Unsung hero of the India story

Twenty years ago, Narasimha Rao became Prime Minister and initiated economic reforms that transformed India. The Congress party doesn’t want to remember him: it is based entirely on loyalty to the Gandhi family, and Rao was not a family member. But the nation should remember Rao as the man who changed India, and the world too.

In June 1991, India was seen globally as a bottomless pit for foreign aid. It had exhausted an IMF loan taken six months earlier and so was desperate. Nobody imagined that, 20 years later, India would be called an emerging superpower, backed by the US to join the UN Security Council, and poised to overtake China as the world’s fastest growing economy.

For three decades after Independence, India followed inward looking socialist policies aiming at public sector dominance. The licence-permit raj mandated government clearance to produce, import or innovate. If you were productive enough to create something new or produce more from existing machinery, you faced imprisonment for the dreadful crime of exceeding licensed capacity.

Socialism reached its zenith in the garibi hatao phase of Indira Gandhi (1969-77), when several industries were nationalized and income tax went up to 97.75%. This produced neither fast growth nor social justice. GDP growth remained stuck at 3.5% per year, half the rate in Japan and the Asian tigers. India’s social indicators were dismal, often worse than in Africa. Poverty did not fall at all despite three decades of independence.

In the 1980s, creeping economic liberalization plus a government-spending spree saw GDP growth rise to 5.5%. But the spending spree was based on unsustainable foreign borrowing, and ended in tears in 1991.

When Rao assumed office, the once-admired Soviet model was collapsing. Meanwhile, Deng had transformed China through market-oriented reforms. Rao opted for market reforms too. He was no free market ideologue like Ronald Reagan or Margaret Thatcher: he talked of the middle path. His model was Willy Brandt of Germany.

His master stroke was to appoint Manmohan Singh as finance minister. Rao wanted a non-political reformer at the centre of decision-making, who could be backed or dumped as required. He presented Singh as the spearhead of reform while he himself advocated a middle path. Yet, ultimately, it was his vision that Singh executed.

In his first month in office, the rupee was devalued. There followed the virtual abolition of industrial licensing and MRTP clearance. At one stroke, the biggest hurdles to industrial expansion disappeared. Who was the industry minister who initiated these revolutionary reforms? Narasimha Rao himself! He held the industry portfolio too.

Yet he did not want draw attention to himself. So he ingeniously made the delicensing announcement on the morning of the day Manmohan Singh was presenting his first Budget. The media clubbed the Budget and delicensing stories together as one composite reform story. In the public mind, Manmohan Singh was seen as the liberalizer, while Rao stayed in the background.

Singh initiated the gradual reduction of import duties, income tax and corporate tax. Foreign investment was gradually liberalized. Imports of technology were freed. Yet the overall government approach was anything but radically reformist. When bank staff threatened to go on strike, Rao assured them that there would be no bank privatization or staff reforms. When farmers threatened to take to the streets, Rao assured them there would be no opening up of Indian agriculture.

The IMF and World Bank believed that when a country went bust, that was the best time for painful reforms like labour reforms. However, Rao took the very opposite line. He focused on reforms that would produce the least mass losers (such as industrial delicensing) and yet produced 7.5% growth in the mid-1990s. These gave reforms a good name, and ensured their continuance even when Opposition parties later came to power.

In the 2000s, the cumulative effect of gradual reform finally made India an 8.5% miracle growth economy. Rao got no glory for this. He had lost the 1996 election amidst charges of buying the support of JMM legislators. This led to his exit as Congress chief. Although he was eventually exonerated by the courts, he died a political nobody.

How unjust! He deserves a high place in economic history for challenging the Bank-IMF approach on painful austerity, and focusing instead on a few key changes that produced fast growth with minimum pain. The World Bank itself later changed its policy and started targeting “binding constraints” (like industrial licensing).

Manmohan Singh said repeatedly that he could have achieved nothing without Rao’s backing. Today, 20 years after the start of India’s economic miracle, let us toast India’s most underrated Prime Minister — Narasimha Rao.

30 thoughts on “Unsung hero of the India story”

  1. Nikhil Mahajan

    I believe that the Babri demolition was the biggest reason why the Congress dumped Narsimha Rao, as continuing with him would have meant losing the Muslim vote bank. How strange, that one moment of indecisiveness ruins the hard work and innovation of several years.People look at the overall performance, failing to toast the moments of glory of an individual. You deserve loads of appreciation for bringing to fore the man behind the most important and revolutionary economic changes carried out in India.

  2. Thanks Sir for sharing this information. I have read your posts in the past also and I thank you for helping me cast a better image of Mr. Narasimha Rao. Otherwise, from my adolescence days, I just remembered bad media about the Man.


