News Excerpt:
Narasimha Rao, the first Prime Minister of India belonging outside the chain of Nehru-Gandhi family to complete the five year term.
More about the news:
- The major contribution during his tenure includes the liberalization of economy, and the demolition of Babri Masjid in Ayodhya.
Background:
- He was born on 28th June 1921 at Karimnagar, Hyderabad (now Telangana).
- He was an advocate by profession, who completed his Legum Baccalaureus from Fergusson College (Pune), and then continued his Legum Magister from Nagpur University.
- In addition to his native language Telugu, he demonstrated remarkable linguistic proficiency in seven other languages including Urdu, Sanskrit, Tamil, English, and Spanish.
- He contributed significantly to literary endeavors by publishing "SahasraPhan," a Hindi translation of the renowned Telugu novel "Veyi Padagalu."
- In 2024, the Indian government posthumously conferred upon him the Bharat Ratna, India's highest civilian honor.
Background of India before his Prime Ministership:
- On May 21, 1991, six and a half years after the assassination of Indira Gandhi, Rajiv Gandhi was blown up by a suicide bomber of the Liberation Tigers of Tamil Eelam (LTTE), and it put India in the middle of a Lok Sabha election, fracturing its polity and economy.
- However, in the 1991 election, the Indian National Congress led by Narasimha Rao won 244 seats and along with external support from other parties he formed a minority government, with him being the 10th Prime Minister.
Major events during his tenure: His tenure witnessed two major events including:
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The liberalization of economy
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- Background:
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- A sharp jump in oil prices in August 1990, leading to an unmanageable balance of payment (BoP) situation, depleted foreign exchange reserves along with massive capital outflows, pushing India closer to the possibility of default.
- The government devalued the Rupee on July 1, 1991 and the RBI transferred over 46 tonnes of gold from its reserves to the Bank of England for borrowing forex to manage liquidity resulting from the BoP crisis.
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- Liberalization Policy:
- The government adopted the Economic Liberalization Policy, which was a landmark document paving ways for India’s economic liberalization.
- The policy abolished industrial licensing for all projects barring a select few strategic industries, allowed the government to disinvest its shareholding in the public sector, and amended the Monopolies and Restrictive Trade Practices (MRTP) Act to allow for the setting up, expansion, and merger of businesses without prior approval.
- It also allowed foreign direct investment of up to 51% foreign equity. Nearly 80% of the industry was taken out of the industrial licensing framework and the number of sectors reserved for public sector companies dropped from 17 to 8.
- Liberalization Policy:
- Demolition of Babri masjid in Ayodhya:
- On the night after the demolition, Rao dismissed governments in four states ruled by the BJP — UP (Kalyan Singh), Madhya Pradesh (Sunderlal Patwa), Rajasthan (Bhairon Singh Shekhawat), and Himachal Pradesh (Shanta Kumar).
- For the third time since Independence, the Rashtriya Swayamsevak Sangh was banned.
- The demolition of the mosque was followed by riots in several cities, including Mumbai, as well as a series of bomb blasts that killed more than 250 people in the city.
Other contributions:
- He initiated the Look East Policy
- He enacted the 73rd and 74th Constitutional Amendments Act which empowers the local bodies.
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1991 election:
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