In a significant development, the Bharatiya Janata Party-led National Democratic Alliance (NDA) government has lauded former Prime Minister PV Narasimha Rao and his then finance minister, Manmohan Singh, in the Supreme Court for their crucial roles in kickstarting economic liberalisation and opening up the economy in 1991, effectively bringing an end to the era of 'licence raj'.
Solicitor General (SG) Tushar Mehta informed a nine-judge bench headed by Chief Justice of India (CJI) DY Chandrachud that while the economic reforms introduced by Rao and Singh liberalised many laws, including company law and the MRTP Act, governments led by various political parties over the subsequent three decades did not deem it necessary to amend the Industry (Development and Regulation) Act, 1951. He emphasised that the winds of change did not affect the IDRA, leaving the Centre with key control over the entire spectrum of industries.
In 1991, amid a foreign reserves crisis, the government led by Narasimha Rao initiated three significant economic reforms: globalisation, liberalisation, and privatisation. Narasimha Rao made history as the first individual from south India to hold the position of Prime Minister of India.
More significantly, Mehta clarified that the Centre's relinquishment of control over industries did not imply a lack of authority to regulate them, empahsising that the Centre retained regulatory control in the national interest and to address exigencies such as the Covid-19 pandemic. He further elaborated that if the Union government lacked the power to regulate industrial alcohol and direct its use, especially for producing hand sanitizers during the extensive spread of coronavirus, and had to await permission from states, the robust response to the pandemic would have been compromised, reported the Times of India on April 17.
Also Read | PV Narasimha Rao | A look-back at his political and economic legacy
Moneycontrol could not verify the report independently.
Mehta's response came in the context of a query posed by the bench, which included Justices Hrishikesh Roy, A S Oka, B V Nagarathna, J B Pardiwala, Manoj Misra, Ujjal Bhuyan, Satish C Sharma, and Augustine G Masih. The bench had expressed sharp criticism of the IDRA, 1951, describing it as archaic and indicative of the restrictive policies of the 'licence raj' era.
Mehta said that the Centre retains its regulatory power over industries, even if it may not exercise it, to address unforeseen exigencies arising from situations not currently anticipated.
Mehta elucidated that industrial alcohol, also known as denatured spirits, was fully governed by the IDRA, underscoring that states possessed regulatory authority solely over potable alcohol, or intoxicating beverages intended for human consumption. When the SG indicated an abundance of raw material being presented to the court, the CJI replied, "Our task is to distill the arguments and discern what is distinctive about industrial alcohol."
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