The Effects of Liberalization on the Indian Economy

In order to acquire a seat at the highest table and to deal with a severe balance of payment crisis, India began a process of economic liberalization in 1991. The liberalization process has impacted the conditions of Indian labour in the organized and unorganized sectors, both big and small, with regard to factors such as wages, labour welfare, trade unionism, social security, employability, labour utilization, job security, labour flexibility, employment growth and industrial disputes. This study has the following two main objectives: (i) to carry out a comparative study of the conditions of Indian labour in the pre- and post-liberalization era with regard to the above-mentioned factors; and (ii) to carry out an empirical study to test the claims made by the Indian government and noted authors regarding the effect of liberalization on the Indian workforce. The comparative study shows that drastic changes have occurred both in the mindset and the conditions of Indian labour due to the initiation of economic reforms in 1991. This has made government and business address issues such as welfare, social security and labour flexibility that were previously neglected. For the empirical study, surveys, interviews and secondary analyses were conducted, and the results clearly showed that the conditions of Indian labour after economic liberalization have improved with regard to wages, productivity and industrial disputes. However, disappointment was expressed by the respondents with regard to labour welfare, social security, employment growth, human resources development and management and trade union membership. The reasons given for the lack of progress range from a lack of political consensus to poor governance at the political and the administrative levels. India is a young country with an aging economy and in order to benefit from the economic reform, it has to ensure a balance between the market economy and the interests of Indian labour as a whole and develop and apply a set of regulations within which the market economy can work.