Today is the era of globalization and liberalization where Indian establishments are in competition with some of the best international players. This has been possible because of the free market policies set by the Indian government which helped India become one of the strongest economies if the world ever since the License Raj Era of ’90.
During the License Raj era, entrepreneurs were not allowed to start organizations thanks to extremely cumbersome legal procedures and the entire decision making power was in the hands of the bureaucracy which was extremely corrupt and narrow-minded. Also since there were very few private players and since competition was hardly present, there was no incentive to develop higher quality products and innovate.
But during the post ’91 period, India has seen a number of much needed economic reforms focusing on economic freedom, free trade policies, foreign investment in the form of FIIs and FDIs, which has helped India develop and become a market for international trade and business.
Providing economic freedom is necessary to promote entrepreneurship, which has been one of the mainstays of the Indian economy. This has led to the establishment of several private players like the Tata Group, WIPRO, Birla, MAhindra & Mahindra, KIngfisher, Infosys, e. T. C. All of which are competent players in the international market and are flag runners for Indian economic growth.
India’s economy bouncing back to 8-9 per cent, overcoming multiple challenges including the slowdown in the global economy.
Governments can promote economic freedom by providing a legal structure and a law-enforcement system that protect the property rights of owners and enforce contracts in an evenhanded manner. However, economic freedom also requires governments to refrain from taking people’s property and from interfering with personal choice, voluntary exchange, and the freedom to enter and compete in labor and product markets. When governments substitute taxes, government expenditures, and regulations for personal choice, voluntary exchange, and market coordination, they reduce economic freedom. Restrictions that limit entry into occupations and business activities also reduce economic freedom.
As time goes on, these measures of economic freedom will improve and our understanding of the relationship between private property and free markets and economic performance will similarly improve. But in the great debate between economic freedom and political planning, the evidence is increasingly clear. Economic freedom leads to better economic results.
Hence I believe that it is important to give economic freedom rather than following old-fashioned theories of development.