ROLE AND IMPACT OF LPG POLICY ON INDIAN ECONOMY FOR SUSTAINABLE DEVELOPMENT

ABSTRACT

In order to acquire a seat at the highest table and to deal with a severe balance of payment crisis, India began a process of economic liberalization in 1991. The liberalization process has impacted the conditions of Indian economy in different organized and unorganized sectors, we have seen landmark shift in Indian Economy since the adoption of new economic policy in 1991. This had far reaching impacts on all spheres of life in India. There can be no concrete conclusions about their impact on Indian people. This turns out to be more of an ideological debate like capitalism vs Socialism. But there is no doubt in the fact that those reforms were unavoidable and very compelling. There was in fact, similar wave all across the globe after disintegration of USSR and end of the Cold War. Many Post-colonial democratic regimes, which were earlier sheltered by USSR, lost their umbrella. They had no option, but to fall in line to new unipolar world order dictated by USA. Even China in late 1980’s adopted ‘Open Door Policy’ through which it liberalized its economy by shedding communist mentality completely. South East Asian economies also reformed their economy and started engaging more with global economy. These along with China, pursued export led growth whereas Indian economy still relies almost wholly on domestic consumption.

This paper studies the Impact of Liberalization, Privatization and Globalization on Indian economy from the last 26 years i.e. 1991-2017. The Economic Reforms that made by government by New Economic Policy in 1991made significant impact on the Indian Economy. In terms of Increasing GDP, per capita Income, Increase in Foreign Direct Investment, Stock Market and employment pattern. The study also covers some negative impact of LPG policy on Indian Economy like Increase in Competition, growing personal disparities, excessive Privatisation has negative impact on MSME industries, gradually decline share of agriculture in GDP etc. So, this study is important to understand real impact of LPG on Indian Economy.

Keywords: Impact on Liberalization, Indian Economy, Economic Reforms, FDI, GDP, Employment.

Introduction:

By 1991, India still had a fixed exchange rate system, where the rupee was pegged to the value of a basket of currencies of major trading partners. India opened up the economy in the early nineties following a major crisis that led by a foreign exchange crunch that dragged the economy close to defaulting on loans. After independence in 1947, Indian adhered to socialist policies. Attempts were made to liberties the economy in 1966 and 1985. The first attempt was reversed in 1967. Thereafter a stronger version of socialism was adopted. The second major attempt was in 1985 by Prime Minister Rajiv Gandhi. The process came to a halt in 1987, through 1966 style reversal did not take place. The country ran out of foreign exchange reserves. India started having balance of payments problems since 1985, and by the end of 1990, the state of India was in a serious economic crisis. The government was close to default, its central bank had refused new credit and foreign exchange reserves had reduced to the point that India could barely finance three weeks’ worth of imports. It had to pledge 20 tonnes of gold to Union Bank of Switzerland and 47 tonnes to Bank of England as part of a bailout deal with the International Monetary Fund (IMF). Most of the economic reforms were forced upon India as a part of the IMF bailout. To face this crisis situation, the government decided to bring about major economic reforms to revive Indian economy. These reforms were popularly known as 'structural adjustments' or liberalization' or 'globalization’. The government announced a New Economic Policy on July 24, 1991.This new model of economic reforms is commonly known as the LPG or Liberalization, Privatisation and Globalisation model. Liberalisation refers to process of making policies less constraining of economic activity and also reduction of tariff or removal of non-tariff barriers. The term “Privatisation” refers to the transfer of ownership of property or business from a government to a private owned entity. Globalisation refers to the expansion of economic activities across political boundaries of nation states. More importantly perhaps it refers economic interdependence between countries in the world economy. Prime Minister of the country, P V NarasimhaRao initiated ground breaking economic reforms Dr. Manmohan Singh was the Finance Minister at that time he assisted NarasimhaRao and played a key role in implementing these reform policies. The fruits of liberalization reached their peak in 2007, when India recorded its highest GDP growth rate of 9%, with this India became the second fastest growing major economy in the world, next only to China. The growth rate has slowed significantly in the first half of 2012. OECD report states that the average growth rate 7.5% wills double the average income in a decade, and more reforms speed up the pace. There has been significant debate, however, around liberalization as an inclusive economic growth strategy. Since 1992 income inequality has depended in India with consumption among the poorest staying stable while the wealthiest generate consumption growth. As India’s GDP growth rate became lowest in 2012-13 over a decade, growing merely at 5.48% more criticism of India’s economic reforms surfaced, as it apparently failed to address employment growth, nutritional solutes in terms of food intake in calories and also export growth and there by leading to worsening level of current account deficit compared to the prior to the reform period. The reforms did away with the License Raj, reduced tariffs and interest rates and ended many public

