todo
Situation in 60s/70s
- import substitution: high taxes on imports
- high direct taxes, but tax inefficiency → tax collection not high
- purchasing power & income low → low tax revenue
- govt took large debts to run welfare scheme
- large borrowing → large interests
- caused issues with intergenerational equity
- PSU inefficient, produced materials at higher cost
- govt continued vital imports
- costlier goods → high inflation
- higher trade deficit
- situation worsened by global oil crisis 70s
- licence raj → manufacturing companies working at suboptimal level
- agri not performing yet
Story