Atal Bihari Vajpayee steadied Indian economy in turbulent times

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The Vajpayee-led NDA government, facing the aftermath of the economic derailment in 1996, implemented major reforms in industrial and economic sectors, continuing the second generation of economic reforms from 2000-01 onwards.

Atal Bihari Vajpayee pix credit X Hardeep Singh Puri

Atal Bihari Vajpayee pix credit X Hardeep Singh Puri

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By Prerana Meher

New Delhi, December 24: Atal Bihari Vajpayee was the first non-Congress Prime Minister who completed his full term since Independence. Coming to the helm of affairs for 13 days in 1996, then for a period of 13 months from 1998 to 1999, followed by a full term from 1999 to 2004, Vajpayee’s tenures are marked with illuminatory reforms and interventions that reshaped governance and the future roadmap of the country.

His leadership witnessed a profound transformation in both India’s economic and infrastructural realms. Vajpayee’s governance was characterized by an unwavering commitment to stability, growth, and modernization, establishing the groundwork for a more robust and prosperous India. The Vajpayee-led NDA government, facing the aftermath of the economic derailment in 1996, implemented major reforms in industrial and economic sectors, continuing the second generation of economic reforms from 2000-01 onwards.

Steps like disinvestment, international joint ventures, capital market liberalization, Greenfield ventures, and increased tax devolution for states were initiated by the Vajpayee government. Outdated laws were abolished, and reforms were introduced in the Indian Penal Code.

In 2000, a committee was established under Vajpayee’s leadership to design the backbone of the Goods and Services Tax (GST) model. Also, the Fiscal Responsibility Act was introduced in 2001 with aims to bring fiscal discipline, and enhance macroeconomic management.

By 2003-04, the fiscal deficit was 4.57% of the GDP, lower than the projected 4.8%. On economic front, Vajpayee government succeeded in curbing the revenue deficit to 3.54% of the GDP, lower than the projected 3.6%. Additionally, his tenure yielded remarkable results, with India’s output growth recorded at 7.2% and a GDP growth rate of 8.2% in 2003-04.

Foreign exchange reserves also surged from $32.4 billion in 1998 to an impressive $113 billion in 2003- 04, accompanied by consecutive current account surpluses. India’s output growth reached 7.2%, and the GDP growth rate was 8.2% in 2003-04. The foreign exchange reserves rose from $32.4 billion in 1998 to $113 billion in 2003-04, with a current account surplus during 2001-2004.

The economic policies of Vajpayee led to a significant decrease in the inflation rate, from 13.23% in 1998 to 2.5% in 2002-03. In 1999, despite the India-Pakistan war, inflation in India hit an eighteen-year low at 3.1%. The government under Vajpayee’s leadership also focused on the growth of small-scale industries, implementing policies that benefited rural artisans. Production increased substantially from Rs. 1,57,525 in 1998-99 to Rs. 3,36,344 in 2003-04, showcasing a massive growth of Rs. 1,78,819 during the NDA’s tenure.

The overall growth rate of industrial production rose from 4.1% in 1998- 99 to 6.9% in 2003-04, with the automobile sector experiencing significant growth from 5.4% in 1998-99 to 15.1% in 2003-04. Shri Atal Bihari Vajpayee effectively utilized economic reforms to lay the foundation for crucial infrastructure through the National Highway Development Policy (NHDP) and National Telecom Policy (NTP), 1999.

The NHDP, launched in 1998, aimed to upgrade, rehabilitate, and develop roads by international standards. As of March 2004, 6909 km of national highways were completed/under construction (3200 km completed, 3709 km under construction). The Golden Quadrilateral Highway Project, launched in 2001, was initially criticized, but it turned out to be the longest road project in India, connecting major metros within a few years.

Over 5400 km of new highways were built across the country. Vajpayee ji’s emphasis on infrastructure extended to rural connectivity through the Prime Minister Grameen Sadak Yojana (PMGSY), launched in 2000. Road connectivity projects in Left Wing Extremist Areas (LWE) were also undertaken, completing 51,511 km of roads during his tenure.

The road network in India expanded to 36.22 lakh km in 2003-04, which marks an insignia of effective governance by Vajpayee government. The National Telecom Policy, launched in 1999, aimed at affordable and effective telecommunication for all, leading to a substantial increase in telephone subscribers. From a base of 14.88 million in 1997, the total number of telephone subscribers reached 54.61 million in 2003, a 267% increase in six years.

Additionally, it installed a network of more than 25 million telephone lines spreading across 300 cities, 4869 towns, and 310897 villages, making the Indian telecommunications network the ninth largest in the world. The subscriber base increased to 3.27 million over the first ten months of the fiscal year (2001), an additional growth of around 74%. 3 Mobile connectivity became a key pillar of the government’s plan for financial inclusion contributing to the JAM (Jandhan, Aadhaar, Mobile) plan, with India’s telephone penetration rate shifting from single digits to a significant level.

In essence, Vajpayee’s legacy is a testament to economic resurgence and infrastructural development. His tenure not only navigated India through economic challenges but also laid the groundwork for a more prosperous nation, showcasing the transformative power of his visionary leadership.  

(Author is a researcher with Public Policy Research Centre)

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