monopolies, allowing automatic approval of foreign direct investment in many sectors. The primary objective of this model was to make the economy of India the fastest developing economy in the globe with capabilities that help it match up with the biggest economies of the world. (Kumar, 2014)The new economic policy 1991 welcomed the thought of lower taxes, less red tape, less paperwork, more space to work and less government interference.

Brief Literature Review:

Mali([2005)observed that small and medium enterprises (SMEs) and micro enterprises have to face increasing competition in the present scenario of globalization, they have to specifically improve themselves in the fields of management, marketing, product diversification, infrastructural development, technological up gradation. Moreover, new small and medium enterprises may have to move from slow growth area to the high growth area and they haveto form strategic alliance with entrepreneurs of neighboring countries. Data bank on industries to guide the prospective entrepreneurs including investors from abroad is also needed.Bala Subrahmanya(2006) investigated the impact of economic reforms on small scale industries. He mentioned that small scale sector has faced constraints in term of growth of units, employment, output and exports. He recommended that small scale industries in India should improve the technology and financial infrastructure therebythis sector can compete at the international level.Mukesh kumar(2014) in their paper entitled “ Impact of Economic reforms on India” made study with objective to find out the impact of Globalization on India and also study Performance of the corporate sector after 1991. Finding shows that during the 11-year period 1995-2006 India’s merchandise exports increased at the rate of 13.3 percent per annum and corporate sectors growth rate in sales and net profits is increased.Chetan Agrawal (2013) in their paper entitled “The Effects of Liberalization on the Indian Economy A Labour Force Perspective” made study with objective to carry out a comparative study of the conditions of Indian labour in the pre- and post-liberalization era and to study the claim made by the Indian government regarding the effect of Liberalisation on the Indian workforce. The comparative study shows the drastic change by the introduction of Liberalisation policy in the mindset and the condition of Indian labour was improved with regard to wages, productivity and industrial disputes. However, disappointment was expressed by the respondents with regard to labour welfare, social security, employment growth, human resources development and management and trade union membership.DR.Meenu (2013) in their paper entitled “Impact of Globalisation and Liberalisation on Indian Administration” study was made with objective to analyse the impact of globalisation and liberalisation on different aspects of Indian administration and changes introduced at different levels in Indian administration due to globalisation and liberalisationVaghelaDhariniIshvarsinh(2014) in their paper entitled “New Economic Policies: Liberalization, Privatization, Globalization ” made study on new economic policy of India under this descriptive study made on basis of secondary data he had given conceptual study of

Liberalization, Privatization and Globalization concepts and advantages and disadvantages of those concepts.

Objective of the Study:

To study the impact of new economic policy 1991 from inception to present (1991 - 2017).

To elaborate the negative impact by introduction of new economic policy.

Hypothesis:

Ho: There is no significant difference between pre and post liberalisation period on impact of Indian economy.

H1: There is significant difference between pre and post liberalisation period on impact of Indian economy.

Research Methodology: For the sake of the study the whole research paper is based on the descriptive study.

Data Collection: The data has been collected for the completion of the study from the various secondary sources i.e. Journals, Magazine, newspapers and different institutional websites.

