Foreign Policy of PV Narsimha Rao
PV Narsimha Rao was one of the ablest prime ministers of India who remained in power between 1991 and 1996. He was first prime minister of India in post-cold war world and first prime minister outside of Nehru family to complete a full term in office. He came to power when a sympathy wave due to assassination of Rajiv Gandhi gave thumping victory to Congress (I) in 1991 elections.
The end of cold war had brought several important changes in the international order. Firstly, there was an end of bipolar nature of global politics; US appeared to be the only super power; and every nation started the process of redesigning its foreign policy adapted to new order. Secondly, impacts of Globalization on international economy and politics became more pronounced.
Ushering India into Liberalization
The Narsimharao Government immediately started redesigning of India’s foreign policy to adjust to new global environment. Within two months of being in power, it took the bold step to reform India’s Economy and under the ubiquitous pressure of globalization, decided to liberalize the Indian Economy. Rupee was devaluated by 23% and most industries were delicensed. Import tariffs were lowered, import restrictions were dismantled and Indian economy was opened for foreign investments. A Market Determined exchange rate system was introduced with LERMS.
The liberalization was very much a part of government policy to set the home in order. However, US as well as other industrialized countries welcomed the liberalizations and hinted at more investments in the country. FDI increased significantly and for the first time since Independence, India was seen as a “Huge Market”. Thus, the Narsimharao government successfully used domestic economic policy as an instrument of changing international perceptions about India.
Changing Relations with Super Powers
Hitherto, India was seen as a close ally of Soviet Union, thus relations with US and west were not very good. When the Rao government decided to go for market economy, it naturally attracted the American and other investors to India. In 1995, a US-India Commercial Alliance (USICA) was created. In the same year, United States declared India as a “Big Emerging Market”.
Neighbourhood Relations
The Narsimharao Government also tried to improve India’s relations with neighbours. In 1993, Prime Minister visited China and alleviated some of the bitterness in the relations. With Nepal, India signed Mahakali Treaty towards generation of hydroelectricity and its export to India. In 1995, India along with other countries of SAARC signed the South Asian Preferential Trade Agreement (SAPTA). With Sri Lanka, the government engaged in economic diplomacy and announced some joint ventures.
Look East Policy
India’s Look East Policy was for the first time pursued by Narsimharao Government. Under this policy, India focused its attention toward South-East Asia, which was long neglected during the Cold war period. This policy was further cemented by successive prime ministers and now converted into “Act East Policy” by the current government.
Security Initiatives
To bolster India’s external security programme, the Narsimharao Government launched the ambitious Ballistic Missile Technology Programme and successfully tested the Augmented Satellite Launch Vehicle (ASLV) and the Polar Satellite Launch Vehicle (PSLV) in 1992. In 1994, first successful tests were done of Prithvi Missile and it was subsequently developed into intermediate-range ballistic missile (IRBM). The Ballistic Missile programme irked US but the relations did not deteriorate the relations much because of economic interests.
In this way, the Narsimharao Government is credited with introduction of a new trend of economic diplomacy in India’s foreign policy.
