The impact of economic reforms has been that rich people have become richer and poor people poorer


In 1991, when the foreign exchange reserves had reduced to such an extent that India could barely finance three weeks’ worth of imports. Economic reforms were introduced in Indian economy. Before 1991, India was closed for foreign companies. It was a period very much known as License Raj. During this period, up to 80 agencies had to be satisfied before a firm could be granted a license to produce and the state would decide what was produced, how much, at what price and what sources of capital were used. The government also prevented firms from knocking off workers or closing factories. Indian economic policy was influenced by the colonial experience. There was monopoly in many sectors by state owned enterprises. This was the period which encouraged the corruption and red tape system in India. The annual growth rate for India during 1950 – 1980 was around 3.5 % compared to 9 % in 2009.

During the national economic crisis of 1991, when India was on the verge of Bankrupt, Government of India decided to bring up several economic reforms. Then PM, Mr. Narshimha Rao, appointed Manmohan Singh as a special economic adviser to implement the reforms. These reforms were mainly focused on liberalizing foreign investment and privatization of loss incurring government corporations. Some latest results have revealed that the scope and pattern of these reforms in India’s foreign investment and external trade sectors followed the Chinese experience with external economic reforms.

The impact of these reforms were seen in just few years as the total foreign investment in India grew from a infinitesimal US $132 million in 1991-92 to $5.3 billion in 1995-96. In initial years of reform, 1991–1992, poverty increased in India slightly. But, later on number of people below poverty line decreased. And, a steep declined in number of person below poverty line in between 1993 to 1998 was seen. Currently, number of middle class in India is expected to be 300 million, which is expected to double by 2025 to 600 million. It is sure that as the economy of India will boom, new millionaire and billionaire will join the list. There will be new addition in the upper class list, mostly coming out of present middle class. Also, the 300 million new middle class people must come from non-other than lower class or poor people list. These trends are taken from the last 5-10 years data. So, the poor are quickly transforming in middle class with increase in their earnings. This shows that the impact of economic reform is helping poor to convert them into middle class. So, impact of economic reforms has not been that poor people have become poorer. But, yeah rich people have become richer.

With revolution in many sectors in India, GDP of India has showed a tremendous growth. Telecom sector is very much saturated in metropolitan and many urban cities. Now, new companies are aiming at rural area with immense network of towers coming around rural sectors. Obviously, this is going to strengthen rural economy. Till now, urban economy has played a major role in economic progress of India after the reforms. However, with improving the network of roads in rural areas and good communication, our villages are going to see sure success. This all is going to help the poor.


Management Education is only for the Rich


Last year, I sat for the CAT exam for the first time. On the very day, I reached at the exam center a bit early than the reporting time. Other aspirants were coming to take the CAT. Waiting at the gate I was observing almost all the candidates arriving to take the test for that slot. I found a very different scenario than that I used to see at the exam center during IIT JEE. Most of the girls were coming on a car with parents or siblings. Few girls were coming on a two wheeler and, very few by auto. Boys were basically coming mainly on bikes with friends. There was huge number of vehicles compared with just around hundred candidates. But, at the IIT JEE center very few people used to come on car, few with bike and mostly by auto. The trend was very easy to understand that management courses attract upper middle class more than lower middle class or poor.

Management education is getting expensive day by day. Some IIMs have increased their fees to more than 12 lakhs. Nearly, all the top 30 institutes have a fees range of 7 lakhs – 15 lakhs. This is creating a huge pressure on the aspirants. Those whose family income is not even 3-4 lakhs, how can they think to study in these institutes on their own. There are institutes who are offering management course at even less than 2 lakhs. However, most of them have poor placement scene. Who would prefer to start their career at less than Rs. 20,000 if they can get starting salary more than Rs. 50,000?

The only hope for the lower middle class or poor student is bank loan. But, there are a lot of requirements for the banks for giving a loan. Other than for the case of meritorious students seeking loan for prestigious institutes, banks ask for an account in their bank, active for at least past six months. Plus, one needs to submit an insurance policy of the candidate. One most important process is to submit the annual simple interest incurred on the amount withdrawn for loan till you get the job or six months after passing the course, whichever comes earlier. These are few requirements for applying for a bank loan. But, still it may happen that processing a bank loan took a long time.

Just suppose a person takes a loan for taking admission to a B-school with yearly expenditure of around Rs. 300,000. So, yearly interest to be paid to the bank will be around Rs. 36,000 – 40,000 for the first year. During second year this will be just around double at around Rs. 75,000. This amount is to be generally paid by the parent. Which in no way is a small amount for many middle class families? These amounts do not include the basic expense for a student, like mobile, conveyance, clothing, etc. Just imagine the burden on a student’s family.

Management institute seeks intelligent candidates having good communication skill in English and who is smart. The best institutes focuses on those candidates who is well-balanced with all these features. Even one of these is a bit less. Your chance is little to get an admission letter. As English is not first language for most of the lower middle class or poor student, neither the surrounding in which they live gives stress on learning English, the students from these class are generally weak in English. One needs a good encouraging surrounding to develop the English to the level required by B-schools. A good option for this is to join a good coaching to get students seeking to clear management entrance. But, this needs money. Most of the institutes have fees around Rs. 15,000 to Rs. 40,000 plus other expenses.

At every step, non-rich students face problem in getting management education. Even if someone is extra talented, there are big obstacles for them also. But, for the rich most of the steps are easier with the money. Therefore, in my opinion “management education is only for the rich”.