Limitation of the Study: The Study was purely based on secondary data only.

Economic Reform Policy 1991: Economic environment is also called business environment and are used interchangeably. The economic reform policy is commonly known as LPG (Liberalisation, Privatisation, and Globalization).

Liberalization: Liberalization refers to slackening of government regulation in area of economic policies. Thus when government liberalize trade it means it has removed the tariff, subsidies and other restriction on the flow of goods and services between countries.

Privatisation: Privatization is closely associated with the phenomena of globalization and liberalization. Privatization is the transfer of control of ownership of economic resources from the public sector to the private sector. It means a decline in the role of the public sector as there is a shift in the property rights from the state to private ownership. The public sector had been experiencing various problems, since planning, such as low efficiency and profitability, mounting losses, excessive political interference, lack of autonomy, labour problems and delays in completion of projects. Hence to remedy this situation with Introduction of NIP’1991 privatization was also initiated into the Indian economy. Another term for privatization is Disinvestment. The objectives of disinvestment were to raise resources through sale of PSUs to be directed towards social welfare expenditures, raising efficiency of PSUs through increased

competition, increasing consumer satisfaction with better quality goods and services, upgrading technology and most importantly removing political interference.

Globalization: Globalization essentially means integration of the national economy with the world economy. It implies a free flow of information, ideas, technology, goods and services, capital and even people across different countries and societies. It increases connectivity between different markets in the form of trade, investments and cultural exchanges. The concept of globalization has been explained by the IMF (International Monetary Fund) as ‘the growing economic interdependence of countries worldwide through increasing volume and variety of cross border transactions in goods and services and of international capital flows and also through the more rapid and widespread diffusion of technology.’

The phenomenon of globalization caught momentum in India in 1990s with reforms in all the sectors of the economy. The main elements of globalization were;

1. To open the domestic markets for inflow of foreign goods, India reduced customs duties on imports. The general customs duty on most goods was reduced to only 10% and import licensing has been almost abolished. Tariff barriers have also been slashed significantly to encourage trade volume to rise in keeping with the World trade Organization (WTO) order under (GATT )General Agreement on Tariff and Trade.

2. The amount of foreign capital in a country is a good indicator of globalization and growth. The FDI policy of the GOI encouraged the inflow of fresh foreign capital by allowing 100 % foreign equity in certain projects under the automatic route. NRIs and OCBs (Overseas Corporate Bodies) may invest up to 100 % capital with repatriability in high priority industries. MNCs and TNCs were encouraged to establish themselves in Indian markets and were given a level playing field to compete with Indian enterprises.

3. Foreign Exchange Regulation Act (FERA) was liberalized in 1993 and later Foreign Exchange Management Act (FEMA) 1999 was passed to enable foreign currency transactions.

4. India signed many agreements with the WTO affirming its commitment to liberalize trade such as TRIPs (Trade Related Intellectual Property Rights), TRIMs (Trade Related Investment Measures) and AOA (Agreement on Agriculture).

Highlights of the LPG PolicyGiven below are the salient highlights of the Liberalisation, Privatisation and Globalisation Policy in India:

Foreign Technology Agreements Foreign Investment MRTP Act, 1969 (Amended) Industrial Licensing Deregulation Beginning of privatisation

Opportunities for overseas trade Steps to regulate inflation Tax reforms Abolition of License -Permit Raj

Impact of LPG in Indian EconomyPositive Impact: Gross Domestic Product

FY91

FY93

FY95

FY97

FY99

FY01

FY03

FY05

FY07

FY09

FY11

FY13

FY15

FY17

02000000400000060000008000000

10000000120000001400000016000000

Nominal GDP at current prices in Rs crore

Nominal GDP at current prices in Rs crore

Source: Compiled from various annual reports of RBI and World Bank

The size of the economy can often give the first impression of the might of a country. GDP gives the total worth of the goods and services produced in a country in one particular year. India’s GDP stood at Rs 5,86,212 crore in 1991. About 26 years later, it stands at Rs.1,57,15,539 crore. In dollar terms, India’s GDP mark $2.454 trillion in 2016-17. At present the India’s nominal GDP rank stood 6th in compare to the World nominal GDP. India is tipped to be the second largest economy in the world by 2050.

