The policy of Liberalization, Privatization, and Globalization (LPG) in India, while marked by notable successes, has also encountered substantial challenges and failures. Key challenges include:
Agricultural Crisis:
The agricultural sector has witnessed a slowdown in growth, leading to rural distress and crises in various regions. Crippling debt, low farm incomes, and reduced credit availability have resulted in widespread distress migration.
Economic reforms have failed to benefit agriculture due to reduced public investment in agricultural infrastructure, liberalization forcing small farmers into a competitive global market with falling prices, policy changes like reduced import duties and the removal of minimum support prices, and an emphasis on export-oriented growth favoring cash crops over food grains.
Changing Employment Pattern:
The inadequacy of widely dispersed and sustainable off-farm employment opportunities poses a challenge, contributing to divides and disparities. Growth without sufficient job creation hinders inclusivity and exacerbates existing divides.
Providing Essential Public Services to the Poor:
Ensuring universal secondary education and addressing gaps in health services, such as the availability of clean drinking water, remains a significant challenge.
Inadequacy of Physical Infrastructure:
Roads, railways, ports, airports, power supply, and communication in India are not on par with standards in competitor countries. Achieving quality infrastructure is an ongoing challenge.
Protecting the Environment:
Growing concerns for environmental issues, aligned with global trends, present a challenge. The threat of climate change poses a real and pressing challenge for future generations.
Slowdown in Industrial Growth:
Post-reform industrial growth has decelerated due to factors such as the adverse impact of globalization on local industries, decreased demand for domestic products due to cheaper imports, inadequate investment in infrastructure like power supply, and limited access to markets in developed countries.
Fall in Tax Revenue:
Post-reform, there has been a decline in tax revenue attributed to factors like tax reductions not translating into increased government revenue, reduced revenue scope from customs duties due to tariff reduction, and the provision of tax incentives to attract foreign investment.
Other Impacts:
Cultural erosion and a lopsided growth process are additional challenges observed in the Indian economy.
These challenges underscore the complexity and multifaceted nature of the LPG policy’s impact on various sectors of the Indian economy.
Objective Type Questions
1.What is a major challenge faced by the agricultural sector in India due to the LPG policy?
A. Increased credit availability
B. Growth in farm incomes
C. Rural distress and crises
D. Enhanced public investment
Answer: C. Rural distress and crises
2. Why has economic reform failed to benefit agriculture according to the passage?
A. Increased public investment
B. Policy changes favoring food grains
C. Reduced credit availability
D. Liberalization promoting competitive global markets
Answer: D. Liberalization promoting competitive global markets
3. What is a consequence of the inadequacy of off-farm employment opportunities mentioned in the passage?
A. Enhanced inclusivity
B. Exacerbation of divides and disparities
C. Rural distress
D. Increased job creation
Answer: B. Exacerbation of divides and disparities
4. What remains a significant challenge in providing essential public services to the poor according to the passage?
A. Achieving universal secondary education
B. Availability of clean drinking water
C. Adequate credit availability
D. High farm incomes
Answer: B. Availability of clean drinking water
5. What contributes to the challenges in the physical infrastructure in India as per the passage?
A. Parity with standards in competitor countries
B. Quality infrastructure already in place
C. Limited access to markets in developed countries
D. A surplus in power supply
Answer: C. Limited access to markets in developed countries