New Delhi: On an October morning in 1998, the then Prime Minister of India, Atal Bihari Vajpayee, called his Finance Minister Yashwant Sinha to discuss what was then reported by the media as a “big idea”. Vajpayee wanted to put forth a concept to key business leaders that would capture their imagination.
This is when he first pitched the idea of connecting the country through a network of highways. “The government will start within this year and from twenty different places from across the country work on a major 7,000-km road project,” he told a FICCI gathering on October 24, 1998. Thus giving birth to what later came to known as the ‘Golden Quadrilateral.’
At the time, the proposal by the Vajpayee-led government to connect the entire country through highways and roads was considered audacious. “People made fun of Vajpayee. They would ask where the money will come from,” Sinha told reporters. “There were several challenges, including land acquisition issues.” The Rs 54,000-crore project was initially funded through an additional Re 1 cess on petrol and diesel.
Vajpayee’s contribution to the Indian economy has been exemplary. To make India a daunting economic power in the 21st century, he transformed the economic policy framework. He carried on the spirit of economic reforms introduced by the PV Narasimha Rao government in 1991.
Sectors like telecommunications, civil aviation, banking, insurance, public sector enterprises, foreign trade and investment, direct and indirect taxes, agricultural produce marketing, small-scale industries reservation, urban land ceilings, highways, rural roads, elementary education, ports, electricity, petroleum prices and interest rates were all subject to far-reaching reforms and raised India’s power graph in the world.
On the infrastructure front, Vajpayee launched two ambitious projects: the National Highways Development Project (NHDP) to connect the four biggest metro cities along with other cities through the Golden Quadrilateral, and the Pradhan Mantri Gram Sadak Yojana (PGMSY) to every village of the nation by road. These two projects also revolutionised the real estate sector, commerce and the rural economy. The improved road connectivity further integrated the country through a network of world-class highways, which put India on the fast lane to socioeconomic development.
Vajpayee's commitment to reducing the 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. These initiatives of the Vajpayee government, not free from controversies, set the tone for the government’s role in future.
The Vajpayee government made another beginning by introducing the Fiscal Responsibility Act that aimed to bring down fiscal deficit. It boosted public-sector savings which rose from -0.8 percent of GDP in the financial year 2000-01, to 2.3 percent in FY 2004-05.
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. The government ended the monopoly of Videsh Sanchar Nigam Ltd on international telephony.
Former chairman of Niti Aayog Arvind Panagariya, in his book India – The Emerging Giant, writes that key policy reforms in the telecom sector implemented by Vajpayee in 1999 scripted India’s true telecom revolution. The New Telecom Policy (NTP) announced by the Vajpayee-led government on March 3, 1999 caused the telecom penetration rate to increase from less than 3 percent in 1999 to over 70 percent as of October 2012.
Sarva Shiksha Abhiyan was another marvel by Vajpayee. It was 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 dropped by 60 percent.
However, Pokhran-II cost India's economy dearly. By the time India had conducted tests, the country had a total loan worth USD 44 billion in 1998, from IMF and the World Bank. The industrial sectors of the Indian economy such as the chemicals industry, were severely hurt by sanctions. The Western consortium companies, which had invested heavily in India, especially in construction, computing and telecoms, were generally the ones who were harmed by the sanctions.
The United States issued a strong statement condemning India and promised that sanctions would follow. Washington imposed economic sanctions on India. The sanctions on India consisted of cutting off all assistance to India except humanitarian aid, banning the export of certain defence material and technologies, ending American credit and credit guarantees to India, and requiring the US to oppose lending by international financial institutions to India.
Despite the odds, when Manmohan Singh took over from Vajpayee in 2004, the GDP rate was above 8 percent, inflation was below 4 percent and foreign exchange reserves were overflowing.
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