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

Ronit Kawale
Ronit Kawale - Senior Editor
8 Min Read

New Delhi : Congress released its manifesto on 5 April 2024 for the Lok Sabha elections to be held this year. Congress's manifesto has been a topic of discussion since its release. This time the party has named it Nyaypatra. Apart from the promises made in the Congress manifesto including nationwide caste census and job guarantee, the party's stand on the Indian economy has been at the center of the debate. The party's 2024 manifesto mentions the Liberalization, Privatization and Globalization (LPG) reforms of 1991. While the credit for bringing economic reforms goes to former Prime Minister PV Narasimha Rao and then Finance Minister Manmohan Singh. 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 1991 manifesto changed the Indian economy forever.

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What was in that manifesto of Congress?

Rajiv Gandhi, who was expected to return to power at the Centre in 1991, was assassinated in a suicide bomb attack by Liberation Tigers of Tamil Eelam (LTTE) terrorists in Sriperumbudur, Tamil Nadu on May 21, 1991. According to an India Today report, a month before his assassination, Rajiv Gandhi released the Congress manifesto. The Congress manifesto promised radical changes to liberalise the economy from the clutches of the licence raj. It was the result of the Congress manifesto that consumers got the option of choosing from many brands ranging from pens to cars.

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Licence Raj in India

The License Raj, also known as the Permit Raj, was a system of strict government control and regulation over the Indian economy. The practice was in place from the 1950s to the 1990s. Under the 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 based on the 'British Raj', which refers to the period. It was coined during British rule in India and on behalf of freedom fighter and politician Chakravarti Rajagopalachari. The License Raj was intended to protect Indian industry, promote self-reliance, and ensure regional equality. According to the report, this led to a system in which private companies had to satisfy 80 government agencies before they could produce anything and, if permission was granted, the government would regulate production. The system was criticized for stifling economic growth and preventing the Indian economy from reaching its full potential.

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Rajiv Gandhi's efforts to curb licensing

Rajiv Gandhi's government began to ease restrictions on business creation and import controls, promoting the growth of industries such as digitalization, telecommunications, and software. Due to these efforts, the average GDP growth rate increased from 2.9% in the 1970s to 5.6%. However he failed to address the systemic issues with the License Raj. Raised in independent India and without any ideological burden, Rajiv Gandhi soon realized the aspirations of a new India. He reduced income and corporate tax rates. He also tried to simplify the licensing system. He deregulated sectors such as computers, textiles, and drugs. In telecommunications, Rajiv Gandhi dissolved the P&T Department and created the Department of Telecommunications in 1985. He also ended the government monopoly on the manufacture of telecommunications equipment, and allowed the private sector to join in the mid-1980s.

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Highlights of the Congress manifesto of 1991

Rajiv Gandhi, who wanted another term as Prime Minister, released the Congress manifesto on April 15, 1991. He promised to continue his economic liberalization policies. Some of the major promises in the Congress manifesto were as follows:

  • To maintain tax rates stable in respect of customs duties and excise duties during the financial year.
  • Opening the way for private and joint sectors for construction of highways and equipment bridges.
  • To eliminate 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 seen the public sector retreat in areas where the private and joint sectors had developed capabilities.
  • Congress will resolve the current foreign exchange crisis. This will include measures for export promotion, effective import substitution, establishing and increasing productivity and efficiency in the economy.

Revolutionary Budget of 24 July 1991

However, before he could see his party return to the Centre and usher in a new economic era, Rajiv Gandhi was assassinated by LTTE terrorists. His death gave an emotional boost to the Congress. The party returned to power with the support of the 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 landscape of India. This budget marked the end of the Licence 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 made a partner, FDI is welcome

As outlined in the Congress manifesto, the budget allowed greater private sector participation. Excise duties were reduced and foreign direct investment (FDI) was welcomed. Industrial licensing was abolished for almost all product categories except for a few sensitive sectors like alcohol, tobacco, hazardous chemicals, industrial explosives, electronics, aerospace and pharmaceuticals. Tariff rates were reduced and import restrictions were relaxed. This boosted competition and efficiency. Export incentives were introduced to boost foreign trade. The government also opened up sectors like telecom, insurance and banking to foreign direct investment (FDI). This brought much-needed capital and technology into the country.

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