GDP Growth Rate, YOY in %

FY91

FY93

FY95

FY97

FY99

FY01

FY03

FY05

FY07

FY09

FY11

FY13

FY15

FY17

0

2

4

6

8

10

12

Real GDP growth, YoY in %

Real GDP growth, YoY in %

Grow

th R

ate

Source: World Bank

India remained the second fastest growing economy in the world, behind China until 2017.The highest GDP growth rate mark between 2006 to 2008 i.e. 9.5%, 9.6%, 9.3% respectively marked. The cliché of lowest GDP growth rate of India after the post liberalization is1.4% in 1992. With the NDA government revising the GDP growth figures and China slowing down, India is now being billed as the fastest growing major economy in the world, with a growth rate of 7.2% in 2016-17.

Foreign Direct Investment inflow in India India improved its ranking by one notch to 10 th position as one of the highest recipients of foreign direct investment (FDI) in 2016, as per latest World Investment report by UNCTAD. The list is topped by United States followed by Hong kong, China, Ireland, Netherlands, Switzerland, Singapore, Brazil and Canada. FDI inflows into India in 2016 calendar year jumped 18% to a record $46.4 billion, at a time global FDI inflows fell. Data released by the Department of Industrial Policy and Promotion (DIPP) showed FDI inflows in 2016 were strongest in October with $6.2 billion inflows followed by $5.1 billion in September. Global flows of FDI fell 13% in 2016 to an estimated $1.52 trillion as global economic growth remained weak and world trade volumes posted anemic gains, according to the latest UNCTAD Global Investment Trends Monitor.UNCTAD said FDI inflows into India fell 5% to $42 billion in 2016, yet India stood as the 10th most attractive destination in the world for FDIs. In comparison, China and Brazil received $139 billion and $50 billion FDI inflows respectively during 2016. The US remained the top source of FDI inflows in 2016 at $385 billion. Mauritius remained India’s top source of FDI inflows at $12.8 billion followed by Singapore at $7.1 billion during April-December period. Services sector continued to attract highest investment of $7.5 billion followed by telecommunications

sector which attracted $5.5 billion inflows during the first nine months of the financial year 2016-17.

19911993

19951997

19992001

20032005

20072009

20112013

20150.000

10.000

20.000

30.000

40.000

50.000

FDI in $ billion

FDI in $ billion

Source: World Bank, DIPP

Before 1991 the FDI inflow was negligible, at the inception year of reform saw a total foreign investment of only $74 million. However, investments have steadily risen since then, except for occasional blips between 1997 and 2000 and 2008 and 2012 – owing to the global economic slowdown. The FDI inflow in India from the inception since 1991 to 2016 is US $ 402.358 billion. The highest FDI inflow recorded in India in 2008 i.e. $ 43.406 billion, the biggest spurt of FDI inflow was started from 2006.

BSE and S&P Sensex:

FY91

FY93

FY95

FY97

FY99

FY01

FY03

FY05

FY07

FY09

FY11

FY13

FY15

1/7/2016

0

500010000

15000

2000025000

30000

S&P BSE Sensex

S&P BSE Sensex

Source: BSE

Before Liberalisation small fraction of Indian population plays in share market, the ups and down in share market reflect the economic condition and political scenario in the country. The BSE share index was slack on around 1000 level in 1991 in the next year it cross the 4000 mark.

Notwithstanding in Harshand Mehta Scam brought the downturn in the market ending 1992-93 below 4000 marks. The Sensex reached the high point of 15,644 by the end of 2007-08, but fell 38 percent to 9,708.50 points by the end of 2008-09. Since then, the Sensex has risen steadily to reach 25,341.86 points by the end of FY 16.

