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Unit 21 Liberalisation Structural Adjustment 3 MSO3English Medium IGNOU Sociology by Dr Sushma Singh - YouTube
Channel: Dr. Sushma Singh
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hello welcome dr sushma singh this side today in聽
unit 21 liberalization and structural adjustment聽聽
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program we are going to start the lecture with聽
the topic the official crisis management scheme
[21]
in the aftermath of 1991 oil shock that聽
was followed by kubat invasion by iraq聽聽
[28]
the immediate tasks at hand were聽
to reduce inflation cut fiscal聽聽
[34]
and trade deficit increase forex inflows聽
and bring the economy out of depression聽聽
[43]
especially industrial recession the view among聽
us to the economic managers of the doctor聽聽
[51]
singh's team was that the high fiscal deficit聽
was leading to an overheating of the economy聽聽
[59]
it was increasing the aggregate demand in聽
the economy causing an increase in prices聽聽
[67]
which was also spilling over the external聽
account and increasing the trade deficit
[76]
the increased fiscal deficit meant higher聽
borrowing by government to finance its聽聽
[82]
expenditures this raised interest rates in the聽
economy and crowded out private investments聽聽
[92]
a reduction of the fiscal deficit on the other聽
hand would have a positive impact it would bring聽聽
[100]
down the interest rate reduce the interest burden聽
have deflationary pressure which would bring the聽聽
[109]
town prices and help close the trade gap since one聽
single variable was held responsible for all this聽聽
[120]
it is but obvious that the target of adjustment聽
policy was the reduction of the fiscal deficit聽聽
[128]
the three commonly used measures are revenue聽
deficit is equal to revenue expenditures聽聽
[136]
revenue received fiscal deficit revenue deficits聽
plus net capital disbursement and primary deficit聽聽
[146]
equal to fiscal deficit minus disinvestment聽
receipts minus gross interest payments
[156]
prior to the economic reforms the most聽
common measures of the government's聽聽
[161]
balance was the budget deficit however this聽
was found to be too low narrow in a measure聽聽
[169]
of the government's overspend and therefore the聽
fiscal deficit was adopted at the standard measure聽聽
[177]
of the government's overspend there are聽
two related questions that come up here聽聽
[184]
these single-minded efforts to reduce聽
the fiscal deficit is it justificable and聽聽
[194]
has it yielded results the neoliberal economic聽
doctrine described above that was propagated by聽聽
[204]
the world bank and imf linked all ills of the聽
economy to the rise in fiscal deficit however聽聽
[215]
rakshith found that the empirical evidence in聽
support of the structural adjustment program was聽聽
[221]
weak rate of inflation and the export import gap聽
had little to do with the level of fiscal deficit聽聽
[230]
calling into the question the very justificability聽
of the structural adjustment program
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gauche felt that what was required to stabilize聽
the economy was not for the trade liberalization聽聽
[247]
but agarian change since the bulk of the indian聽
population was dependent on the sector in the聽聽
[256]
first two years of the reform program the聽
center introduced severe budgetary cuts聽聽
[263]
which were directed at reducing subsidies聽
social sector spending and capital expenditures
[274]
as a consequence of this revenue deficit as聽
well as the fiscal deficit declined briefly聽聽
[281]
but by the mid 90s these聽
returned to the pre-reform level聽聽
[287]
in fact the one who deficient persistently聽
exceeded the 1990-91 figure by 1998 and 99
[300]
the share of revenue deficit in the fiscal聽
deficit grew from below 50 to 78 percent聽聽
[309]
this means that excess government spending was not聽
for asset creation but the consumption purposes
[319]
it seems that the fiscal deficit itself has聽
been declining that should be reason to cheer聽聽
[328]
however a close look at the聽
data tells another story聽聽
[333]
the centers deficit are only a part of the聽
overall deficit of the center and states combined聽聽
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data clearly shows that the revenue deficit has聽
increased persistently and fiscal deficit has聽聽
[350]
hovered around the pre-liberalization figure so聽
despite the fairly reversed growth of the economy聽聽
[358]
and the wild ranging fiscal changes that have聽
been undertaken we continue to have a government聽聽
[365]
that invest too little and consume too much聽聽
[370]
further the center very quietly is passing on聽
its fiscal responsibilities to the states so聽聽
[378]
while the center seems to be improving its聽
fiscal performance it is the states which聽聽
[385]
have to suffer the fiscal burden of reform the聽
major problem large debts and deficits pose for聽聽
[395]
any government is the burden of servicing the debt聽
in fact the central government has an interest聽聽
[406]
liability amounting to more than 4.5 percent聽
as a proportion of gdp this is a large drain聽聽
[415]
on the government's limited revenues聽
and species expenditures on other hands
[423]
here we want to close this聽
lecture thanks for listening
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