Overview

In 1991, India made a firm break with the past. Faced with bankruptcy, the government made a commitment to economic reforms in order to meet the conditions of a 'structural adjustment programme' devised by the International Monetary Fund (IMF). The pact envisioned a withdrawal of the licence-permit regime under which the government controlled private-sector business and progressive privatization of the public sector. The government also made a commitment to liberalize imports and facilitate exports. Further, the 'structural adjustment programme' called for a reduction and eventual elimination of subsidies to the agriculture sector, the public sector and to various influential lobbies. Despite the fact that the government did not have majority backing in Parliament, where the ruling Congress party controlled just 220 of the 540-plus seats, the reforms proposal did not face much opposition.

Traditionally, the government spells out its economic policies in the Finance Bill that is proposed to and passed by Parliament at the end of February each year. For most interested parties, therefore, the Finance Bill, which contains the government's budgeted taxation and expenditure proposals, is a major policy document. The significance of the Finance Bill has become even more acute since the reforms were introduced in 1991. All the major television networks carry the budget hearings live during prime time, followed by hours of analysis. Not to be left behind, the print media devote reams and reams of newsprint to news and analysis. Many newspapers...