The Hindu Business Line : Patriarch of reforms Narasimha Rao dead

The former Prime Minister earned international praise for his reform initiatives that opened the Indian economy to the world after decades of controls.

New Delhi , Dec 23

FORMER Prime Minister Mr P.V. Narasimha Rao died of cardiac arrest on Thursday after fighting serious illness during the past fortnight. Mr Rao, 83, breathed his last at the All-India Institute of Medical Science (AIIMS) in the Capital where he was being treated since December 10.

During his political career spanning many decades, Mr Rao held several other important positions in public life including being Chief Minister of Andhra Pradesh and Union Cabinet Minister holding key portfolios, including Defence, External Affairs, Home and HRD.

Though better known for his political skills that ensured his minority Government lasting a full five-year term (1991-96), Mr Rao's contribution in carving out the roadmap for economic reforms cannot be understated.

In his quiet, unflustered manner, Mr Rao provided the political backing for ushering in large-scale economic reforms in the country during his five-year tenure as Prime Minister since June 1991 at a time when the country was going through a severe balance of payments crisis with foreign exchange reserves touching precariously low levels to meet import payments.

Working in tandem with the present Prime Minster, Dr Manmohan Singh, who was then his Finance Minister, he unfolded a series of reform measures that completely changed the face of the then largely `closed' Indian economy, liberalising and integrating it with the global economy.

During 1991-96, the country moved towards a free-market by reducing the Government's role, instituting austerity measures, and encouraging foreign investment.

A set of big-bang reforms were unveiled by Dr Singh under the watchful eyes of his Prime Minister within days of the Government taking office. A pre-Budget move to devalue the rupee by 20 per cent to encourage repatriation of export earnings was followed by Budget proposals (July 1991) that included abolition of licensing requirements in most industries, hiking fertiliser prices to reduce subsidies, and a clear signal for public sector reforms to improve efficiency. The Budget also proposed relaxation of controls on foreign investments.

The second Budget of Mr Rao's Government carried the reforms further and set a tone that virtually made the process of change irreversible leaving successive Governments with no option but to carry the task forward. While more import items were transferred to the Open General Licence list, further liberalisation was proposed for attracting investment flows.

The period also saw major stock market reforms, including abolition of the office of Controller of Capital Issues that paved the way for a statutory regulator - the Securities and Exchange Board of India.