  4. it is indeed sorry to see that nobody remembers Narsimha Rao who was such an able statesman and administrator.we,in india mostly rate our leaderes based on their oratory skills rather than their administrative competence,reason why Atal bihari Vajpayee was so popular. only if we had chosen our leaders based on their ability to deliver the goods,india would have been a vibrant democracy and a developed country.Even Rao was never voted by people of India to be prime minister ,it was just a coincident,it changed history though.

  5. Shahnawaz Khan

    Dear Mr. Swami, could you please provide a ‘Contact Me’ button on your blog, so that people can write to you Or maybe an email address where you can be contacted.

  6. If the reasons why Rao is not being mentioned by the Congress Party are i) he faced corruption charges – members of the Nehru-Gandhi family have faced/facing corruption charges and ii) his inaction during Babri Masjid episode – Gandhi family had used “Soft Hindutva” card time and again and not to mention about the Mass murders after Mrs. Gandhi’s assasination and the crude justification provided by none other than her son. So, there are other reasons why Rao is not being given due credit.

  7. What a writer!! I have become a big fan of you,Mr. Swaminathan. Your articles keep me spellbound. Read about 10 articles of yours in just 1 day. Awesome stats!!
    And after reading this article, only one word flashes in my mind for
    our past PM Mr. Rao—-“RESPECT”

  8. Indeed a well written one!! He was a great visionary and great politician. We need many more such PVNRs who have great vision to develop India and at the same time crooked enough handle the murky politicians and corrupt buerocrats. If he could do what he had done in 5 years of tenure, imagine if he was in power for more time, I am sure he would have handled burning issues like Kashmir, Corruption, Black Money, etc

  9. Devarahalli V K

    Narasimha Rao has remained an unsung hero. Establishment is not leaving any opportunity to humiliating him; a postage stamp on Kasu Brahmananda Reddy etc.

    Thanks to Swaminathan A Aiyer to have rightly written on Rao’s contribution to uplife India’s Economy. Was not Rao scholar-stateman.

  10. Pardhasaradhi N

    PV Narasimha Rao, man who believed that “power is responsibility”. Trying to defame the talent is impossible. Because, talent will result in visible output that can sensed by generations. India is what it is now by chance but not but choice. Because, PVNR became PM by chance.

    Swami, what is that we can do, to not leave the country driven away by chances?

  11. he is a great man in the indian economy.his vision has changed india to a great extent.he was not recognised by the congress party it self as he had not chanted the nehuru and gandhifamily mantras.

  12. I just can’t imagine how India would have been without those reforms. We all Indians should respect his contribution and always be thankful to him. In a way, he was responsible for employment to lakhs of people.

  13. hats off to him ,for his visionary sight for a progressed india ,let us give him the credit at least now by establishing a memorial becoz of being a pm for a big nation in troubled times, truly marvelous politician and statesman.

  14. K N Sreenivasan

    “Unsung hero of the India story” is an excellent piece from Swami…. What is most paining is the fact that the coterie surrounding the Gandhi family did not even allow Narsimha Rao’s dead body to be kept at the Congress Bhawan in New Delhi for the public to see…. The Gandhi dynasty would like to erase him from public memory…. What Swami possibly left unsaid is the difference that a leader can make in so far as the manner in which a technocrat is perceived…. Manmohan Singh was a star under Rao’s regime; today the same Manmohan is seen as a weak and inept person under Sonia Gandhi’s so called “great” leadership…. Manmohan SIngh is the same then and now – it’s only his leader who has changed…. I guess that says a lot about the Gandhi dynasty…. Dinesh Trivedi, the ex Railway Minister, when he quit his post recently said ” THE COUNTRY COMES FIRST, FAMILY COMES SECOND, AND HIS PARTY IE. the TMC COMES THIRD”…. Under the Gandhi dynasty, I guess the order stands totally reversed ” THE GANDHI PARIWAR COMES FIRST, THE CONGRESS PARTY COMES SECOND, AND INDIA THE COUNTRY IS THE LAST PRIORITY”….. The way the Gandhi dynasty is now leading India, I guess posterity would judge Mrs. Gandhi as a leader who frittered away/ totally destroyed all the gains that Narsimha Rao delivered……

  15. The only mistake Narasimha Rao ji did was that of not being a Gandhi family member. really a great leader who went beyond party lines to appoint non political and opposition leaders to key posts. it was under him that dynamism came to indian politics….

