought about significant benefits in terms of economic growth, export diversification, and increased foreign investment. However, it also faces challenges, including trade imbalances, income inequality, and the need for more comprehensive support for the agricultural sector. The effectiveness of the policy depends on addressing these challenges, ensuring equitable growth, and continuing to adapt to a rapidly changing global economic landscape.