Impact of Foreign Policy on India's Growth

No one can forget the historic New Economic Policy of 1991 which changed the economic scenario not only for India but also for the whole world. The triple attack of Liberalisation, Privatisation and Globalisation (popularly known as the LPG Policy of the government) helped shape the demographic and economic scenario to what it is today. We might as well say that it saved India from the shackles of the licensing systems, existential role of public sector and a farthing of an incentive for the foreign companies.

One might argue that Globalisation, perhaps, has been the leading force of change among the three. Import liberalisation, export promotion, increase in the rate of interaction and interdependence with other nations and expansion of the market for customers has lead to free movement of goods, services, capital, labour, technology and information between India and the world. Global governance perspective with common acceptable mechanism for settlement of disputes has also earned India a feather in its cap. Increasing competition has turned it into a consumer-centric market, wherein customers also enjoy a wider choice of options. Rapidly changing technological environment has also cornered the Indian companies and PSUs to revamp their modus operandi.

Thanks to such a robust arrangement and continuous improvements, even after a gamechanging subprime crisis and hyper-active technological changes, India is the one economy which hasn’t shown signs of slowdown. O’Neill was proven wrong when four of his five conjectured BRICS economies failed to deliver the requisite – only India hiked on and recently surpassed the growth index of China. Adding to the euphoria were the general elections of 2014, as now under the banner of our Prime Minister Shri Narendra Damodar Modi, the legacy continues(so much so that it is also termed as the “Modi Doctrine”).

The prime agenda of the Modi Government has been improvement of relations with the other countries. “Under the leadership of Narendra Modi, the government has made its ties with India’s East Asian countries a precedence.”(Quora) The Indian Minister of Foreign Affairs Sushma Swaraj has proposed a new vista, naming it the Act East Policy, following from the Look East policy. In the light of the Neighbourhood First Policy, it may be pointed out that Modi is a strong believer in SAARC and hopeful that it will strengthen regional cooperation and developmental activities between the member countries. Now, the Indian foreign policy makers have started focusing again on its role in fostering institutions like SAARC to bolster regional cooperation. Greenfield Foreign Direct Investment has already skyrocketed – with India moving ahead of China. Some

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