Pamulaparthi Venkata Narasimha Rao was born on 28 June 1921 and died on 23 December 2004. He was the twelfth Prime Minister of the Republic of India, and led one of the most important administrations in India`s modern history, overseeing a major economic transformation and several incidents affecting national security. Rao, also called Father of Indian Economic Reforms, is best remembered for launching India`s free market reforms that brought the nearly bankrupt nation back from the edge.
Narasimha Rao`s father was P. V. Ranga Rao. He belonged to a rich Telugu Brahmin family from a village called Vangara (pedda) in the Karimnagar District of Andhra Pradesh, India. Rao studied at the Osmania University and at the Universities of Mumbai and Nagpur where he obtained Bachelor`s and Master`s degrees in law. He was a polyglot (person who spoke multiple languages) and could speak 13 languages, including Urdu, Marathi, Kannada, Hindi, Telugu and English with a fluency similar to a native speaker. His mother tongue was Telugu. He also learned several European languages that are typically not spoken in India, such as French and Spanish. Along with his cousin Pamulaparthi Sadasiva Rao, Rao edited a Telugu weekly magazine called Kakatiya Patrika from 1948 to 1955.
Narasimha Rao was an active freedom-fighter during the Indian Independence movement and, after independence, he joined politics full time. Rao served brief stints in the cabinet (1962-1971) and as chief minister of the state of Andhra Pradesh from 1971 to 1973. When the Indian National Congress split in 1969, Rao remained loyal to Prime Minister Indira Gandhi, and stayed so during the Emergency period from 1975 to 1977. He rose to national prominence in 1972 by handling several diverse portfolios, most significantly Home Ministry, Defence Ministry and Foreign Affairs from 1980 to 1984, in the cabinets of both Indira Gandhi and Rajiv Gandhi.
After the assassination of Rajiv Gandhi, and the general elections of 1991, Rao was chosen to lead the Congress party. After the Congress got the largest number of seats, Rao was invited to head the minority government as Prime Minister. He was the first person outside the Nehru-Gandhi family to serve as Prime Minister for five continuous years, the first to hail from South India and so the first from the state of Andhra Pradesh. He was elected from Nandyal with a majority of 5 lakhs votes and his win was recorded in Guinness Book Of World Records. Rao`s cabinet included Sharad Pawar, himself a strong contender for the PM`s job, as defence minister.
The major achievement of Rao is generally thought to be the liberalization of the Indian economy. This can be considered as the launching of India`s emergence as a great power. The reforms were adopted to avert impending international default in 1991. The reforms progressed furthest in the areas of opening up to foreign investment, reforming capital markets, deregulating domestic business, and reforming the trade regime. Rao`s government goals were to reduce the fiscal deficit, privatize the public sector, and increase investment in infrastructure. Trade reform and changes in the regulation of foreign direct investment were introduced to open India to foreign trade while stabilizing external loans. Rao`s finance minister, Manmohan Singh, a trained economist, played a central role in implementing these reforms. It was Manmohan Singh who chiefly spearheaded Rao`s economic reforms.
Major reforms in India`s capital markets led to an influx of foreign portfolio investment. The major economic policies adopted by Rao include:
Abolishing in 1992 the Controller of Capital Issues which decided the prices and number of shares that firms could issue.
Introducing the SEBI Act of 1992 and the Security Laws (Amendment) which gave SEBI the legal authority to register and regulate all security market intermediaries.
Opening in 1992 of India`s equity markets to investment by foreign institutional investors and permitting Indian firms to raise capital on international markets by issuing Global Depository Receipts (GDRs).
Starting in 1994 of the National Stock Exchange as a computer-based trading system which served as an instrument to leverage reform of India`s other stock exchanges. The NSE emerged as India`s largest exchange by 1996.
Reducing tariffs from an average of 85 percent to 25 percent, and rolling back quantitative controls.
Encouraging foreign direct investment by increasing the maximum shares of foreign capital in joint ventures from 40 to 51 percent with 100 percent foreign equity permitted in priority sectors.
Streamlining procedures for FDI approvals, and in at least 35 industries, automatically approving projects within the limits for foreign participation.
The impact of these reforms may be gauged by the fact that total foreign investment (including foreign direct investment, portfolio investment, and investment raised on international capital markets) in India grew from a minuscule US $132 million in 1991-92 to $5.3 billion in 1995-96. Rao began industrial policy reforms with the manufacturing sector. He slashed industrial licensing, leaving only 18 industries subject to licensing. Industrial regulation was rationalized.
National Security, Foreign Policy & Crisis Management
Rao energized the national nuclear security and ballistic missiles program, which ultimately resulted in the 1998 Pokhran nuclear tests. It is speculated that the tests were actually planned in 1995, during Rao`s tenure in office. Rao increased military spending, and set the Indian Army on course to fight the emerging threat of terrorism and insurgencies, as well as Pakistan and China`s nuclear potentials. Rao also made diplomatic overtures to Western Europe, the United States, and China.
It was during Rao`s tenure that terrorism in the Indian state of Punjab finally ended.
Rao was confronted with scenarios of plane hijackings and all of them ended without the government conceding the terrorists` demands.
Rao successfully directed negotiations to secure the release of Doraiswamy, an Indian Oil executive, from Kashmiri terrorists who kidnapped him, and Liviu Radu, a Romanian diplomat posted in New Delhi in October 1991, kidnapped by Sikh terrorists.
Rao decided in 1992 to bring into the open India`s relations with Israel, which had been kept secret since they were first established under Indira Gandhi`s orders in 1969 and permitted Israel to open an embassy in New Delhi.
Rao ordered the intelligence community in 1992 to start a systematic drive to draw the international community`s attention to alleged Pakistan`s sponsorship of terrorism against India and not to be discouraged by US efforts to undermine the exercise.
Rao`s crisis management after the Mumbai blasts of March 12, 1993 was highly praised. He personally visited Mumbai after the blasts and after seeing evidence of Pakistani involvement in the blasts, ordered the intelligence community to invite the intelligence agencies of the US, UK and other West European countries to send their counter-terrorism experts to Mumbai to see things for themselves. He felt that if they were convinced about the Pakistani role, they would at least tell their leaders even if they did not admit it to India.
Rao expertly handled the response to occupation of the Hazratbal holy shrine in Jammu and Kashmir by allegedly Pakistan sponsored terrorists in October 1993. He brought the occupation to an end without damage to the shrine. Similarly, he dealt with the kidnapping of some foreign tourists by a terrorist group called Al Faran in Kashmir in 1995 effectively. Although he could not secure the release of the hostages, his policies ensured that the terrorists demands were not conceded to, and that the action was condemned internationally, even by Pakistan.
Rao launched the Look East foreign policy, which brought India closer to ASEAN.
Rao decided to maintain a distance from the Dalai Lama in order to avoid aggravating Beijing`s suspicions and concerns, and made successful overtures to Teheran. The `cultivate Iran` policy was pushed through vigorously by him.
These policies paid rich dividends in March 1994, when Benazir Bhutto`s efforts to have a resolution passed by the UN Human Rights Commission in Geneva on the human rights situation in Jammu and Kashmir failed, with opposition by China and Iran.