Explain the changing role of state …

The changing role of state is reflected in the eighth five year plan which mentioned that the planning in India will be indicative increasingly. In order to give some correctness to the changing role of state the eighth five year plan has identified the principles governing public sector. These are :

1. The public sector must withdraw from the areas where no public sector is served by its presence.

2. State should make investments only in those areas where investment is of main infrastructural nature where private sector is not likely to come forth to an adequate extent within a reasonable time perspective.

After that we saw a major shift in the Indian economy and the role of state has been changing from a controller, regulator and participator to that of a facilitator, observer and guide. The changes that took place in the role of state since 1991 are as under:

1.  Before economic reforms, government had its share in all sectors of the economy.  It was producing bread, butter, biscuits, milk, running hotels and many of these were actually not required to be in public sector. Government withdrew herself from these sectors through delicensing, deregulation and disinvestment. 
2.  As a regulator, during 1947-1990, Government regulated all activities with the laws and acts. But after 1991, except some basic and strategic goods and services, decisions were made to be market driven. For this purpose, regulatory authorities were set up for different sectors.
3. Since 1991, Government has focused its attention on development of social sector like education, health, defence, law and order.

Overall, we can say that the role of state has changed from producer to production facilitator.