Narsimha Rao forced into 1991-reforms after Nehruvian economics failed: Arun Jaitley

By: |
Updated: August 21, 2016 1:17:01 PM

Finance Minister Arun Jaitley in a comment on Congress party has said that former Prime Minister PV Narasimha Rao should not be given so much credit for economic liberalisation. According to Jaitley, Rao had started those reforms out of "compulsion" since Nehruvian economics had failed in national development.

Arun Jaitley said that Rao in order to avoid sovereign credit default incurred because of Nehruian mindset, had to initiate the economic reforms in 1991.(Reuters)Arun Jaitley said that Rao in order to avoid sovereign credit default incurred because of Nehruian mindset, had to initiate the economic reforms in 1991.(Reuters)

Finance Minister Arun Jaitley in a comment on Congress party has said that former Prime Minister PV Narasimha Rao should not be given so much credit for economic liberalisation. According to Jaitley, Rao had started those reforms out of “compulsion” since Nehruvian economics had failed in national development. Jaitley said that Rao in order to avoid sovereign credit default incurred because of Nehruian mindset, had to initiate the economic reforms in 1991. Jaitley said that the former PM was not a “big liberaliser” as people hail him to be.

While addressing party workers Jaitley maligned the Nehruvian economics and said, “While in the 1950s and the 60s we had limited resources,the 70s and 80s were wasted decades, which contained our growth rates at 1-2 per cent per annum.” Jaitley also added, “when Rao was the law minister of Andhra, his first decision was that all private colleges should be abolished and only government should run the colleges. But when he became the prime minister, he found that there was no foreign reserves left in its kitty, and that the country was heading towards bankruptcy. So, the reforms were brought in due to that compulsion, due to failure of that system.”

“In the first two-three decades after the Independence, our growth was around 1-2 per cent, or maximum 2.5 per cent. Compared to world economic growth, we were nowhere. At that time the mindset was that all the responsibilities were of the government… impacted by the Nehruvian thoughts,” Jaitley said.

“The Nehruvian model did not help development. Less than 1% of the population had a phone. Other countries were developing, India wasn’t, that was the model of development we were following, and there are some people who actually praise that model,” the finance minister added.

“When Japan, Korea and Taiwan were on the path of economic success, we were impacted by the Nehruvian thought as there was a thinking that there were some work that only the government can do,” Jaitley said.

Speaking on Tax reforms like GST in India, Jaitley stressed on the importance to increase the taxpayer base and reduction of tax evasions. He said, “If all taxpayers pay their taxes, it will help bring in tax rates further low. The more the evasions and exemptions, the higher will be the tax rate. So, moderate tax rates and evasions cannot co-exist,” Jaitley said.

Jaitley also talked about the current policies by PM Modi, especially the Make in India program and said that “it isn’t just an empty slogan”.

Get live Stock Prices from BSE and NSE and latest NAV, portfolio of Mutual Funds, calculate your tax by Income Tax Calculator, know market’s Top Gainers, Top Losers & Best Equity Funds. Like us on Facebook and follow us on Twitter.

Switch to Hindi Edition
FinancialExpress_1x1_Imp_Desktop