Whatever new and vibrant approach, the Government is at present making in the economic sector, was initiated by Mr. Rajiv Gandhi in 1985. Destiny had appointed a person in Rajiv Gandhi to rectify and reverse the wrong economic policies by his mother.
The most significant thing was that he had a vision for India in the next century, which other politicians and even Businessmen were lacking in. He kicked off the economic reform right from the first budget his Government presented in the Parliament. He began his tenure in a blaze of glory and proved that he had the right vision and decent instincts.
The first twelve months of his rule (Nov 1994-85) were the brightest period in our republic. The union budget of 1985 was the finest budget since we became independent. He dismantled controls and introduced liberalization. Rajiv had the right ideas but chose the wrong people to surround him. His untimely death is a grim reminder that the land with the noblest heritage has become the most criminalized and the most violent democracy in the world.
Shri Nani Palkhivala has also opinionated – “The political situation in our country today is such that if we cannot achieve speedy growth under PM Rajiv Gandhi, we may find ourselves in a worse plight than merely Paradise Postponed”.
The economic liberalization started by the annual budget of 1985 and its first phase continued till 1996, with a bump in 1989 when the emotional issues of Mandal and Mandir pushed the economic agenda into back burners.
The 1985-86 Annual Budget presented by VP Singh under the leadership of Rajiv Gandhi represented a mood of optimism and self-confidence. That was for the growth and that takes place fastest under the condition of economic freedom. East and West Germany, South and North Korea are classic examples of how two sections of the same race of people achieve vastly different levels of development due to operating under two different sets of economies, one full of control and regulations, and another for free enterprise.
The tirades for unshackling the economy had continued and in next year’s Budget, the Finance Minister continued the trend by further restructuring the taxes and tariff of lower taxes. The wisdom of low rates of taxes in last year had been fully vindicated by recording growth in direct taxes – 23% in 1985-86. India today is growing into a big market for IT and computer software is only because of the honest and sincere efforts made by the visionary Rajiv Gandhi Government in 1985-86. Had similar efforts been made in other industrial and food processing areas, India can very quickly recoup its lost ground.
Indian Economy is carrying on its back a load of public sector undertakings [PSU], which were conceptualized for the core sector like Steel, Electricity, and other Infrastructure areas, for helping in the growth of the economy and for meeting the social obligation of the Government by providing the key raw materials for the industry. The objective of this sector had been hijacked in the mid-way by the governing agencies, politicians, and bureaucrats alike, and changed to one-in launching the nationalization campaign of industries, and two-providing rock-solid job security for employees, irrespective of the financial and other performances of the undertakings.
As per the public sector money and resource guzzlers are now being discussed for disinvestments by a specially formed ministry. The Government during the period of 1992 to 1997 had sold and raised Rupees 7303 Crores. It is to be seen that whether they are going to be a turn around a profitable business or simply ’govt. run monopoly’ getting converted into ‘non-government-controlled monopoly’.
There is already a lot of heat being generated on divestment in the banking and insurance sector, and employees are turning their sleeves up to raise alarms apprehending the security of their job. There is, finally, an even bigger problem of managerial culture than any discussed so far; the lack of understanding of what free enterprise and market economy are all about. In a market economy, a business does not make a profit, but it has to earn a profit through open competition.
This is a very crucial issue that, the success or survival of economic reforms and turn around, would depend upon the tactics rather than ideology or political strategies. India’s ability to balance her economic performance with pressure for jobs and decontrolling the economy, and simultaneously controlling the inflation solely depends on the WILL of government.