Former Indian Prime Minister Atal Bihari Vajpayee, who passed away at the age of 93 on August 16, 2018, was the forerunner for several socio-economic reforms undertaken by his successors. He continued to liberalise the economy and presented a fresh image of India to the world.
Like many popular politicians, Vajpayee gave people wide-ranging reasons to admire, but one that has left an enduring impact on the country is most probably his economic policies.
Policies that helped expand highways, cut mobile tariffs, lowered interest rates and privatised PSUs would stand out. The Vajpayee government liberalised the economy further, and gave a new direction to infrastructure. His government is known to have taken road and infrastructure projects to the next level in the country through the Golden Quadrilateral and the Pradhan Mantri Gram Sadak Yojana, something the country was in desperate need to fulfill the reform agenda. Under the Golden Quadrilateral project the four major metro cities, Chennai, Kolkata, Delhi and Mumbai were connected through a network of highways. The Pradhan Mantri Gram Sadak Yojana laid down a network of roads for the unconnected villages across India.
His desire to reduce government role in running businesses and industry was reflected in the formation of a separate disinvestment ministry. The most important disinvestments were Bharat Aluminium Company (BALCO) and Hindustan Zinc, Indian Petrochemicals Corporation Limited and VSNL.
The insurance sector, until 1999, was dominated by state-owned entities in both life and general insurance segments. The sector was privatised to allow corporates to set up insurance companies.
The Vajpayee government's New Telecom Policy unleashed the telecom revolution in India by replacing fixed licence fees for telecom firms with a revenue-sharing arrangement. Bharat Sanchar Nigam Ltd. was created to separate policy formulation and provision of service. The creation of the Telecom Dispute Settlement Appellate Tribunal also separated the government's regulatory and dispute settlement roles.
Vajpayee government made another beginning by introducing the Fiscal Responsibility Act that aimed to bring down fiscal deficit. The first National Democratic Alliance government enacted a new law, the Fiscal Responsibility and Budget Management (FRBM) Act, to keep the fiscal deficit under 3%.
The FRBM Act aimed to introduce transparent fiscal management systems in the country, a more equitable and manageable distribution of the country’s debts over the years, and fiscal stability in the long run. This brought about a significant change in the macro-economic sphere. Experts believe that this paved the way for the low interest rate regime. Until the late 1990s, the official bank rate was about 10-11%. But a prudent fiscal management saw the repo rate to come down to 6% by the Vajpayee laid down office in 2004.
Another big reform that Vajpayee initiated was the idea of a common tax structure for goods and services across the country. GST was implemented last year, but it was Vajpayee who had first mooted the idea of a common tax structure for goods and services across the country. In 2000, the Vajpayee-led government had set up a committee to design the backbone of the GST model and ensure that the technology back-end was put into place.
And who would forget his Sarva Shiksha Abhiyan, a social scheme to provide universal access to free elementary education for children aged 6-14 years. Within four years of its launch in 2001, the number of out-of-school children reportedly, dropped by 60%.
There were many more new initiatives. He overcame the resistance of the world and threat of isolation to make India a nuclear weapons power and went for the nuclear test in Pokhran. The decision was of paramount importance to India’s security. He gave approval to Chandrakant Mission, and the result is there before the world now. He was keen to have better ties with neighbours and even visited Pakistan to normalise relations.
May be many of Vajpayee’s reform initiatives have been refined over the years to suit present day needs and to achieve political consensus, but as in his political visions, in his economic ideologies too he will remain a path-breaker in his own right.