Bold Decisions, Strong Political Will

Economic reforms are sustained, deep and pronounced under PM Modi

- Nirmala Sitharaman

Economic reforms are a matter of continuing interest in India. Only recently, marking the birth anniversary of former PM Narasimha Rao, decisions taken during his time to open the Indian economy were recalled. They were bold decisions taken under compelling circumstances. Even from 1989, the brewing balance of payments crisis was getting noticed. India had to undertake higher levels of borrowing, and correspondence with the IMF and World Bank had commenced by late 1990. Without the borrowing, India would have had to default on its external payment obligations.

The IMF pegged the release of the credit tranches to our quarterly performances based on specified criteria. The World Bank provided the structural adjustment loans linked to specified benchmarks. Their conditions were to work in tandem. India was to open its economy to be market driven and out of the licence quota raj. To dismantle the four-decade-old command and control model required immense political will, which despite running a minority government Rao had shown. After all, India had to be pulled out of a near bankruptcy.

However, several of the agreed conditions remained unfulfilled. A leadership and its vision for India adds strength to the required political will to undertake reforms which, post-Narasimha Rao, the Congress lacks. The finance minister of 1991was the prime minister for a decade, but the Congress used its political will for itself rather than for India. Several observers called 2004-14 as India’s lost decade. It doesn’t take a crisis to reform, nor should a crisis be allowed to overwhelm India.