P.V. Narasimha Rao

P.V. Narasimha Rao

GS1-Modern India/Personalities in News


P.V. Narasimha Rao's tenure as India's Prime Minister from 1991 to 1996 was a transformative period marked by sweeping economic reforms and strategic policy initiatives.

Despite facing significant challenges, Rao's leadership steered the nation through a critical juncture, reshaping India's economic trajectory and global standing. In this analysis, we explore the key achievements, controversies, and lasting legacy of the Narasimha Rao Government, highlighting its profound impact on India's socio-economic landscape.

About P V Narasimha Rao (9th Prime Minister)

Pamulaparti Venkata Narasimha Rao assumed office as India’s 9th Prime Minister on June 21, 1991. Rao's tenure marked a significant shift in India's economic policies, transitioning from Nehruvian socialism to liberalisation. Notably, he was the first Prime Minister from outside the Hindi-speaking belt and the first from a southern state.

Important Facts about P V Narasimha Rao

  • Centenary Celebration: The 99th anniversary of P V Narasimha Rao's birth was celebrated on June 28, 2020, marking his significant contributions to Indian politics and governance.
  • Term as Prime Minister: Narasimha Rao served as Prime Minister from 1991 to 1996, overseeing a period of substantial economic reforms and policy changes.
  • Early Life: Born into a farmer's family in Lanepalli, located in Telangana's Warangal District, Narasimha Rao emerged as a prominent leader from humble beginnings.
  • Advancement of Rural Economies: Narasimha Rao spearheaded initiatives for the development of rural areas, focusing on various sectors such as clean water, women and children's welfare, primary healthcare, education, artisan empowerment, animal husbandry, and small industries.
  • Budgetary Allocations: Under his leadership, the allocation for rural development schemes surged to Rs. 30,000 crores in the 8th Five Year Plan, a substantial increase from Rs. 7,000 crores in the previous plan.
  • Economic Achievements: Narasimha Rao's economic reforms led to a significant increase in foreign exchange reserves, which rose 15-fold by 1996, reaching Rs. 3,000 crores from its 1991 level. His policies contributed to a steady GDP growth rate, averaging around 7-7.5 percent during his tenure.
  • Pioneer of Inclusive Growth: Widely regarded as the pioneer of inclusive growth, Narasimha Rao's policies aimed to uplift all sections of society, ensuring equitable development across regions and demographics.

Transformative Economic Reforms under the Narasimha Rao Government (1991-1996)

The Narasimha Rao Government (1991-1996) marked a transformative period in India's economic history:-

  • Leadership Transition: PV Narasimha Rao, initially planning to retire, assumed office as India's ninth Prime Minister following the 1991 Lok Sabha elections.
  • Economic Crisis Management: Rao's government inherited a severe economic crisis. Despite initial challenges, the government embarked on a series of bold reforms aimed at addressing the crisis.
  • Economic Reforms: The government implemented several key reforms, including:-
    • Significant depreciation of the Indian rupee (18-19%)
    • Elimination of industrial licensing and MRTP clearance
    • Gradual reduction of import duties, income tax, and corporate tax
    • Liberalisation of foreign investment regulations
    • Privatisation of the public sector
  • Economic Growth: These reforms led to notable outcomes, including:-
    • Increase in foreign reserves to $25.1 billion by 1995
    • GDP growth rate of 6.5 percent during the eighth plan period (1992-1997), marking the highest growth rate in the country's history up to that point.

Narasimha Rao Government: Pioneering Achievements

Liberalizing the Indian Economy

  • Amidst a severe economic crisis, Rao's government undertook bold measures to liberalize the economy.
  • Initiatives included the elimination of industrial licensing, reduction of import duties, and privatization of the public sector.
  • These reforms led to a significant increase in foreign reserves and GDP growth, marking a historic turnaround for the Indian economy.

Framing India’s Look East Policy

  • Rao's administration revitalized India's engagement with Southeast Asia, fostering strategic and commercial ties with ASEAN nations.
  • This policy shift not only enhanced regional cooperation but also positioned India as a counterbalance to China's influence.

Recognition of Israel

  • In a landmark move, India established full diplomatic relations with Israel, overturning decades of diplomatic estrangement.
  • This decision, despite initial skepticism, signaled a significant shift in India's foreign policy and set the stage for closer cooperation between the two nations.

Bringing an end to the insurgency in Punjab

  • Despite significant challenges, Rao pursued democratic processes and held elections in Punjab, defying militant threats.
  • This decision showcased the government's commitment to restoring peace and stability in the region.

Managing the aftermath of the Mumbai blasts

  • Following the devastating bombings in Mumbai, Rao's government took proactive steps to address the security threat.
  • By presenting evidence of Pakistan's involvement to the international community, the government effectively countered terrorism and upheld national security interests.

Narasimha Rao Government: Notable Controversies

The Babri Masjid Demolition

  • The demolition of the Babri Masjid in December 1992 sparked widespread communal violence, resulting in the loss of over 2,000 lives.
  • The government faced criticism for its perceived inaction in preventing the demolition, leading to a significant erosion of Muslim support for the Congress party.

Cash for Votes Scam

  • In July 1993, the government faced allegations of bribery during a no-confidence motion filed by the BJP.
  • Accusations surfaced that members of parliament were offered bribes to support the Congress government, tarnishing the administration's reputation.
  • While lower courts found some MPs guilty, higher courts eventually cleared them, but the controversy left a stain on the government's integrity.

Stock Market Scam

  • The arrest of stockbroker Harshad Mehta in connection with a massive stock market scandal in 1992 implicated the government.
  • Allegations arose that Mehta had paid a substantial sum to Narasimha Rao to evade legal consequences, although these claims were vehemently denied by Rao.

Hawala, St Kitts, and Lakhubhai Pathak Cases

  • The government faced scrutiny and allegations of corruption in various cases, including the Hawala scandal, St Kitts forgery case, and Lakhubhai Pathak cheating case.
  • These scandals undermined the government's credibility and diverted attention away from its economic reforms and development initiatives.

Impact on Electoral Outcome

  • The controversies surrounding corruption and malfeasance significantly impacted the Congress party's electoral prospects in the 1996 Lok Sabha elections.
  • Corruption emerged as a prominent issue during the campaign, contributing to the party's electoral defeat and tarnishing Narasimha Rao's legacy.


The Narasimha Rao Government played a pivotal role in shaping India's economic landscape through bold reforms and transformative policies. Despite facing significant challenges and controversies, particularly regarding corruption and communal tensions, the administration's enduring legacy lies in its contributions to economic liberalization, regional diplomacy, and peacebuilding efforts. While the government's achievements paved the way for India's emergence as a global economic powerhouse, the controversies underscore the complexities and pitfalls of governance. Ultimately, the Narasimha Rao Government's legacy is one of both remarkable progress and enduring scrutiny, reflecting the intricacies of India's democratic journey.