Topic 05 of 6 · Chapter 09 · Indian Economy
Impact of LPG Reforms — Achievements & Criticism
GDP growth, poverty reduction, IT boom, rising inequality, jobless growth — balanced assessment of 1991 reforms.
📋 In This Article
1. Achievements of LPG Reforms
✅ Major Achievements:
- Higher GDP growth: Growth accelerated from ~3.5% (pre-1991) to ~6-7% (post-1991)
- Poverty reduction: Poverty ratio fell from ~45% (1993) to ~22% (2011) to ~12% (2019)
- IT boom: India became world’s largest IT services exporter (~$200 billion/year)
- FDI inflows: Increased from $100 million (1991) to $83 billion (2021-22)
- Foreign exchange reserves: Increased from $1.2 billion (1991) to $600+ billion (2023)
- Consumer choice: More variety of goods at lower prices
- Middle class expansion: India’s middle class grew significantly
- Global integration: India became 5th largest economy
2. Criticism of LPG Reforms
📌 Major Criticisms:
- Rising inequality: Rich got richer; poor benefited less. Gini coefficient increased.
- Jobless growth: GDP grew but formal employment didn’t grow proportionally
- Agriculture neglect: Reforms focused on industry and services; agriculture lagged
- Regional disparities: Some states (Maharashtra, Karnataka, Tamil Nadu) benefited more than others (Bihar, UP)
- Informal sector: ~90% of workforce still in informal sector with no social security
- Environmental degradation: Rapid industrialisation caused pollution
- Farmer distress: Agricultural reforms were incomplete; farmer suicides increased
3. Before vs After 1991
| Indicator | Before 1991 | After 1991 (2023) |
|---|---|---|
| GDP Growth Rate | ~3.5% (Hindu rate) | ~6-7% average |
| Foreign Exchange Reserves | $1.2 billion | $600+ billion |
| FDI Inflows | $100 million/year | $83 billion (2021-22) |
| Poverty Rate | ~45% | ~12% |
| GDP Rank | ~12th largest | 5th largest |
| IT Exports | Negligible | ~$200 billion/year |
4. Key Points for Exam
🔑 Must-Remember Facts
- GDP growth: ~3.5% (pre-1991) → ~6-7% (post-1991)
- Poverty: ~45% (1993) → ~12% (2019)
- Forex reserves: $1.2 billion (1991) → $600+ billion (2023)
- FDI: $100 million (1991) → $83 billion (2021-22)
- India’s GDP rank: ~12th (1991) → 5th (2023)
- Criticism: rising inequality, jobless growth, agriculture neglect
- IT exports: ~$200 billion/year (world’s largest IT services exporter)
- Middle class expanded significantly post-1991
- ~90% of workforce still in informal sector
- Regional disparities increased post-1991