Congress Party rule under Manmohan Singh

Domestic policy

Singh had been minister of finance under Rao until 1996, and he was the man most credited with restructuring the Indian economy during the 1990s. The 2004 election was seen by many as a turn away from the pro-urban policies adopted by the BJP. Since the early 1990s, India’s economy had boomed, particularly in the high-technology and technical-services sector. The economy in many rural areas, however, had stagnated. Farming remained largely dependent on monsoon rains, and many formerly remote areas were opened up merely so that their natural resources might be exploited with little benefit to local inhabitants. The UPA government espoused a strongly pro-farmer message and sought to introduce rural programs reminiscent of those of the New Deal era in the United States aimed at revitalizing the agrarian economy, stepping up investment in agriculture, providing access to credit, and improving the quality of rural infrastructure.

The government also made employment generation and social equity important features of its agenda. An indication of the government’s efforts on the latter point actually began during the BJP era, when Kocheril Raman Narayanan, a Dalit, served as president of India (1997–2002). After the Congress Party came to power, Pratibha Patil became the country’s first woman president in 2007, and another Dalit, Meira Kumar, was named the first woman speaker of the Lok Sabha in 2009. In addition, women began occupying senior positions in state and union-territory governments, notably in highly populated Tamil Nadu, Uttar Pradesh, and West Bengal.

Another priority of the Singh administration was combating terrorism both at home and abroad. Along with the growth of terror by Muslim extremists, India experienced a rise in violence among communist (mostly Maoist) groups known as Naxalites. First formed in the 1960s, Naxalite groups experienced a revival in the early 21st century, espousing a doctrine of liberation and emancipation. They generally operated in the fringes of society in the most economically backward regions and were highly attractive to marginalized tribal peoples, poor rural residents, and others with grievances. The union government soon acknowledged that Naxalism, along with terrorism, presented significant threats to the country’s internal security. However, efforts to deter terrorist attacks did not prevent some major deadly incidents, including the bombing of multiple trains in Mumbai in July 2006, bombings in several locations in Delhi in September 2008, and the assault by armed terrorists on several buildings in central Mumbai two months later. The Mumbai terrorist attacks in 2008, which killed more than 180 people and injured some 800 others, greatly shocked the country.

Foreign policy

Prior to the attacks, Singh’s government had sought to build diplomatic bridges to Pakistan. Singh had met in a summit conference with Pervez Musharraf, president of Pakistan, in 2006, shortly after the Mumbai train bombings, which produced a joint statement in which the two sides agreed to cooperate against terrorism. Then, in October 2008, limited trade resumed between the Indian- and Pakistani-administered portions of Kashmir, the first such commerce through the region in six decades. Although the resumption of that trade signaled improved relations between the two countries, the improvement was short-lived, as India later linked the terrorists responsible for the November attacks to Pakistan, bringing bilateral relations to a new low. Singh did meet with his Pakistani counterpart, Prime Minister Yousaf Raza Gilani, in 2009 and 2010 in an attempt to resume the talks started earlier with Musharraf. However, relations between the two countries remained strained.

India had better diplomatic luck with other countries. Singh’s government engaged in multilateral talks with the World Trade Organization and lobbied heavily for India to become a permanent member of the UN Security Council. It also successfully negotiated free-trade agreements with the Association of Southeast Asian Nations (ASEAN) and with South Korea, which went into effect in 2010, and signed a trade pact with Japan in 2011. In addition, India hosted the 2010 Commonwealth Games in Delhi, which were a great success, despite questions about corruption and mismanagement that arose during the construction of new facilities for the event.

Singh’s second term as prime minister was marked by a continuing decline in his and the UPA’s popularity among the Indian people. A major factor was the Indian economy, which initially had weathered the global financial crisis of 2008–09 but then began to decline, encumbered by such factors as slipping growth and rising inflation rates, escalating costs for food and energy supplies, and high interest rates that discouraged investment. More serious, however, was a string of corruption scandals that implicated a number of government officials—including, in 2013, Prime Minister Singh himself—and grew increasingly distasteful to the country’s electorate. In 2013 the Congress Party lost some key state and territory elections, including in Delhi, which had long been a Congress stronghold.

Monetary and tax reforms

One of the most far-reaching initiatives to formalize the economy under Modi’s premiership was monetary reform. On November 8, 2016, the government demonetized 500- and 1,000-rupee banknotes with only a few hours’ notice, causing disruption to the economy and prompting banks to be overrun by large crowds. The primary purpose of the sudden move was to stop “black money”—cash used for illicit activities—by making it easy to exchange small amounts of cash but difficult to exchange large sums. More than 99 percent of 500- and 1,000-rupee notes were successfully returned and replaced, which indicated that even black money was successfully replaced despite the hurdles. The government ended up spending more to print and distribute new currency than the money it saved through unreturned banknotes. The move did, however, broaden the income tax base through increased bank activity and stimulated the use of digital transactions.

