BREAKING NEWS

Peek Into History: Growth of the Telugu Land in a post-liberalisation era

(This article is part 3 of The Better Andhra’s ‘History Series’ on post-independence development in Andhra Pradesh)
 
End of Permit Raj
 

The New Economic Policy of 1991 aimed to completely reform the Indian economy through liberalization, privatization and globalization by reducing the role of government in economic activities and rather, being a facilitator of faster production and economic growth. This was one of the most important steps taken by the Union Government in the history of India that ended the “License-Permit-Quota Raj”, wherein government control was so strong that it not only decided which company would produce what, but also the amount of production, as well as the price of commodities.
 
When India had achieved independence in 1947, the country was grappling with problems of widespread poverty and crises in agriculture as well as industries. The First Five Year Plan was launched in 1951 which mainly focused on the development of the primary sector. 
 
Five years later, on 14 May 1956, the Second Five Year Plan, famously known as the Mahalanobis Model, was announced. The emphasis of this plan was on government-led industrialization. Thus, started the “License-Permit-Quota Raj” in India. With the nationalization of banks in 1969 and the Monopolies and Restrictive Trade Practices (MRTP) Act of 1970, the License Raj was further strengthened.
 
The License Raj created a ‘scarcity economy’, and this scarcity also applied to foreign reserves since we practiced ‘swadeshi’. The Balance of Payment crisis arose in the 1970s and worsened towards the end of 1980s. The balance of payments situation came to the verge of collapse in 1991, mainly because the current account deficits were financed by borrowings from abroad. India was in the need of an International Monetary Fund (IMF) bailout. The price of the bailout was the License Raj.
 
From 1991, the Indian economy started on a path of economic liberalization, which has eventually impacted each and every sector of the country, and the life of every Indian citizen. The Balance of Payment (BoP) crisis was over by the end of March 1994 and foreign exchange reserves rose to USD 15.7 billion. Inflows of both Foreign Direct Investment (FDI) and Foreign Institutional Investment (FII) into India increased massively.
 
Following the opening up of the economy, local industry leaders played a major role in the state to highlight the investment opportunities in power and infrastructure sectors. Another crucial step that they took during this time was to build a strong public consensus against Bundhs, which were proving to be an impediment to trade as well as the state’s progress. 
 
Post-liberalisation also witnessed the greater role of states in proactively pursuing investments and competing with other states. As a result, the Government of Andhra Pradesh: Launched special schemes to attract investment from abroad especially from NRIs, announced strong support for private investment in sugar, pharma and biotech industries, launched an Export Processing Zone at Visakhapatnam, established a Software Technology Park in Hyderabad in order to promote industries in high-technology areas, took loans from the ADB for laying roads and took up power reforms in the state.
 
With the biotechnology sector already gaining prominence in the previous decade, another home-grown company that was established in 1993 was Shantha Biotechnics. The project originated as an R&D outfit of Osmania University. The company was set up by Dr. Varaprasad Reddy and Khalil Ahmed provide cost-effective drugs to the common man. The company was later acquired by French pharma giant, Sanofi.
 
Media and entertainment industries get a boost
 
In 1994, when the Central government announced the National Telecommunications Policy to increase telecom network and services, the industry supported the AP government in educating personnel who were involved in expanding the network in the state.
 
The government also gave approvals for the beginning of a satellite TV network called the Etv Network in 1995. ETv’s inception created an ecosystem for several other satellite channel broadcasts in Hyderabad in the coming years. In 1996, the film industry received another major push with the founding of the Ramoji Film City in Hyderabad. At 1633 acres, it is the largest integrated film city in the world. 
 
During this period, the government also took an active part in development of agriculture in the state. It enlightened several businessmen to support farmers, supply good quality seeds and push for rural development. 
 
By 1995-96, the State Gross Domestic Product (GDP) of AP was far below the national average. The state government’s expenditures on subsidy and welfare were deemed to be excessive, comprising around 10% of the state GDP. As the revenue earning was declining and expenditure increasing, the state economy was heading for a crisis. 
 
Following Nara Chandrababu Naidu’s take over as the Chief Minister, he decided to recover the state economy. As a result, the state government took loan from the World Bank under the Structural Adjustment Programme (SAP). Along with the loan, the World Bank advised the state government to cut government expenditures and introduce economic reforms. At the same time, priorities were given to attract foreign investments in tertiary industries such as information technology, biotechnology, finance and banking.
 

Photo Gallery