The calculus of liberalisation

Despite a booming global economy, our share of world exports has, in fact, declined over the past five years

Liberalisation was born out of a balance of payments crisis in 1991. As non-resident Indians withdrew foreign currency deposits and international banks cut their lending lines, India sought help from the international community. Emergency funding was granted contingent on reforms that would make the economy more market-oriented and externally competitive. Almost three decades later, these external sector imbalances remain. Worse still, the liberalisation of trade and investment has left us with an economy that is fundamentally weakened and structurally fragile.

Over the past five years, our current account deficit has averaged 1.9 per cent (versus 2 per cent in 1990),