Vajpayee’s big economic impact is rarely spoken about…

When we talk of economic reforms in India, the focus is normally on Dr. Singh and Mr. Narasimha Rao. While they certainly pioneered the reforms process in India under pressure from the IMF, the practical thrust came from Mr. Vajpayee. In fact, had it not been for Atalji, Indian markets may have never seen the big bull market of 2003-2007. Let us also remember his significant economic contribution, apart from his vision and unmatched oratory.

Golden Quadrilateral

When the NDA government announced an Rs.75,000 crore outlay for the Golden Quadrilateral project in the 2003 budget, it was an audaciously large allocation. Over the last 15 years, if India has seen a major thrust to trade, commerce, production and income levels; it is all thanks to the trigger that came from Golden Quadrilateral project which remains India’s first major infra thrust post liberalization.

Opening up telecom

It is a tribute to the vision of Atalji that Indian telecom became globally smart and led to many other spill-off benefits like internet banking, internet broking, ecommerce, big data, AI, machine learning etc. Most of these would have been inconceivable without a paradigm shift that made the telecom revolution possible in India. A lot of connectivity dividends today are due to Atalji.

Fiscal responsibility

Today if India is able to maintain its external ratings despite the challenges to the trade deficit, it is largely because of the Fiscal Responsibility and Budget Management (FRBM) Act that was mooted during the Vajpayee regime. For a country like India that has been under perpetual deficits of all kinds, this was the best way to demonstrate the commitment of the government towards fiscal responsibility and keeping the fiscal deficit under control. The FRBM also forces the government to cut its expenditure as well as look at more innovative sources of revenues to bridge the gap apart from just borrowing. A large part of the thrust to FDI via the “Make in India” initiative can also be attributed to the FRBM.

Divestments and low rates

The interest rates scenario in India saw a paradigm shift with the combination of Atalji and Dr. Bimal Jalan. Interest rates were cut at a rapid pace and that value explosion was used to make PSU IPOs attractive. The speed with which the Vajpayee government genuinely sold PSU shares to the public remains unmatched till date. If India really enjoys a broad investor base and quality PSU paper today, it is all thanks to Vajpayee. The next time we get overwhelmed by Atalji’s oratory, let us also remember him as the man who had a big impact on economic reforms!