  16. Well said Srinivasan, Manmohan Sing is the same person who was a Star under PVNR and a puppet under Sonia, this is an exemplary extraordinary leadership skills displayed by the great leader for whom our Country India’s honor and development was always always first. He did not encourage his own family members and distanced them for the sake of our country’s development, True leader with a great vision, who cares if his party dosent care for him, he is in the hearts of every Indian who wants to see the county developed …..

  17. He is the most disrespected member in the congress part as he took on the gandhi clan. I think we should not play petty politics with people who have contributed a lot to indian economy.

  18. lets salute p.v Narasimharao his glory remains great not only he is the father of indian economic reforms he is the man who believed that power is responsibility.

  19. thanks for this wonderful article. It is a coincidence that I was thinking about PVNR and his greatness. I became politically concious under his regime, as I was just entering the college. I can confidently say, he shaped my political ideology and I consider him as my guru in that field. Who cares about Gandhi clan. When ever india’s growth is talked about, it is with PVNR. When ever India’s stagnation is talked about it is with Gandhi clan. Since India is growing PVNR is already immortal.

  20. dear swaminathanji, please also highlight the fact that late PV Narsimha Rao was also architect and visionary for ONE GUAGE RAILWAYS conversion into Broad Guage primarily to ensure smooth transit of Indian Armed Forces from Kashmir to Kanyakumari and from Gujarat to North East Borders which also helped in growth of Indian Railways. Now people have forgotten the pain of changing trains from Meter Guage to Broad Guage and we have acomplished the dream of a train from Jammu to Trivandrum without any changing the trains at different places. PVNarsimha Rao is an unsung hero who laid the base for dream vision 2020 of H’ble APJ Abdul Kalam. But alas! the present Gandhi Family [with no true gandhian left in the said family] is again working hard to convert India back into a POOR MAN’s India by converting all AAM AADMI into beggars living on the alms given by their government under MMSINGH who is basically an obidient government servant serving the fake GANDHI PARIVAAR. God save our country.

  21. manohar rao dandanayakula

    He is a real hero, he is the last congress prime minister with a great vision for this nation, entire world has recognized his greatness, but un fortunately Indian s couldn’t. His name remains forever in annals of Indian history as a national hero.

  22. There are no schemes on this great guy’s name… no matter there are plenty on the dictator woman and his son, the perpetrator of 1984 riots.

    Loyalty to family seems to be the key here 🙁

  23. its a good peace of article sir. First of all thank you sir. P.V Narasimha Rao, ex prime minister and one of the best prime minister that INDIA had. he is a great man and done huge useful things for our country. it’s very sad that he still remain unknown hero. we have to give him some RESPECT….for a great service he had done for INDIA….

  24. Quite apart from the economic reforms , PVN had another feather to his cap. He put the right people in and gave them full freedom to crush terrorism in Punjab. In his five years in power, he finished off a wound that had been festering right through the 80s under Indira and Rajeev. He alos brought Kashmir to a state where elections could be held. If one goes purely by achievements then these three in a five year period alone would merit him with the title of the best performing PM we ever had.

  25. manmohan is the father of indian reforms and not narshimarao, narshimarao did not know even abc of economics.and was also caught in taking bribes etc.no doubt narshima rao was pm .

  26. Satish Vinjamuri

    If Manmohan was a financial whiz why is it that the indian economy is in this stage of desperation. I think you need deft political management to complement financial wizardry for country to prosper. Narasimha Rao provided that.

    None in congress will agree as only one family rules there.

  27. Dr.S.B.N.PRAKASH

    P.V.Narasimha Rao a great statesman and is to be remembered for ever in the process of development of modren India. In deed the government of India should release a postal stamp in the honour of the said great person, without mincing politics.

  28. Late Sri PVN brought laurels to our nation in various ways.By postponing certain issues or not taking any decision over issues also he used to solve the problems faced by our country.He solved Huzrathbal issue where Terrorists took shelter by peaceful way. Simply he allowed them to stay there & to get all facilities including Biryani.They were not allowed to room in the public. I too got angry over such facilities provided to such cutthroat people.But those murderers could not spend much time in that jail like thing.They had surrendered to GOVT. with their sophisticated weapons just in one month period.
    The other one more important thing he solved was that the world leading countries were not coming to aid/support when India was suffering with Terrorists.When 4 foreigners were kidnapped by the Terrorists in Kashmirvally he did not take any action,rather to say allowed Terrorists to kill.When one of the 4kidnapped were killed the whole world reacted &came to forefront to support to our country in all
    aspects blatantly. That is why he was named as apara chanakya.

  29. Totally agree, here the subject is the economic reforms. But but let me remind you about the St Kiits and Chandraswami, Pathak pickle case, Harshad Mehtha suitcase,JMM bribery, Babri demolition-it was foolishness on his part to get involved in all those.

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