Q."The 1991 economic reforms had both positive impacts and genuine limitations." Discuss.

The reforms delivered real growth and integration gains, but also left real gaps — jobless growth, inequality, and continuing agrarian distress among them.

The LPG reforms of 1991 are best assessed with both their achievements and their shortcomings held together, rather than treated as an unqualified success or failure.

Positive impacts:

1. A higher and more sustained rate of GDP growth than the pre-reform decades.
2. Foreign exchange reserves rebuilt substantially, giving far greater external resilience.
3. Large inflows of FDI and FPI/FII, bringing capital, technology, and management practices.
4. Rapid growth of the services and IT sector, a major driver of growth, exports, and employment.
5. Greater competition, consumer choice, and product quality from reduced licensing and import restrictions.
6. Diversified and growing exports, and the emergence of globally competitive Indian companies.

Genuine limitations/criticisms:

1. "Jobless growth" — output growing faster than employment, since much growth is concentrated in capital/skill-intensive sectors.
2. Rising income and regional inequality, with gains concentrated more in urban areas and services than in rural areas and agriculture.
3. Continuing agrarian distress, since agriculture did not benefit from the reforms to the same extent as industry and services.
4. Competitive pressure on the small-scale and informal sector from stronger domestic and foreign competition.
5. Greater exposure to global economic shocks — financial crises, volatile FII flows, and imported inflation. …