The historic manifesto of Rajiv Gandhi and Congress which completely changed the economy of the country.

New Delhi : On April 5, 2024, Congress released its manifesto for the Lok Sabha elections to be held this year. The Congress manifesto has remained a topic of discussion ever since its release. This time the party has named it Nyayapatra. Apart from the promises in the Congress manifesto including a nationwide caste census and a guarantee of jobs, it is the party’s stance on the Indian economy that has been at the center of the debate. The party’s 2024 manifesto refers to the Liberalization, Privatization and Globalization (LPG) reforms of 1991. While former Prime Minister PV Narasimha Rao and then Finance Minister Manmohan Singh are credited with bringing economic reforms. However, the foundation of these economic reforms was laid in 1991 by former Prime Minister Rajiv Gandhi with the release of the Congress election manifesto. Let us know how that Manifesto of 1991 changed the Indian economy forever.

What was in that manifesto of Congress?

Rajiv Gandhi, who was likely to return to power at the Center in 1991, was killed in a suicide bomb attack by Liberation Tigers of Tamil Eelam (LTTE) terrorists in Sriperumbudur, Tamil Nadu on May 21, 1991. According to India Today report, a month before the assassination, Rajiv Gandhi released the Congress manifesto. In this manifesto of Congress, it was promised to bring radical changes to liberalize the economy from the clutches of License Raj. It was the result of the Congress manifesto that consumers got the option to choose from many brands of pens to cars.

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license raj in india

The License Raj, also known as the Permit Raj, was a system of strict government control and regulation of the Indian economy. This practice was in force from the 1950s to the 1990s. Under this system, it was necessary to obtain a license from the government to operate a business in India. These licenses were often difficult to obtain. The term ‘License Raj’ is a play on ‘British Raj’, which refers to that period. It was coined during the British rule in India, and on behalf of the freedom fighter and politician Chakravarti Rajagopalachari. The purpose of the License Raj was to protect Indian industry, promote self-reliance and ensure regional equality. According to the report, this led to a system where private companies had to satisfy 80 government agencies before they could produce something, and if permission was granted, the government would control the production. The system was criticized for stunting economic growth and preventing the Indian economy from reaching its full potential.

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Rajiv’s efforts to curb the license

Rajiv Gandhi’s government began loosening restrictions on business formation and import controls, while promoting the growth of industries such as digitization, telecommunications and software. Due to these efforts, the average GDP growth rate increased from 2.9% to 5.6% in the 1970s. However they failed to address the systemic issues with the license raj. Growing up in independent India and without any ideological baggage, Rajiv Gandhi soon realized the aspirations of a new India. he/she reduced income and corporate tax rates. Also tried to simplify the licensing system. They regulated sectors like computers, textiles and medicines. In telecommunication, Rajiv Gandhi dissolved the Department of P&T and created the Department of Telecommunications in 1985. he/she also ended government monopolies. manufacturing of telecommunications equipment, and in the mid-1980s the private sector was allowed to get involved.

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Highlights of Congress Manifesto of 1991

Rajiv Gandhi, seeking another term as Prime Minister, released the Congress manifesto on April 15, 1991. he/she promised to continue his/her economic liberalization policies. Some of the major promises in the Congress manifesto were:

• To maintain stable tax rates during the financial year in respect of customs and excise duties.
• Opening up for private and joint sectors for construction of highways and equipment bridges.
• Ending the monopoly of any sector or any individual enterprise in any sector of manufacturing (except strategic and defence).
• The Congress government, in its first 1,000 days, has overseen a retreat from the public sector in areas where the private and joint sectors have developed capabilities.
• Congress will resolve the existing foreign exchange crisis. This will include export promotion, effective import substitution, measures to establish and increase productivity and efficiency in the economy.

Revolutionary budget of 24 July 1991

However, before he/she could see his/her party return to the center and usher in a new economic era, Rajiv Gandhi was assassinated by LTTE terrorists. his/her death brought emotional support to Congress. The party returned to power with the support of Janata Dal. PV Narasimha Rao became the Prime Minister of the coalition government and Manmohan Singh became its Finance Minister. On 24 July 1991, Manmohan Singh presented a revolutionary budget. This budget changed the economic scenario of India. This budget marked the end of the License Raj. This happened at a time when India was facing an economic crisis with only two weeks of foreign reserves.

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Private sector should be partner, FDI welcome

As mentioned in the Congress manifesto, the budget allowed greater participation by the private sector. Lowered excise duty and welcomed foreign direct investment (FDI). Industrial licensing was abolished for almost all product categories, except some sensitive sectors like liquor, tobacco. Hazardous chemicals, industrial explosives, electronics, aerospace and pharmaceuticals were included. Tariff rates were reduced and import restrictions were relaxed. This promoted competition and efficiency. Export incentives were introduced to promote foreign trade. The government also opened up sectors like telecommunications, insurance and banking to foreign direct investment (FDI). This brought much needed capital and technology into the country.