1. Compare between the economic features of pre reform and post reform India.

Answer:
Pre reform and post reform India has different specific. features. The economic system that
developed in India after 1947 was a mixed economy and in 1991 the government of India took
the economic reform program.

1.
2.
3.
4.
5.
6.
7.
8.
9.

Pre reform India

State owned enterprises.
Centralized planning.
Subsidies by government.
Constrained in the growth of private
sector.
High import duty.
Difficult labor law.
Access to foreign exchange system was
limited.
Foreign investment was restricted.
Market price of products was
determined by the government.

Post reform India

1. Privatized state owned enterprises.
Private sector growth in electricity,
steel industry, air transport and
telecommunication industry.
2. Decentralized planning.
3. Subsidies by government.
4. Increasing growth of private sector.
5. Import duty was decreased. Raw
materials and many industrial goods
could be freely imported.
6. New labor law was introduced.
7. Increase in Foreign direct investment.
8. Foreign equity stakes up to 51% by
foreign investors was approved.
9. More open market economy which
determines the market price through
demand and supply.

2. Evaluate the performance of pre reform and post reform India.

Answer:
The pre reform economic system of India which is more of a closed economic system was
incapable of delivering the progress. In the meantime many Southeastern Asian countries had
started to enjoy their economic progress. Indias GDP per capita was $310, less than half of
Indias population could read; only 6 million could access the telephones and only 14% of the
population had access to clean sanitation. World Bank estimated that some 40% of the worlds
desperately poor lived in India.
The lack of progress of the pre reform economic system led the Indian government to initiate an
ambitious economic reform program; in which state owned enterprises was privatized; private
sector investment was encouraged in electricity generation, oil industry, steel making, air
transportation and telecommunication. Tariff was reduced from 400% to only 65%. Corporate tax
declined to only 35% in 1997 from 57.5%. The result of this economic reform has been
impressive. The economy expanded at an annual growth rate of about 6.3% from 1994 to 2004,

and then accelerated to 9% annually during 2005-2008. Foreign investment jumped from $150
million in 1991 to $36.7 billion in 2008. Indias software development sector emerged with sales
of $50 billion in 2007, which is about 5.4% of Indias GDP. Indias pharmaceuticals industry was
also flourished and emerged as credible players on the global marketplace.

3. Relate the lesson to Bangladesh.

Answer:
Bangladesh followed a socialist economy by nationalizing all industries after independence; it
experiences a slow growth of producing experienced entrepreneurs, managers, administrators,
engineers and technicians. Foreign exchange system was not developed enough. Bangladeshi
people were largely illiterate, unskilled and underemployed. After 1975, Bangladeshi leaders
began to turn their attention to developing new industrial capacity and rehabilitating its economy,
the pre reform economic model resulted in inefficiency and stagnation. Beginning in the late
1975, the government gradually gave greater scope to private sector participation in the
economy. Many state owned enterprises have been privatized, like banking, telecommunication,
aviation, media, and jute. In the mid 1980s there were encouraging sign of progress. Economic
policies aimed at encouraging private enterprise and investment, privatizing public industries,
and liberalizing the import were accelerated.
Bangladeshs economy is characterized as poor and developing, despite several improvement
efforts at the national and international level. In 2013, the per capita income of the country stood
at $1,024, while the world average is $10,200. As of 2012, the literacy rate in the country is
about 57.70%. The poverty rate is still very high. World Bank report in July 2005 states that the
poverty has seen a decline of 20% since the early 1990s. Bangladesh has experienced a growth
rate of 5% since 1990. According to the World Ban, Bangladesh has achieved growth of 5.7% in
FY2009.