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3 economic policies of the Vajpayee Govt. that catapulted India's GDP growth

India enjoyed explosive growth of 8-9% during 2004 to 2007 due to three economic policies of the Vajpayee Govt. It was these policies that catapulted India's GDP growth from 4-5% to 8-9%.

Unfortunately, NDA was defeated in 2004 elections before the benefits of these policies became apparent. It is a well know fact that economic policies act with a time lag...sometimes even over a few years. Unfortunately, Indians failed to appreciate the log-term beneficial impact of these policies.

Result: UPA is wrongly credited with the growth during this period.

Tragically, all these policies have been reversed since then. And the result of the same is that we were sliding back to the bad old days of poor growth.

The global slowdown since 2008 is merely an excuse. In fact, given India's economic potential, this was the moment in history that India should have seized to become economic super-power.

1. The Golden Quadrilateral  
Roads are the lifeline of "inclusive and sustainable" economic growth. The GQ implemented by Vajpayee Govt brought prosperity to millions of Indians who earlier had no access to goods and services available in the cities. Inclusion does not come from giving free food, free jobs, free etc. - but by giving 'appropriate' opportunities. Naturally, this translated into more growth and more jobs.

2. Low Interest Rates
It was Vajpayee Govt. that took a bold step to substantially reduce the administered interest rates. This brought down the cost of capital. Low interest rate, as everyone knows, is critical for economic growth and low inflation. This enabled "aam aadmi" to borrow cheap money for his home. This enabled companies to implement big projects. This enabled India to raise its GDP to 8-9%. Naturally, this translated into more growth and more jobs.

3. No micro-management
Earlier, budgets used to fix excise and customs duty for individual items. Vajpayee Govt. divided everything into just 3-4 categories like essentials, non-essentials and luxuries and fixed the duty rates accordingly. This simplification meant that businesses could focus on their core area i.e. managing business rather than sitting in Delhi to manage politics. Naturally, this translated into more growth and more jobs.

All is not lost...yet. We can still become Economic Superpower. All we need is good economic governance.

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