Per Capita Income:

FY91

FY92

FY93

FY94

FY95

FY96

FY97

FY98

FY99

FY00

FY01

FY02

FY03

FY04

FY05

FY06

FY07

FY08

FY09

FY10

FY11

FY12

FY13

FY14

FY15

FY16

FY17

0

20000

40000

60000

80000

100000

120000

Per capita net national income in Rs (at current prices)

Per capita net national income in Rs (at current prices)

Source: Economic Survey, CSO

Per capita income or average income measures the average income earned per person in a country at a specified year. Per capita income is a crude indicator of the prosperity of a country. It is calculated by dividing the area's total income or GDP by its total population. The per capita income has rose from Rs.6270 to Rs.103219 , it cover the great milestone 1546.236% from 1991 to 2017. However, there’s nothing to be euphoric about the number. India’s per capita income grew by 9.7% to Rs1,03,219 in 2016-17 from Rs94,130 a year ago. In 2015-16, the rate of growth of the country’s per capita net income stood at 7.4%. The Ex- governor of RBI Raghu Ram Rajan said with this number we are nowhere near ending poverty. “...We are still a $1,500 per capita economy. All the way from $1,500 per capita to $50,000, which is where Singapore is, there is a lot of things to do. We are still a relatively poor economy and to wipe the tear from every eye, one would at least want to be middle-income around $6,000-7,000 which, if reasonably distributed, will have dealt with extreme poverty. And that is two decades worth of work to be even moderately satisfied,” he said in a recent interview to The Times of India.

Share of different Sector of Economy (Agriculture, Industry & Service)

FY91

FY92

FY93

FY94

FY95

FY96

FY97

FY98

FY99

FY00

FY01

FY02

FY03

FY04

FY05

FY06

FY07

FY08

FY09

FY10

FY11

FY12

FY13

FY14

FY15

FY16

FY17

010203040506070

Sector Wise Contributor of GDP% Share in GDP

Agriculture & allied services Industry Services

Source:Statisticstimesinfo.com

Before liberalization policy 1991,the economy of India is based on the agriculture sector because most of the population involve in agriculture activities at that time. After liberalization reform the post period shows the gradual decline in agriculture sector contribution in Indian economy. The traditional occupation of Indians is agriculture more than 70% of population involve in agriculture activities, agriculture now contribute only 17.32% to the GDP of India 2017, which down from 29.5 % in 1991. The service sector has play the major role in propelling the economy at the global stage. The IT sector proves as the torchbearer of the service sector in India. Currently, it contributes around 53.66% to the national economy. In the meanwhile, the industrial sector has undergone marginal growth in the last 26 years it grew up by 5% from inception till now.

Services sector is the largest sector of India. Gross Value Added (GVA) at current prices for Services sector is estimated at 73.79 lakh crore INR in 2016-17. Services sector accounts for 53.66% of total India's GVA of 137.51 lakh crore Indian rupees. With GVA of Rs. 39.90 lakh crore, Industry sector contributes 29.02%. While, Agriculture and allied sector shares 17.32% and GVA is around of 23.82 lakh crore INR.

According to CIA Fackbook sector wise Indian GDP composition in 2014 are as follows : Agriculture (17.9%), Industry (24.2%) and Services (57.9%).  India has the second larger producer of agriculture product after china total production of China $1004.92 billion and India’s total production $366.592 billion. India has 7.68% of total world agriculture production. GDP of Industrial sector contribution is $495.616 billion and the world rank in industrial product production is 12th and the China is at the 1st position in production of agriculture product having output $4548.04billion. Services sector is the largest sector of the world. 63.5 percent of total global wealth comes from services sector, the service sector contribution of India in GDP $1185.792 billion and it has 11th work rank whereas the United States has 1st rank having contribution $13535.34 in there GDP, while the China has 2nd position in world rank having $4807.04 billion contribution in GDP through service sector.

