A reset of the 1991 liberalisation policy is needed with a focus on social spending

Rahul Gandhi, P Chidambaram, Anand Sharma and Siddaramaiah at Congress Chintan Shivir in Udaipur on Day 2.

In Udaipur, Rahul Gandhi, Anand Sharma, P Chidambaram, and Siddaramaiah attended the Congress Chintan Shivir on Day 2.

In an interview with journalists at Chintin Shivir in Udaipur, former Finance Minister P Chidambaram said that the Congress is working on a post-liberalization policy.

The former finance minister called for a re-evaluation of the 1991 economic policy. “A Congress-led government ushered in a new era of liberalisation in 1991,” Chidambaram said.

As a result of the 10 years, the country has created enormous wealth, created new businesses and entrepreneurs, created a vast middle class, created millions of jobs, exported and lifted 27 crore people out of poverty. In light of recent global and domestic developments, it may be necessary to re-set economic policies after 30 years.”

He said, “We need to move forward and not backwards,” when asked if this meant reversing the reforms initiated by Narsimha Rao and Manmohan Singh. Chidambaram also said that we do not intend to review or re-evaluate the 1991 liberalisation, but to re-set the policy framework instead.

The 1991 reforms occurred 30 years ago. India has also changed. A re-set means embracing global developments and fine-tuning them to India’s needs,” Chidambaram said.

Social infrastructure will be heavily financed by the Congress. Chidambaram said, “A comprehensive review would also be justified by the health and education outcomes as indicated by the Annual State of Education Report 2021 (ASER 2021) and the National Family Health Survey-5 (NFHS-5). It is our belief that economic policies can influence health and educational outcomes.”

It is a shift from the economic policies hammered out by Rao and Manmohan Singh after 1991. The Economist reported that India spends 10 percent of its gross domestic product on welfare and 87 percent on public debt. In response to inflation and the global tightening of monetary policy, India’s central bank raised interest rates on May 4th from 4% to 4.4%.

Chidambaram was non-committal on the final draft, but based on the Congress’ initial statement, it marks a shift towards farm and social sector spending that would aid them in differentiating themselves from the BJP politically. Only challenge is that BJP has already created a near-perfect delivery mechanism for the poorer segment of Indian society that Congress will not be able to match. This is why the NYAY policy failed to deliver at the 2019 Lok Sabha elections.

According to Chidambaram, resetting economic policies must also address rising inequalities, extreme poverty among the lowest 10 percent of society, India’s ranking in the Global Hunger Index 2021 (101 out of 116 countries), and widespread nutritional deficiencies among women and children. Several sources said that Congress should return to its traditional voter base of farmers and the social sector since those constituted its primary social base.

The Congress Working Committee will meet on Sunday to approve the resolutions of the six committees that have been appointed. Sonia and Rahul Gandhi will conclude Chintin Shivir.