Geography Reference
In-Depth Information
not privatisation), drastically reducing industrial licensing and trade protection, and open-
ing the country up to foreign investment. The need for financial and labour reforms were
mentioned without any details.
Another policy document had been prepared at the industries ministry during V.P.
Singh's time by Amar Nath Verma, the industry secretary (the ministry's top civil servant),
and Rakesh Mohan, then the ministry's economic adviser and later the finance secretary
and a deputy governor of the RBI. The industry minister at the time (later aviation minister
from December 2011) was Ajit Singh, who was new to politics. He had returned to India in
1981 with plans to set up his own company after 17 years in the US working as a software
systems trouble-shooter with IBM, Xerox and others. His father, Chaudhary Charan Singh,
a prominent farmers' leader in Uttar Pradesh and briefly prime minister in 1979-80, died in
1987 and this swept Ajit into politics to inherit a mass-base legacy. Accustomed to life in
America, he was impatient for reforms and was appalled by the huge number of approvals
and files that crossed his desk. 'The industries minister was the most powerful in the gov-
ary 1990, V.P. Singh (no relation) told him to go to the World Economic Forum in Davos,
which was just beginning to grow into an annual Swiss alpine jamboree for world leaders
and businessmen, and talk about how India could be changed by reforms. 'We had to brief
him on policy and that was the trigger for putting together a presentation on what had to
control mechanisms that were in place including industrial licensing, phased manufactur-
ing, monopolies regulations, controlling capital issues and export-import controls.' But a
day or two before Ajit Singh was due to fly to Davos, V.P. Singh decided to send someone
else who did not have an industries' brief.
The ideas continued to be developed and, in the middle of 1990, Ajit Singh placed a new
industries policy in the Rajya Sabha. This included measures that appeared in the 'M' doc-
ument and proposed, perhaps most controversially, raising the permissible level of heavily
restricted foreign direct investment (FDI) to 51 per cent of a company's equity, and open-
ing some public sector industries to the private sector. It also proposed relaxing controls on
monopolies and industrial production, and changing the way that import and export trade
classifications were listed. There was widespread opposition, and the ideas had not pro-
gressed by the time the V.P. Singh government fell in November. Next came a coalition
government led by Chandrashekhar (his second name was Singh but he was always known
by this one name), a respected veteran socialist politician with a broad enough base to be
chosen as leader of a fractured coalition. India was heading into a deep financial crisis and
there was some interest in reforms, but there was strong resistance from politicians, bur-
eaucrats and the private sector, who regarded the ideas as too controversial, so nothing was
