The legacy of Atal Bihari Vajpayee: 12 key reforms the former PM rolled out

Former Prime Minister Atal Bihari Vajpayee was the first non-Congress prime minister to complete a full five-year term in office. But that was not his only claim to fame. Vajpayee also pioneered economic reforms, which laid the foundation for several major steps.
The new divestment era

Vajpayee was the first PM to set up a separate disinvestment ministry. Despite facing political obstacles and internal conflicts, the Vajpayee-led government successfully divested Bharat Aluminium Company (BALCO), Hindustan Zinc, Indian Petrochemicals Corporation Ltd and VSNL. Vajpayee not only had to face a determined Opposition, but also the growing dissent from coalition partners and the Sangh Parivar over privatisation of profit-making public sector undertakings (PSUs), such as HPCL and BPCL.


The Vajpayee government had first tried the cross-purchase of shares of oil companies - ONGC, Indian Oil Corporation (IOC), and GAIL.
Between 1999 and 2000, the Vajpayee government made the three oil companies to purchase government-owned equity shares. The idea was mooted by the then Finance Secretary Vijay L Kelkar and endorsed by the then Finance Minister Yashwant Sinha.
Under the move, ONGC bought 9.1% shares in IOC and 4.8% shares in GAIL. Similarly, IOC bought 9.6% shares in ONGC and 4.8% shares in GAIL. GAIL bought 2.4% shares in ONGC.
All the shares were owned by the government and all the companies used their own resources to buy these shares. At the end of the exercise, the government's disinvestment receipts were boosted by Rs 4,643 crore.
Golden Quadrilateral

The Vajpayee government's Golden Quadrilateral, launched in 2001, was the longest road project in India and the fifth-longest highway in the world, connecting four major cities: Delhi, Mumbai, Chennai and Kolkata. According to a study, Highway To Success, by Ejaz Ghani, Arti Grover Goswami and William R. Kerr, The Economic Journal, the highway project provided a huge boost to manufacturing activity and productivity in districts located within 10 km of the road network.
Experts said that the new road infrastructure facilitated growing young firms to move out of congested big cities in search of cheaper land and buildings. The project resulted in a 49% increase in overall output for the average district located along the Golden Quadrilateral network.

Pradhan Mantri Gram Sadak Yojana

In 2000, a parallel programme to Golden Quadrilateral, the Pradhan Mantri Gram Sadak Yojana (PMGSY) was launched to provide all-weather road connectivity to every rural habitation with a minimum population of 500 in the plains and 250-plus in hill states, tribal districts and desert areas. The biggest impact of the project was on productivity.
Between 2000-01 and 2003-04, a cumulative expenditure of Rs 6,607.83 crore was incurred under PMGSY, with 51,511 km of roads getting built. NDA's successor UPA 1, did not undermine the programme, despite it being an NDA flagship and wholly invested in the programme.

India's telecom revolution

In May 1998, Atal Bihari Vajpayee's PMO notified the appointment of a National Task Force on Information Technology and Software Development headed by Jaswant Singh, who was then the Deputy Chairman of the Planning Commission. With this, the Vajpayee government brought about a telecom revolution in the country by replacing fixed license fees for telecom firms with a revenue-sharing arrangement. The task force was asked to draw up a national policy on informatics aimed at helping India become an IT superpower within 10 years.

Telecom Disputes Settlement Appellate Tribunal

It was constituted in 2000 by the Vajpayee government in order to strengthen the regulatory framework. The government viewed that disputes involving parties such as licensor, licensee, service provider and consumers, can be resolved by TDSAT. Also, any direction, order or decision of the Telecom Regulatory Authority of India could be challenged before the TDSAT.

Fiscal profligacy

The Fiscal Responsibility and Budget Management (FRBM) Act was introduced in 2003 with the aim to check fiscal profligacy. The decision was taken on the back of India's mounting debt burden, which in turn affected the country's fiscal deficit and financial health of the states. The move resulted in public sector savings, which surged from 0.8% of GDP in fiscal year 2000 to 2.3%  in 2004-05.
Goods and Services Tax

While NDA-II will always be credited for the implementation of the Goods and Services Tax, former PM Vajpayee had first proposed the indirect tax regime. It was during a meeting between Vajpayee and his advisors that the GST was discussed. Three former RBI governors IG Patel, Bimal Jalan and C Rangarajan were also part of the team that envisaged the tax reform.
In 2000, Vajpayee had formed a committee headed by CPM leader and the then West Bengal finance minister Asim Dasgupta to design a GST model. It is said that Vajpayee had personally called the then Bengal CM and CPM stalwart Jyoti Basu requesting him to spare Dasgupta to draft the policy.

Air India sale

In 2000, the government under Atal Bihari Vajpayee examined the strategic sale of equity in Air India and Indian Airlines. Those were the days when Indian Airlines and Air India operated as two distinct corporate entities, only to be merged in 2007 and rechristened as Air India. Vajpayee and then finance minister Yashwant Sinha were serious about strategic disinvestment in the two airlines and had even set up a committee to expedite such sales. But due to lack of suitable offers, the government dropped the plan.

Sarva Shiksha Abhiyan

Pioneered by Vajpayee, the social scheme aimed to provide universal access to elementary education for children aged 6-14 years. The expenditure was shared by the Centre (85%) and the state governments (15%). The central government's share was funded by a number of external agencies, including the World Bank, Department for International Development and UNICEF. Within four years of its launch in 2001, the number of out-of-school children dropped by 60%.

Focus on North East

India's North-East policy took a new turn under Vajpayee. He made several departures from the past by setting up several autonomous councils in the region, a separate ministry for development of the region and earmarked 10% of funds from each ministry for the development of the north eastern states. The Bodo peace accord in Assam was also signed during his term as prime minister.

US-India relations

Vajpayee visited the United States four times during his tenure. He visited twice in 2001 and once each in 2002 and 2003. When Vajpayee visited the US in 2000, his position was a little precarious as India had carried out the nuclear tests in Pokhran in 1998 and there was a huge resentment in the US against the move.
Things improved during his visit in 2001. President Bush promised Vajpayee that he would look into India's technology push. Subsequently, in 2004, the government signed Next Steps in Strategic Partnership (NSSP) initiative with the US on the liberalisation of high-technology transfers to India.