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Updated on: Wednesday, December 22, 2021, 05:36 PM IST

Remembering former Indian Prime Minister PV Narasimha Rao: 'Father of Indian Economic Reforms'

Narasimha Rao, along with his Finance Minister Manmohan Singh, is responsible for leading India through a turbulent period and pulling the country out of economic darkness.
Former Indian PM Narasimha Rao |

Former Indian PM Narasimha Rao |

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Born in a small village near Karimnagar (now in Telangana) PV Narasimha Rao or Pamulaparti Venkata Narasimha Rao served as the prime minister of India between 1991 and 1996. He is best known for introducing sweeping economic reforms that liberalised the Indian economy.

After Congress leader Rajiv Gandhi’s assassination in May 1991, the Congress (I) Party chose Rao as its leader at the age of 70, and he became India’s 10th prime minister after the general elections in June. Before becoming India's prime minister, Rao represented Andhra Pradesh in the Lok Sabha. He also served as the foreign and home minister under Rajiv Gandhi tenure.

Narasimha Rao, along with his Finance Minister Manmohan Singh, is responsible for leading India through a turbulent period and pulling the country out of economic darkness.

National security, foreign policy and crisis management:

  • Rao energised the national nuclear security and ballistic missiles programme, which ultimately resulted in the 1998 Pokhran nuclear tests.

  • He increased military spending and set the Indian Army on course to fight the emerging threat of terrorism and insurgencies, as well as Pakistan and China's nuclear potentials.

  • It was during his term that Khalistani terrorism in the Indian state of Punjab was finally defeated.

  • Rao also made diplomatic overtures to Western Europe, the United States, and China. He decided in 1992 to bring into open India's relations with Israel, which had been kept covertly active for a few years during his tenure as a Foreign Minister and permitted Israel to open an embassy in New Delhi.

  • Rao's crisis management after the 12 March 1993 Bombay bombings was highly praised for his personal investment in the case that lead to Pakistani involvement in the blasts.

Major economic reforms done by Narasimha Rao that led to an influx of foreign investment in Indian markets:

  • Introducing SEBI Act of 1992 and the Security Laws (Amendment) which gave SEBI the legal authority to register and regulate all security market intermediaries.

  • Opening up of India's equity markets to investment by foreign institutional investors and permitting Indian firms to raise capital on international markets by issuing Global Depository Receipts (GDRs).

  • Establishing National Stock Exchange as a computer-based trading system that served as an instrument to leverage reforms of India's other stock exchanges. The NSE emerged as India's largest exchange by 1996.

  • Reducing tariffs from an average of 85 percent to 25 percent, and rolling back quantitative controls.

  • Encouraging foreign direct investment by increasing the maximum limit on the share of foreign capital in joint ventures from 40 to 51% with 100% foreign equity permitted in priority sectors.

  • Streamlining procedures for FDI approvals, and in at least 35 industries, automatically approving projects within the limits for foreign participation.

Look East policy:

  • Look East policy was his brainchild

  • Rao launched the Look East foreign policy, which brought India closer to ASEAN.

  • It cultivated extensive economic and strategic relations with the nations of South-East Asia, in a bid to foster India’s standing as a regional power.

  • Under this policy, India’s strategy was focused on forging close economic and commercial ties, along with economic liberalisation and deference from Cold War-era policies.

  • The expansion of regional markets for trade, investments and industrial development; was observed under this policy.

Political commentator and analyst Sanjaya Baru had termed that Former Prime Minister PV Narasimha Rao had many achievements like ending terrorism in Punjab and successfully conducting Jammu and Kashmir polls, other than initiating 1991 economic reforms, but his party Congress let him down.

"Yes, these and many others. Overall, the party has let him down," Baru, who was media adviser to former Prime Minister Manmohan Singh said during an interview.

'Those who dub his economic policy as “reform by stealth” fail to recognise that what Rao pursued was in fact reform through implicit, if not explicit, consensus-building. He called it the “middle path”. His consensual approach adopted by both his successors — Atal Bihari Vajpayee and Manmohan Singh — served them and the country well. In the long run, it is an approach that serves India’s plural democracy better than brute majoritarianism,' Baru wrote in Indian Express.

(with inputs from sources)

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Published on: Wednesday, December 22, 2021, 05:36 PM IST
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