Spectrum Summary: The Narasimha Rao Years (1991–1996) | History for UPSC CSE PDF Download

The Narasimha Rao Years ( 1991 - 1996)

Pamulaparti Venkata (P.V.) Narasimha Rao assumed leadership of the Congress party in 1991 following the assassination of Rajiv Gandhi. A seasoned politician and proficient linguist, Rao had previously held key ministerial roles under Indira Gandhi and Rajiv Gandhi. In June 1991, he formed a minority government and, despite not contesting elections, secured a victory in the Nandyal by-election in Andhra Pradesh after being sworn in as the prime minister. Rao's tenure from 1991 to 1996, known as the Narasimha Rao years, saw significant economic reforms and policy initiatives, marking a transformative period in Indian politics. 

P V Narasimha Rao taking oath as Prime minister

Economic Reforms

• Rao's tenure as prime minister marked a crucial period of economic reform in India. When he assumed office, he appointed the non-political economist Manmohan Singh as the finance minister, who played a key role in implementing reforms. The Indian economy was facing challenges, including a precarious balance of payments situation and high inflation.
• Rao opted for a middle path in economic reforms, aiming for high economic growth rates with minimal suffering for the masses. The New Economic Policy of 1991 addressed fiscal and balance of payments issues to stabilize the economy. The fundamental principles included liberalization, privatization, and globalization.

Manmohan Singh with P V Narasimha Rao 

• Key measures were taken to correct fiscal imbalances, such as devaluing the rupee to boost exports and reducing the fiscal deficit. Manmohan Singh initiated the gradual reduction of import duties, income tax, and corporate tax. The finance minister and the prime minister targeted restrictive trade and industrial policies. Quotas on imports, especially for machinery and equipment, were removed, and there was a rationalization of the tariff structure with a reduction in custom duties.
• Narasimha Rao presented the Industrial Policy of 1991, a revolutionary move that shortened the list of industries subject to industrial licensing. Amendments to the MRTP Act removed restrictions on growth and allowed the merger of large business houses. The public sector's role was reduced, granting it more autonomy, and private investment was welcomed in the infrastructural sector. Restrictions on foreign ownership were liberalized, and foreign investment saw gradual easing. The service sector, including insurance, banking, telecom, and air travel, was liberalized, allowing private sector participation.
• Several regulatory changes were introduced, including the abolition of the Controller of Capital Issues, the introduction of the SEBI Act of 1992, and the Security Laws (Amendment) to regulate security market intermediaries. The National Stock Exchange was initiated as a computer-based trading system.
• Despite these reforms, bureaucratic controls persisted, causing delays in starting a business compared to other countries. Labor laws remained unreformed, and the process of exiting for failing enterprises remained challenging.
  SEBI Bhavan, Mumbai 

[Question: 957207]

Panchayati Raj and Nagarpalika Acts

• Initiation by Rajiv Gandhi: Rajiv Gandhi initiated the move for constitutional recognition of Panchayati Raj and municipal government.

• Narasimha Rao's Prime Ministership: The constitutional status for Panchayati Raj and municipal government was achieved during Narasimha Rao's prime ministership.

• 73rd Constitutional Amendment: This amendment implemented a Directive Principle of State Policy, providing constitutional recognition to local village governments under the Panchayati Raj system.

• Provisions for Local Village Government: The 73rd Amendment included several provisions to empower and structure local village governments.

• 74th Constitutional Amendment: This amendment obligated states to adopt municipalities as per the system prescribed in the Constitution.

• Constitutional Obligation for States: The 74th Amendment established a constitutional obligation for states to adhere to the municipal system outlined in the Constitution.

• Reservations for SC/ST and Women: Both in Panchayats and municipal bodies, there are reservations for Scheduled Castes (SC), Scheduled Tribes (ST), and women to ensure inclusive representation.

Handling Security Issues and Space Tech

Punjab Situation Control

• Under Narasimha Rao's leadership, the security situation in Punjab was effectively controlled.
• State elections were conducted, contributing to the stabilization of the region.
  

Militancy Subsided

• Post the 2002 elections, militancy in Punjab significantly diminished.

Terrorist and Disruptive Activities (Prevention) Act

• The government passed the Terrorist and Disruptive Activities (Prevention) Act.
• The legislation aimed at addressing security concerns, particularly targeting infiltrators from Pakistan.

Defence Sector Modernization

• Emphasis was placed on modernizing the defence sector during Rao's tenure.
• Increased military spending to strengthen the country's defense capabilities.

Induction of Prithvi-1 Missile

• The Prithvi-1 missile was successfully inducted into the army, showcasing advancements in indigenous missile technology.

Prithvi Missile gliding down the Rajpath during the Republic Day Parade

• Successful tests of the Augmented Satellite Launch Vehicle and the Polar Satellite Launch Vehicle were conducted, demonstrating India's capabilities in space exploration and satellite deployment.

Foreign Policy

Post-Soviet Era Adaptation

• The Soviet Union disintegrated in 1991, leading India to adapt its foreign policy in the absence of Cold War dynamics and bloc politics.

Improved Relations with the US

• India's relations with the United States improved during this period.

