Part - I

A Background

A true market economy, in the theoretical sense of the term, is a hypothetical proposition. In any economy, the Government, by definition, is bound to have interests in certain sectors. What distinguishes a more market friendly economy from another is the extent to which the Government's policies shape the functioning of the "market". Hence, to begin with, market economy or market-friendliness of an economy is undoubtedly a relative term. It is also to be noted that like any other public action, reforming an economy by changing the role of the Government from an "interventionist" to a "minimalist" one is to be judged primarily from both the perspectives of efficiency and effectiveness. An easy way to distinguish between the two is by arguing that an efficient transition in an economy is brought about by a Government that is committed to "doing things right" while an effective change is brought about by "doing the right things". Thus, when situations in early nineties, external and otherwise, forced the Indian Government to reform the economy, it was thought to be an effective way to absorb the shocks that it was being subjected to. Today, after more than a decade past, when one reflects upon the extent to which the proposals have been fructified, one is more inclined to look at the impediments to their efficient implementation, if any. This essay, therefore, is not to question the basis of the reforms but given the reforms, to look at where the economy stands vis-à-vis where it is intended to reach. Given the scope, one wishes to restrict the term "market" largely to the commodity market. Money market characteristics of India and its limitations (e.g., a soft regulatory authority or a high degree of speculation) closely follow those of other emerging economies and have been dealt with at length in past literature.

The present market scenario in India can be analyzed from three aspects. Firstly, a look at the very nature of the Indian market shows why it should be distinguished from other "emerging economies" and hence what are the possible strategies that the corporate sector can adopt in order to align such a market to its objectives. Secondly, one can look at what is in it for the consumers and in what sense can one measure the market-readiness of the country from their perspective. Finally, a look at the macro picture illustrates the possible areas where the Government can "chip in" to make India ready for the market economy.

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*Contributed by -
Suchintan Chatterjee,
Post Graduate Diploma in Computer Aided Managemnet (PGDCM),
IIM Calcutta.