B S Yadiyurappa - The Economic Reformer

The 1991 economic reforms were a revolution in India's history. They freed our economy by removing government-controls on production and trade. But government-controls remained on the three inputs/factors of production – land, labour and capital. So our economy became only 50% free. Making our economy 100% free and unleashing its full potential requires removing these government-controls also – ie, carrying out factor-market reforms. Economists call this as Second Generation Reforms – and have been demanding it since 1991.

In 2015, Prime Minister Narendra Modi tried to carry out land-reforms – ie, removing government-controls on selling and buying land. Congress Party (which wants the pre-1991 govt-controlled socialism) said the land-reforms were 'pro-rich' and 'anti-poor'. Rahul Gandhi famously said: "Aapki sarkar suit-boot ki sarkar hai". The Modi-government was afraid of being seen as pro-rich/anti-poor – so it dropped the land-reforms and said it would leave it to the states. And how many state-governments (including BJP state-governments) carried out the land-reforms? Answer: Zero.

In 2019, BJP came to power in Karnataka and B S Yadiyurappa became Chief Minister. In January 2020, he attended the World Economic Forum at Davos and then announced that he would carry out the land-reforms in Karnataka. In September, he pushed the Land Reforms Bill through both the Houses of the Karnataka Legislature and carried out the land-reforms. Now (10 months later) the first benefits of the land-reforms are already visible: land prices, land sales and government revenue have all increased.

Today B S Yadiyurappa resigned as Chief Minister of Karnataka and brought an end to his long political career. He will go down in history not just as the man who brought BJP to power in South India but also as the greatest economic reformer among India's Chief Ministers.

India's 1991 Revolution

Today is the 30th anniversary of India's 1991 economic reforms. When we became free in 1947, Prime Minister Jawaharlal Nehru adopted the inefficient govt-controlled socialism as our economic system. After him, his daughter Indira Gandhi also continued with the same inefficient economic system. As a result, our GDP grew by around 3.5% per year. Our population grew by around 2% per year – so our per capita income grew only by around 1.5% per year.

But the countries of East Asia and South East Asia adopted the efficient free-market capitalism as their economic system. As a result, their GDPs grew by up to 10% per year. Consequently, the East Asian countries (Japan, Korea, Taiwan) became high-income countries and the South East Asian countries (Thailand, Malaysia, Indonesia, etc) became middle-income countries whereas we remained a low-income country – though they were poorer than us in 1947.

Finally in 1991, Prime Minister P V Narasimha Rao started the process of changing our economic system from inefficient govt-controlled socialism to efficient free-market capitalism. As a result:
# Our GDP has grown by around 8% per year. Our population has grown by around 1.5% per year – so our per capita income has grown by around 6.5% per year.

# We have lifted around 60 crore people out of poverty – drastically reducing our poverty from around 50% in 1991 to around 5% today.

# Our economy has grown more than 10 times from $ 270 billion (#17 in the world) in 1991 to $ 3 trillion (#5 in the world) today.

Today's youngsters have not seen pre-1991 socialist India – so they do not know how revolutionary the 1991 economic reforms were. We can understand this revolution by looking at the lifestyle of a middle-class family in pre-1991 socialist India:

# Only a few middle-class families had cars – most had only scooters.

# Only doctors got telephones immediately – other middle-class families had to be in a waiting-list.

# There was only one TV channel for the whole country – the government channel (Door Darshan).

Thus the 1991 economic reforms brought about sweeping and unimaginable changes in India. So we must call the event by its correct name: not 'reforms' – but 'revolution'. But the process is still incomplete. Our economy is still 50% socialist. We must take the 1991 Revolution to its logical conclusion by making our economy 100% capitalist – to lift all our people out of poverty and make India a superpower.