Diversification of International Relations

• India built strong relations with Western countries, Japan, Israel, Brazil, and South Africa.
• The foreign policy became closely linked with economic considerations.

Look East Policy

• Narasimha Rao launched the Look East policy to strengthen ties with ASEAN (Association of South East Asian Nations).
• The policy aimed at enhancing political, economic, and cultural relations with Southeast Asian and Pacific nations.
• Governments succeeding Narasimha Rao continued and built upon the Look East policy.

20th ASEAN Summit 

Overture to China and Iran

• Narasimha Rao made diplomatic overtures to China and Iran during his tenure.
• This proved beneficial when Pakistan raised a resolution on India's human rights violation in Kashmir at the UN human rights body.
• China and Iran did not favor Pakistan's resolution on India's human rights violation in Kashmir, highlighting the success of Rao's diplomatic efforts, thus gaining their support.

Negative Aspects

The Babri Masjid Demolition

Background on Ram Janmabhoomi-Babri Masjid Dispute

• In the late 1980s, the Bharatiya Janata Party (BJP) utilized the issue of Ram Janmabhoomi (believed birthplace of Lord Ram) to gain political advantage.
• The Vishwa Hindu Parishad (VHP), an affiliated organization, organized protests demanding a temple at the site of the Babri Masjid in Ayodhya.

VHP's Plan and Kar Sevaks' Convergence

• The VHP announced that on December 6, 1992, they would begin construction on the temple.
• Thousands of volunteers, known as kar sevaks, gathered in Ayodhya.
• Initially, the plan was to hold prayers near the mosque, but some groups of kar sevaks defied instructions and moved towards the mosque.

Uncontrolled Situation and Demolition

• Despite calls from RSS (Rashtriya Swayamsevak Sangh) and police to stay back, the situation became uncontrollable.
• Kar sevaks, armed with tools, scaled the mosque walls and attacked it.
• Prominent BJP leaders, including L.K. Advani, were present, and attempts to call back kar sevaks reportedly failed.

kar sevaks atop the Babri masjid (December 6, 1992)

BJP's Response and Communal Riots

• The BJP clarified that it was not a party to the vandalism, and the incident was deemed unfortunate.
• BJP leaders were arrested, but communal riots erupted in Uttar Pradesh and other parts of the country, resulting in numerous deaths.
• The Shiv Sena, particularly in Bombay, exacerbated the violence.

Bombay Bomb Blasts (1993)

• Retaliatory bomb blasts occurred in Bombay in 1993, orchestrated by mafia dons based in Dubai.
• The blasts were seen as retaliation for the attacks on Muslims during the Babri Masjid demolition.

Role of Kalyan Singh and Center's Inaction

• Kalyan Singh, as the Chief Minister of Uttar Pradesh, was criticized for not taking action to prevent the destruction.
• The central government's inaction was pointed out, and it was suggested that it did not want to be perceived as anti-Hindu.
• President's rule was imposed on Uttar Pradesh only after the destruction had taken place.

BJP leader and former UP CM Kalyan Singh 

International Image and Social Impact

• The Babri Masjid demolition damaged India's international image.
• While predictions of lawlessness and dictatorship did not materialize, the event left a lasting impact on the social fabric, fostering suspicion and hostility between Hindu and Muslim communities.

Liberhan Commission

• The Liberhan Commission, appointed 10 days after the demolition, was tasked with investigating the sequence of events.
• Justice Liberhan submitted the report in June 2009, indicting top BJP leaders, including Advani, Joshi, Vajpayee, and Kalyan Singh.
• The Kalyan Singh-led BJP government in Uttar Pradesh was identified as the key executor of the conspiracy.

Report Findings and Criticisms

• The Liberhan Commission held 68 individuals culpable.
• While BJP leaders were criticized, the central government and Prime Minister Narasimha Rao were not severely condemned.
• Rao's contention that it was not legally and constitutionally possible to impose president's rule in Uttar Pradesh before the event was accepted by the report.

Corruption Scandals 

• Narasimha Rao government faced a no-confidence motion in July 1993.
• The government was technically a minority government.

Vote Manipulation Allegations

• Opposition brought a no-confidence motion, and the government lacked sufficient numbers.
• Members of Jharkhand Mukti Morcha (JMM) and Janata Dal (Ajit Singh group) allegedly voted against the motion.
• Allegations surfaced that JMM members were bribed by Narasimha Rao through a representative.
• The alleged bribery allowed the government to win the vote and complete its full five-year term.

Post-1996 Investigations and Convictions

• After Rao left office in 1996, investigations into the bribery case occurred.
• A special court convicted Rao and his colleague, Buta Singh.
• On appeal to a higher court, the conviction was overturned.
• Doubt was cast on the credibility of Mahato, who claimed to have taken the bribe.
• In 2002, Rao and Buta Singh were cleared of the charges related to bribery.

Involvement in Other Scandals

• Rao's name was linked to the Harshad Mehta stock market scam.
• Also implicated in the hawala and Lakhubhai cheating cases.
• Rao was cleared of charges in both the Harshad Mehta stock market scam and the hawala and Lakhubhai cheating cases.

Harshad Mehta 

Kashmir