Contribution of Agriculture sector in Indian economy is much higher than world's average (6.1%). Contribution of Industry and Services sector is lower than world's average 30.5% for Industry sector and 63.5% for Services sector.

Labour Force and Employment

Table: Organised Labour Force

Year Public Sector (in millions)

% of Increase in public sector

Private Sector (in million)

% of increase in private sector

Unemployment Register (in million)

% of increase in Unemployment

1975 13.63 --- 6.79 --- 9.78 ---1980 15.48 0.14 7.40 0.09 17.84 0.821985 17.68 0.14 7.37 0.00 30.13 0.691990 19.06 0.08 7.68 0.04 36.30 0.201995 19.43 0.02 8.51 0.11 37.43 0.032000 19.14 -0.01 8.65 0.02 42.00 0.122005 18.19 -0.05 8.77 0.01 41.47 -0.012010 17.54 -0.04 11.45 0.31 40.17 -0.03

Source: Wikipedia

1975 1980 1985 1990 1985 1990 1995 2000 2005 201005

1015202530354045

Public Sector (in millions)Private Sector (in million)Unemployment Register (in mil-lion)

Analysis it is clears from the above table and graph the Compound Annual Growth Rate (CAGR) of labour force engaged in public sector in pre-liberalisation period from 1975-1990 was 2.26% and in post-liberalisation period from 1995-2010 was 0.51%, the yearly growth rate was higher in pre-liberalisation in comparison to post liberalisation. In the same way the CAGR of labour force engaged in the private sector before liberalisation is 0.82% and after liberalisation it was 1.49% apart from this the CAGR of unemployment before liberalisation was 9.2% but after liberalisation it was decrease it become 0.35%. The analysis reveals that with the introduction of liberalisation policy 1991 the labour force who are engaged in the public sector they decrease gradually decrease but the labour force in the private sector is increased and the unemployment rate is also decrease.

Employment Pattern in India

Table: Distribution of Work Force in Different Sector

Economic Activity 1972-73 1983 1993-94 2009-10

Primary Sector (Agriculture & Allied Activities)

74 68.1 63.9 53.2

Secondary Sector (Mining and Quarrying, Manufacturing, Electricity, Gas and Construction)

11.2 13.9 14.9 21.4

Service Sector (Wholesale and Retail trade, Restaurant and Hotels, Transport, Storage and Communication, and others )

14.8 18 21.2 25.4

Total 100 100 100 100 Source: Various reports of National Sample survey Organisation, Planning Commission Eleventh Five Year Plan

1972-73 1983 1993-94 2009-100

20406080

Distribution of Worforce

AgricultureIndustryService

Year

Axis Title

Analysis the above table and graph depict that share of workforce deployed in agriculture was decline in pre to post liberalisation period from 74% in 1972-73 to about 53.2% in 2009-10. Along with this declines, the share of employment in industry increased from 11.2 per cent in 1972-73 to 14.9 per cent in 1993-94 and further to 21.5 per cent in 2009-10. Also the share of services in total employment increased from 14.6 per cent in 1972-73 to 25.4 per cent in 2009-10.

The upshot of this analysis reveal that GDP share of agriculture declined gradually, the corresponding decline in employment share did not take place in India. Meanwhile the GDP share of industry is increase step by step after liberalisation from the last two decades and the corresponding share of employment is also increase during the same period. This only indicates that the process of liberalisation fails to absorb the excess labour in agriculture during the expansion of industry. Thirdly the share of service sector in GDP is increase sharply about to 53% up to 2017 after liberalisation but they also failed to register a sharp increase in employment which was barely 15% as against a 25% increase in GDP during 1970-71 and 2009-10. From this

it follows that Indian did not experience sequence in the growth of GDP and employment in industry during the process of industrialization, but skipped to the post liberalisation phase of increasing its share of GDP as well as employment in services, though a relatively smaller increase in employment in the service sector took place. We may have to wait for some more time so those secondary and tertiary sectors are able to absorb more labour force in tune with their rising share in GDP (Banu, 2015).

