India

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Economic Growth

In April 1999 the BJP-led government lost its majority in parliament when a member of the coalition withdrew, and new elections were held in October. A multiparty coalition led by the BJP won a clear majority of seats in parliament. BJP leader Vajpayee was sworn in as prime minister a third time.

Vajpayee’s government continued to vigorously pursue economic reforms, which had begun in the early 1990s under the Congress (I) Party. The reforms achieved remarkable economic growth in India through the 1990s and into the early 21st century. Many state-owned enterprises were sold to the private sector, and foreign investment poured into the country. Information technology became a vital sector of the economy, leading to the development of new high-tech centers. India’s per capita income increased, helping alleviate poverty. However, the economic growth mostly benefited India’s middle and upper-middle classes, which formed the BJP’s base of support.

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Kashmīr Conflict

Fighting between Indian security forces and Muslim separatists in Jammu and Kashmīr escalated in late 2001. India blamed Pakistan for supporting Kashmīr-based militants, who staged an attack on the Indian parliament building in New Delhi in December 2001. Pakistan denied supporting the militants. Relations between India and Pakistan rapidly deteriorated, and by mid-2002 the two countries had amassed an estimated 1 million troops along their shared border. The military buildup raised concerns in the international community that the conflict in Kashmīr could escalate into full-fledged war between the two nuclear powers.

However, intense international diplomacy helped defuse the crisis. In May 2003 India and Pakistan agreed to restore full diplomatic ties and made the first high-level government contacts in almost two years. In late November, the improved relations resulted in a cease-fire along the shared border in Jammu and Kashmīr. For the first time in 14 years, artillery fire ceased between the two armies stationed along the border. The two countries also restored airline service, which had been cut off in 2001, and made diplomatic moves toward improving other trade and transportation ties. In January 2004 India and Pakistan agreed to resume high-level talks on a range of issues, including the status of Kashmīr.

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2004 Elections

Riding high on the booming economy and improved relations with Pakistan, Vajpayee called early parliamentary elections in 2004. The BJP campaign motto, “India Shining,” emphasized economic development and prosperity. Although polls indicated the BJP would coast to victory, the election resulted in a surprise win for the Congress Party (formerly known as the Congress (I) Party). The Congress Party had campaigned on a platform that appealed to millions of Indians who continued to live in poverty. Years of drought had compounded the problems of rural farmers, who felt their plight was largely ignored by the BJP-led government. India’s strong tradition of anti-incumbency also played in Congress’s favor.

The Congress Party, which had not won an outright majority in parliament, relied on its allies to form a coalition government. Communist parties declined to join the coalition but offered it crucial support. Congress Party leader Sonia Gandhi, the Italian-born widow of former prime minister Rajiv Gandhi, was widely expected to be named prime minister. However, she turned down the post in the face of BJP-led protests against her nomination due to her foreign-born status.

The upset victory of the Congress Party led to the biggest one-day plunge in the history of India’s stock market, fueled by investors’ fears that economic reforms could be slowed or halted because of pressure from the political left. However, the market soon rallied on news that a respected architect of India’s economic reforms, former finance minister Manmohan Singh of the Congress Party, had been chosen to be India’s next prime minister.

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Tsunami Disaster of 2004

On December 26, 2004, a magnitude 9.0 earthquake struck under the Indian Ocean off the northwestern coast of the Indonesian island of Sumatra. The earthquake triggered a tsunami (series of massive waves), which quickly hit the Andaman and Nicobar Islands, spread across the Bay of Bengal, and crashed into the east coast of India about two hours later. Coastal towns and fishing villages in Tamil Nādu, Kerala, Andhra Pradesh, and Puducherry were devastated by the powerful wave surges. Between 11,000 and 16,000 Indian people died in the tsunami.

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Relations with Pakistan

In February 2005 in Kashmir the Indian and Pakistani authorities agreed on a plan for a bus service between the towns of Srinagar and Muzaffarabad, giving Kashmiris the opportunity to cross the cease-fire line for the first time in more than 50 years. Symbolically important to the region, 49 passengers made the inaugural trip across the Line of Control, arriving safely despite a grenade attack from militant groups.

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