ECONOMIC

ENVIRONMENT UNDER RAJIV GANDHI

Topics Covered

Introduction Timeline Composition of Planning Committee Economic Policies The Economic condition Conclusion

Introduction

Rajiv Gandhi - Did not enter politics until after his younger brother Sanjay was killed.
Indira Gandhis assassination in 1984. Came into power as the Prime Minister of India in 1984. A poor country cannot afford to carry on billing the poorest people for its inefficiency and call itself socialist.

Faced with an unenviable four-pronged challenge:

1)Resolving political and religious violence; 2)Reforming the demoralized Congress; 3)Reenergizing the sagging economy in terms of productivity and budget control; 4)Reducing tensions with neighbors.

Timeline

1944: Born in Mumbai. 1960s: Returns to India from Trinity College, Cambridge, without a degree. Joins Indian Airlines as a pilot. 1968: Marries Sonia. 1981: After Sanjay's death, he quits IA to join politics.

1984: Becomes PM after Indira's death.

1985-86: Ushers in economic reforms. Signs Punjab, Assam, Mizo Accords.

1987: Signs Indo-Sri Lankan peace pact. Bofors scandal unfolds. 1989: Defeated in Lok Sabha elections. 1991: Assassinated in Sriperumbudur.

Composition of the planning Commission during Rajiv Gandhis Tenure

Rajiv Gandhi Manmohan Singh Vishwanath Pratap Singh P.V. Narsimha Rao Buta Singh C.H. Hanumantha Rao M.G.K. Menon Raja J. Chelliah Hiten Bhava Abid Hussain C.G. Somiah Chairman Deputy Chairman Member Member Member Member Member Member Member Member Member

Economic Policies Tax Policies

Rajiv called for a tax reform which cut the income and corporate tax rates. Different from his precursors. Against the traditional socialism. Revived Foreign Policy

Cut in Income and Corporate Tax Rates. Brought in 40% of more Revenue. Increased Government support. Reduced import quotas, taxes and tariffs on technology-based industries.

Licensing

Reduced the restrictions on the economy. Modified definitions so that the limitation imposed by "small company" policy were lessened. Some industries removed from coverage by the MRTP Act. Created broadbanding

Telecom
Revolution in the field of information technology and telecom. Origination of the MTNL and VSNL in 1986. Telecom services to the rural India.

Separated the Department of Post and Telegraph in 1985. With a growth rate of 45%, Indian telecom industry has the highest growth rate in the world. Government set up the Centre for Development of Telematics (C-DoT) in 1984.

National Education Policy

Task of HRD was increased. National education policy" to modernize and expand higher education and thus introduced Jawahar Navodaya Vidyalaya system. Promote national progress, a sense of common citizenship and culture The National Education Policy laid stress on the need for a radical reconstruction of the education system, to improve its quality at all stages, and gave much greater attention to science and technology, the cultivation of moral values and a closer relation between education and the life of the people.

The Economic Condition:1-Agriculture

Genetic development of high-yielding grain varieties, the Green Revolution- continued Under his tenure. Between 1970 and 1989 the rate of growth of agriculture was only 2.1 percent per year whereas in Indonesia, Malaysia, the Philippines and Thailand were 3.7%, 4.7%, 3.6% and 4.5%, respectively.

Licensing and Imports

The cost of the License Raj was about half the rate of growth. The cost of the License Raj more importantly is in the slower pace of alleviating poverty. India virtually shut off imports with high tariffs, low quotas and outright banning. The structure of India's wall against trade is shown: Profits on exports were made exempt from the corporate profit tax.

Type
Consumer Goods Inessential Consumer Goods Essential (Medicines)

Regulation
Banned

License?

Permitted

Capital Goods Restricted

Permitted

Certification of Being Essential Indigenous Angle Clearance License No License Required

Capital Goods Open General License Intermediate Goods Banned Intermediate Goods Restricted Intermediate Goods

Permitted

License Required

License Required

In 1988: India's imports were distributed as follows: 40 percent -canalized variety. 12 percent- restricted, 32 percent -limited permissible 16 percent- Open General License.

 India in 1985 had

Nominal Tariff Rates of Various Countries As Percentage of Value, 1985

the highest level of tariffs in the world, as is shown in the corresponding table: In 1988 had the

Country Hungary Yugoslavia Argentina Morocco Philippines Mexico Thailand Turkey Pakistan China Bangladesh India

Intermediate Capital Consumer Manufacturing Goods Goods Goods Goods 14.2 18.0 21.2 21.6 21.8 25.5 27.8 29.4 75.0 78.9 97.9 146.4 15.0 20.7 25.0 18.1 24.5 23.5 24.8 54.9 73.8 62.5 80.5 107.3 22.6 20.0 21.9 43.0 39.0 32.2 8.5 55.3 127.3 130.7 116.1 140.9 20.9 19.0 22.9 27.3 28.0 24.7 33.6 37.1 89.8 91.2 100.8 137.7

lowest ratio of imports to GDP of any country in the Asia

Conclusion

Rajiv Gandhis Tenure was successful for India in the area of Science and Technology especially telecommunication and Education. The GDP of India grew from 4.2 Trillion Rupees in 1984 to about 5.8 Trillion in 1989. Businesses were benefited. Domestic Businesses were protected. Profits on exports were exempted from the corporate profit tax.

PRESENTED BY:
RITIKA BAKLIWAL -6 VAIBHAV DHANDIA-16 DISHA KHANNA-26 SAMARTH MEHTA-36 VARUN RASTOGI -46 TANUSHREE SINGHVI-56