The following year the government undertook a massive tax overhaul. In 2017 a centralized consumption tax regime known as the Goods and Services Tax (GST) was implemented. The new tax system replaced a number of taxes levied throughout the country by various jurisdictions and unified them under one system and thus eliminated the problem of cascading tax. Its implementation caused temporary confusion among businesses, but the number of firms registered for collecting indirect taxes increased by half.

BJP reelection bids and tensions in Kashmir

The BJP suffered major losses in five state elections in 2018, including its strongholds of Madhya Pradesh, Rajasthan, and Chhattisgarh. The Congress Party won the largest share of seats in the state assemblies of those three states and outperformed the BJP in the other two, Mizoram and Telangana. In total, it picked up more than 100 state assembly seats across the five states. The BJP’s losses were attributed to the rising cost of living and to unemployment, despite Modi’s grandiose promises of economic growth. That the Congress Party gained from the BJP’s losses was attributed to the efforts of Congress Party Pres. Rahul Gandhi to unite internal factions as well as to his attempts to undercut the BJP’s appeal to Hindu identity through his own outward show of devotion to Shiva. Still, the BJP continued to hope that, in the following year’s general elections, Modi’s charisma and boldness would alleviate the losses.

Just months before the 2019 elections for the Lok Sabha, the BJP saw a boost of support after its hawkish response to an attack in the state of Jammu and Kashmir on February 14. A suicide bombing killed 40 members of India’s Central Reserve Police Force, making it the deadliest attack on security personnel in the region in three decades. A militant group believed to be operating underground in Pakistan claimed credit for the attack, leading many Indians to demand that the government take action in Pakistan. India conducted an aerial mission in Pakistani airspace for the first time in five decades and claimed to have launched air strikes against the militant group’s largest training camp. Pakistan denied the existence of any such camps and claimed that the strikes had been conducted in an empty field. Skirmishes between the countries occurred the following day. Pakistan captured an Indian Air Force pilot but soon returned him to India. Both countries appeared to avoid escalating the situation, and Pakistan announced a crackdown on militants operating within its borders.

As the election approached, the campaign was dominated by the BJP. Through a combination of a spending blitz, greater access to government resources, and grassroots efforts, the BJP maintained more visibility than its main competitor, the Congress Party. Rahul Gandhi, moreover, was unable to shed his lacklustre and elitist image. Certain ploys during the campaign, such as a petition brought before the Supreme Court questioning his citizenship and eligibility to be prime minister, spoiled attempts to improve the public’s perception of him. The BJP was returned to power in the Lok Sabha with a landslide victory, and Modi became the first prime minister outside the Congress Party to be reelected after a full term.

As one of the first major initiatives of its second term, the BJP-led government stripped Jammu and Kashmir of its autonomy and brought it directly under the control of the union government. In anticipation of unrest from the controversial maneuver, which would also split Jammu and Kashmir state into Jammu and Kashmir union territory and Ladakh union territory, the union government sent tens of thousands of soldiers to Jammu and Kashmir days before the August 2019 announcement and restricted communications and movement in the state the night before. Local political leaders, including Lok Sabha member Farooq Abdullah, were detained for several months. Despite continued backlash as well as court challenges, the downgrade and bifurcation of Jammu and Kashmir became official on October 31.

Addressing COVID-19 and its economic impact

In March 2020 the government implemented a strict national lockdown to address the outbreak of COVID-19. The lockdown was eased in June, but the rate of infection among the country’s dense population rose rapidly throughout the summer, and by mid-August the virus was spreading faster in India than in any other country. Infections peaked in September, however, and continued to decline until February 2021. Even though the country’s vaccination drive launched in January, it did not keep up with a rapid surge in cases, and India became a global epicentre of the pandemic by April. The new wave of infections, driven by the so-called Delta variant, quickly dwarfed that of 2020; hospitals and crematoriums were filled to capacity, and vital supplies such as medical oxygen ran out. The wave peaked in May but continued to devastate the country through much of June.

As part of the effort to counter the economic impact of the COVID-19 pandemic, Modi undertook executive action in June 2020 to reduce obstacles to selling produce and encourage private investment. Critics argued, however, that the provisions made farmers vulnerable to exploitation. Despite those concerns, the reforms were rapidly codified into law in September. Sustained local protests against the reforms gave way in late November to large organized protests in Delhi, which escalated over the months that followed. On Republic Day (January 26, 2021) violence broke out between police and protesters, and some of the protesters stormed the Red Fort. The event led unions and other farming organizations to cancel a protest planned for Budget Day (February 1) in an effort to lower tensions while less confrontational protests continued. Extraordinary efforts were undertaken by the government to stifle protests, including the imposition of Internet blackouts and punitive measures against organizers and participants. Implementation of the reforms, meanwhile, were stayed by the Supreme Court as it pursued an investigation into the matter.