P. V. Narasimha Rao Reforms.
P. V. Narasimha Rao was the 10th Prime Minister of India who ushered in an era of economic reforms in 1991. He took charge of the country when it was facing a severe balance of payments crisis and was on the verge of bankruptcy. He appointed Manmohan Singh as his finance minister and together they initiated a series of bold measures to liberalise the Indian economy and integrate it with the global market.
Some of the major reforms that Rao’s government implemented were:
- Devaluation of the Indian rupee by 20% to boost exports and reduce imports.
- Abolition of industrial licensing for most sectors, except for 18 industries related to security and environmental concerns.
- Reduction of import tariffs and removal of quantitative restrictions on imports.
- Allowing foreign direct investment (FDI) up to 51% in select sectors such as telecom, hotels, airlines, etc.
- Opening up the capital market to foreign institutional investors (FIIs).
- Privatisation of public sector enterprises through disinvestment.
- Rationalisation of taxes and introduction of value-added tax (VAT).
- Strengthening of the banking and financial sector through prudential norms and regulation.
These reforms had a profound impact on the Indian economy and society. They unleashed the entrepreneurial potential of millions of Indians and created new opportunities for growth and development. They also increased the competitiveness and efficiency of Indian industries and services. They enabled India to cope with the challenges of globalisation and technological change. They transformed India from a closed and stagnant economy to a dynamic and emerging one.
Rao’s reforms were not without opposition and criticism. He faced resistance from within his own party, especially from the left wing, who feared that liberalisation would lead to loss of sovereignty, social inequality, and cultural erosion. He also faced hostility from some regional parties, trade unions, farmers’ groups, and civil society organisations, who protested against the adverse effects of reforms on their interests and livelihoods. He had to overcome several political and legal hurdles to implement his vision.
P. V. Narasimha Rao is widely regarded as the father of economic reforms in India. He is credited with laying the foundation for India’s rapid growth and development in the subsequent decades. He is also recognised as a visionary leader who had a deep understanding of India’s history, culture, and diversity. He was a scholar, a polyglot, a poet, and a statesman. He passed away on 23 December 2004 at the age of 83.
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