Conclusion: The step of government towards the economic reform is proving to be worth full in the economic development of the society. There are many changes came after independence in our economy after the introduction of liberalisation policy the India is placed at 9th position in the world in terms of nominal GDP contribution and the growth rate is 7.6% in 2017.India is tipped second largest economy in the world up to 2050. By the initiation economic reform the foreign investors start making investment on different activities through FDI and by the inflow of foreign currency it strengthen the economy. The FDI is steadily risen since inception of economic reform except in 2000 and 2007 the global economic slowdown and the highest FDI inflow recorded in 2008 and at present 2017 $10.55 billion, by the inflow of FDI the players in stock market is also increases and it strengthen the capital market of India the Sensex reached at the highest point 15,644 at the end of 2007-08. But suddenly it starts decline in 2008-09 about to 38% to 9,708.5 points and after it steadily increases and tries to accomplish their milestone by reaching 25,341.86 points by the end FY 2016. The per capita income from 1991 to 2016 is Rs.6, 270 to Rs.1, 03,219 respectively and it steadily rise by 1546%, at it grew by 9.7%. But the reality is that most of the population of India is live below the poverty line at present. During the pre and post liberalisation period the different sector contribution in GDP is whopping step by step but the share of agriculture and their allied activities is gradually decline after economic reform from 29.5% to 17.32% at present even though 70% of the population involve in agriculture activities. After liberalisation the industrialization sector is increase step by step and it stood by 24.2% share in GDP in 2017 and with these the share of service sector is highest among the entire sector in GDP contribution i.e.42.6% to 53.6% from 1991 to 2017. Apart from the GDP contribution the share of employment is also increases except in agriculture sector but in the industry and service sector the share of employment in industry sector is increase at greater rapid face in comparison to service sector after liberalisation The services sector is booming, but it cannot help much to absorb the growing low- and unskilled labour force. The debate on spectacular growth of the Indian economy during the past two decades presents a wide range of optimistic as well as skeptic claims about strong basis of this growth. While it is generally accepted that India has been able to maintain a high growth rate so far, doubts about long-term sustainability of this growth can hardly be ignored. The main reason is that the Indian labour force is growing at about 2 percent per annum which is faster than that of China and other competitor countries. A majority of this labour force is going to be absorbed in the informal sector which has low productivity. India needs to take benefit of the advancement in IT sector to modernize its informal economy for increasing its productivity and to create more jobs for maintaining the fast growth of economy.

References:

Banu, D. N. (2015, May-June). Changing Occupational structure and Economic Condition of Farm labourers in India: A Study. Socio Economic voices, pp. 1-6.

Kakarlapudi, K. K. (April, 2010). The Impact of Trade Liberalisation on Employment: Evidence from India’s. MPRA, 1-33.

Kumar, M. (2014). Impact of Economic Reforms on India. International Journal of Informative & Futuristic Research, 47-53.

Ravan, S. V. (05 April 2016.). Impact of LPG on Indian Economy. Prime International Research Journal, 21-32.

Suman, D. (June, 2015). Liberalization and Performance of Micro, Small and. Suman, Apeejay - Journal of Management Sciences and Technology, 1-5.

http://www.livemint.com/Politics/JV5cFZfUieY1Orp5bL8SqM/FDI-inflows-into-India-jumps-18-to-a-record-464-bn-in-201.html

http://www.firstpost.com/business/25-years-of-liberalisation-a-glimpse-of-indias-growth-in-14-charts-2877654.html

http://www.livemint.com/Politics/EqruCBRa2NLXByxgIJZeNL/Per-capita-income-rises-97-to-Rs103-lakh-in-FY17.html .

https://tradingeconomics.com/india/labor-force-participation-rate