Interview with current Indian PM Singh: Overview of post-1947 Indian economic history

-Problems with central planning

But the real problem starts after 15 or 20 years, because the central-planning system that we have evolved and [that] other countries have evolved lack an effective incentive system to modernize on a progressive basis, to improve productivity, to bring new technology.

- How central planning led to corruption?
it was inevitable, because in an economy where resources are scarce [and] demands are too many, you need rationing, you need controls, and therefore you need permit license rights. In the initial stages, these controls were introduced in the name of introducing greater rationality into the allocation process. But after a period of time they became instruments of corruption.

- How it choked off economic growth

If you have a rigidly controlled economy, cut off from the rest of the world by infinite protection, nobody has any incentive to increase productivity and to bring new ideas. Therefore, the license Permit Raj became a great handicap in carrying forward the sustained process of sustained growth.

the information system that was necessary to rationally implement these controls, that also got bogged down, so I think it became a factor....

- Bankruptcy of the Soviet model
Therefore the collapse of the Soviet Union -- the end of the Cold War was also a major factor -- influenced thinking on economic reforms in our country, as it did other countries.

-Fundamental Change of govt. policy in 1991

We got government off the backs of the people of India, particularly off the backs of India's entrepreneurs. We introduced more competition, both internal competition and external competition. We simplified and rationalized the tax system. We made risk-taking much more attractive... [and] much more profitable. So we tried to create an environment conducive to the growth of business. We removed a large number of controls and regulations, which in the past had stifled the spirit of innovation, the spirit of entrepreneurship, and restricted the scope for competition, both internal competition and external competition. As a result, in the '90s, productivity growth in the Indian industry has been much faster than ever before.

- Arguments for advocating economic reforms

It would release the innovative spirit, [the] entrepreneurial spirits which were always there in India in [such] a manner that our economy would grow at a much faster pace, sooner than most people believed. That's exactly what happened.

- Future role of government

But the government will not be in the business of running industries and running trading enterprises.

It is restructuring the role of the government, getting government out of activities where governments are not very efficient at doing things, getting government more actively involved where we feel markets alone cannot provide the necessary amount of goods to the extent that our people need -- basic education, basic health care, environmental protection measures, basic social safety net.

- On success of IT

if the information technology industry had been regulated in the same way as we had regulated other industries, I think that revolution also would have been stopped in its infancy.

One good fortune is [that] the information technology sector has been left alone. Government has played a more promotional role, but not a regulatory role, and that's why I think the favoring of creativity, the favoring of entrepreneurship ... was a help.