Three decades of liberalisation

The year 1991 marked a watershed in several aspects: fall of the Chandrasekhar government even while the then finance minister

Yashwant Sinha was ready with the budget; dismissal of the DMK government in Tamil Nadu; the finances of the Centre at the worse phase forcing  pledge of gold; LTTE violence peaking culminating in the assassination of Rajiv Gandhi; elections throwing up the Congress to form the government without a majority in the Lok Sabha; a dark horse, P V Narasimha Rao, assuming power with the surprise appointment of Dr Manmohan Singh as Finance Minister.

What a revolutionary change triggered by the duo!

Forty years of the economy characterised by licence-permit-quota raj was ended in one stroke. The budget set the economy on a new growth trajectory with liberlisation, market orientation, globalisation and wide-ranging reforms in monetary, fiscal and trade policies.  Imagine two devaluations of the currency in successive days! Manmohan Singh had a team of experts who supported him with enthusiasm – M S Ahluwalia, C Rangarajan, M Narasimham, Raja J Chelliah, P Chidambaram… Remember all these changes were made when P V Narasimha Rao’s Congress party did not have a majority in the Parliament!

Ahluwalia recalls how the trade policy underwent a dramatic change in just 8 hours. States enjoyed, for the first time, the freedom to attract foreign direct investments. Maharashtra, Tamil Nadu and Gujarat seized the opportunity with great alacrity!

Great changes on the global plane too, like the collapse of the USSR and the communists opting for market orientation as the new mantra.

Despite the unstable coalition governments that followed, thrust for reforms continued. These peaked during the NDA government headed by A B Vajpayee. A new telecom policy, privatisation of PSUs, a massive highway development programme, power sector and civil aviation reforms, the opening up of the insurance sector… All these reforms provided big stimulus and set the economy on a higher growth path. Competition among states also helped in attracting investments from across the globe.

The NDA and UPA governments also focused on building closer relations with other countries,  in particular the US. Despite the global financial crisis of 2008 the country continued to maintain its high growth till 2011.

The 25 year long coalition regime from 1989 constrained bolder policy reforms. This changed in 2014 with the return of the NDA II government with comfortable majority in the Lok Sabha. It took another five years for this party to gain such support for reforms in the Rajya Sabha also in 2019. The Modi government embarked on reforms with greater speed. Several new concepts like unique identification through Aadhaar, GST, Smart Cities, greater focus on MNREGA, privatisation of PSUs, Atmanirbhar, reforms in the power sector, the Ayushman Bharat, Swachh Bharat, Jal Shakti Abhiyan, farm reforms… were introduced.

With the average economic growth maintained at over 8 per cent for a decade, India was emerging  stronger. With GDP close to $ 3 trillion. India is already the fifth largest economy in the world. There has been a welcome reduction in poverty with the governments taking care of the basic human needs of health and education.

The Covid-19 pandemic had wreaked havoc slowing down growth and severely impacting lives and livelihoods. But the base laid through these 30 years has prepared the country to emerge stronger. The next three decades promise to make India a technology – rich nation.

In his birth centenary year, India remembers

P V Narasimha Rao for his bold vision in setting the country on the reform mode and to his wisdom in co-opting Manmohan Singh for this momentous task.