Prime Minister who catalyzed India’s infra, telecom revolutions

Atal Bihari Vajpayee was the first non-Congress prime minister to complete a full five-year term in office. When his government lost power in 2004, most commentators attributed the defeat to the BJP’s ‘India Shining’ campaign backfiring. This, in a way, describes the biggest economic legacy of Vajpayee. While economic reforms were started in 1991, and there was, by and large, an economic continuity on major issues under the previous Congress and UF governments, it was Vajpayee who was seen as having pushed the envelope on economic reforms, even if it entailed a political cost.

The BJP’s rise as a force to reckon with in politics was on the back of a campaign demanding that a Ram temple be built where the Babri Mosque stood. Ironical as it may sound, the Vajpayee government will be remembered for “constructing” completely different things.

Statistics speak for themselves. Centre for Monitoring Indian Economy data shows the length of standard multi-lane national highways in India was 1,576 km in 1997-98. This increased more than four-fold by the end of 2003-04, the last year under the Vajpayee government. Most of the credit for this goes to his government’s Golden Quadrilateral project. Road travel underwent a revolutionary transformation in India after this initiative. It was not just roads the first NDA government was building. India witnessed one of the highest growth phases in the construction sector under his government. This was not by fluke. His government increased income tax deductions attributable to interest payments on housing loans. This gave a boost to housing demand. In hindsight, the construction boom, which outlived his government, can be described as the cushion that prevented the economy from crash-landing on the employment front. Rising share of construction in total employment, notwithstanding the problems associated with earnings and social security, helped re-route labour from the farm sector which has been mired in a systemic crisis for quite some time.

Not all of Vajpayee’s economic achievements were state-led. It was his government which unleashed animal spirits in the telecom sector. In 1999, his government moved from a licence-fee regime to a revenue-share regime. The number of mobile phone connections, under 10 million then, doubled every year after that for the next five to six years. The then Comptroller and Auditor General did make a point about the huge loss of revenue to the exchequer on this account in a draft report, but Vajpayee and his telecom minister Pramod Mahajan clarified that their goal was to increase tele-density, not focus on revenue maximisation. India’s mobile-phone revolution owes a lot to these reforms. His was also the first government to put in place a disinvestment ministry. While some of the decisions by this ministry landed in controversy, even the next government did not dismiss the idea of disinvesting Public Sector Units (PSUs) in principle. Indeed, some analysts maintain that Air India might have been in private hands now if the Vajpayee government had come to power.

Many commentators highlight the contradiction between the Swadeshi moorings of the Rashtriya Swayamsevak Sangh and the pro-reform orientation of BJP governments. One area where Vajpayee aced this contradiction was in the Doha Round of World Trade Organisation (WTO) negotiations. Represented by Murasoli Maran, Vajpayee’s commerce minister (and perhaps India’s best ever), India forced the WTO ministerial conference held in Doha in 2001 to recognise that the multilateral trade regime could not be only about liberalisation, and must recognise the concerns of the global south on the role of trade in development and poverty. It was India which led the charge on behalf of the third world in Doha. That the advanced countries have refused to honour the Doha mandate till date, even at the risk of jeopardising decision making in the WTO itself, shows the importance of India’s success in making them agree to it in the first place. This could not have been possible had Vajpayee not given his backing to Maran against pressure from countries such as the US. Vajpayee’s economic legacy will be evaluated by persons of differing political-ideological persuasions. India’s economic history will be significantly poor if it does not include an objective analysis of the Vajpayee years.

 

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