Reforms by Stealth: Indian Economic Policy, Big Business and the Promise of the Shastri Years, 1964-1966
Author(s)
Kudaisya, Medha M.
Abstract
The business community in India welcomed the appointment of Prime Minister Lal Bahadur Shastri (1904-66) in 1964, as he was thought to be more friendly to business than was his predecessor, Jawaharlal Nehru. In the next two years there was a move to reduce state involvement in the economy and to place a greater reliance on the market. Government control over key sectors, such as the steel and cement industries, was reduced and there was a general move toward a decentralization of economic decision making. Foreign investment was welcomed and plans were made to reduce taxation levels. The sudden death of Shastri in 1966 was a major blow to implementing these reforms. His successor, Indira Gandhi (1917-84), was initially willing to continue the reform process. However, the hostile local response to her devaluation of the rupee, combined with the failure of the United States to deliver promised economic aid, caused Gandhi to turn her back on the reform process.
