From Janata to Liberalisation (1977–1996)

The 1977 election produced the first non-Congress government, the short-lived Janata Party. Indira Gandhi returned in 1980, only to be assassinated in 1984 after the Punjab crisis. Her son Rajiv Gandhi won a record mandate and then lost his shine to scandal. The Mandal (caste) and Mandir (religion) agitations broke the old order. Three Prime Ministers came and went in three years, and a near-default forced India to pledge its gold. Out of that crisis, P.V. Narasimha Rao and the reforms of 1991 set the country on a new economic course.

The Janata Party, a coalition of former rivals, struggled to govern coherently and lasted barely two years. Its own divisions brought it down.

• Achievements and failures. It restored civil liberties after the Emergency but failed to deliver the radical reforms it had promised. Bright spots were the Food for Work programme (1977), which paid rural workers in food stocks, and railway reforms under Madhu Dandavate.
• Foreign relations. It practised "genuine non-alignment". US President Jimmy Carter visited, and ties with the USSR stayed cordial. A major step was the normalisation of relations with China: in 1979, Vajpayee became the highest-ranking Indian to visit Beijing, re-establishing ties suspended since the 1962 war.
• The Mandal Commission. In 1979 it appointed the Second Backward Classes Commission, popularly called the Mandal Commission (after B.P. Mandal), to examine reservation for OBCs in central jobs. Its impact would be felt a decade later.

In the 1980 general elections, the Congress (I) returned with a strong majority and Indira Gandhi became Prime Minister once again.

• A personal blow. In June 1980 her son and chosen successor Sanjay Gandhi died in a plane crash. Her elder son Rajiv Gandhi, an airline pilot, was reluctantly drawn into politics as heir apparent.
• The economy. A new Sixth Five-Year Plan (1980-85) focused on growth, modernisation, and self-reliance, with rural programmes like the IRDP (1980) and the NREP. NABARD was set up in 1982 for rural credit. The Sixth Plan took the first cautious steps towards economic liberalisation ("Operation Forward", 1982), though Indira remained wary of multinationals.
• The environment. Her first term brought the Wildlife Protection Act (1972) and Project Tiger (1973). Her second added the Forest (Conservation) Act, 1980 and the Air (Prevention and Control of Pollution) Act, 1981.
• Siachen. Pakistan began encouraging expeditions to the Siachen Glacier. India launched Operation Meghdoot (April 1984) and took the key passes, making Siachen the world's highest battlefield.
• Space and diplomacy. Under a joint Indo-Soviet programme, Rakesh Sharma became the first Indian in space in April 1984, aboard Soyuz T-11. Asked how India looked from space, he replied, "Saare jahan se achcha." India also hosted the 1983 NAM summit at Delhi, with Indira as chairperson pressing for disarmament and a new international economic order.

The gravest internal crisis of the 1980s unfolded in Punjab, where a demand for autonomy curdled into a violent separatist movement for Khalistan.

• The roots. Many Sikhs felt the Akali Dal could not rule the state freely, resented that Chandigarh was still shared with Haryana, and were unhappy over river-water sharing. The Anandpur Sahib Resolution (1973) demanded greater autonomy, but its phrase "Sikh nation" lent itself to a separatist reading.
• Bhindranwale. Jarnail Singh Bhindranwale, head of the Damdami Taksal, rose to prominence. He was reportedly built up by the Congress as a counterpoise to the Akalis, a "Frankenstein's monster" who broke free and grew militant. Sikhs abroad pushed for an independent Khalistan. From 1980, violence spread, with killings of prominent Hindus and Sikh officials. By 1984, Bhindranwale and his armed associates had fortified the Golden Temple complex in Amritsar, occupying the Akal Takht.
• Operation Blue Star. On the advice of Army Chief A.S. Vaidya, Indira Gandhi authorised the army to storm Harmandir Sahib (the Golden Temple) from the night of 5 June 1984, under Major General K.S. Brar, directed by General K. Sundarji. Curfew was imposed, communications were cut, and the media was censored. Tanks had to be used against the Akal Takht before full control came on 7 June. Bhindranwale was killed, with heavy casualties among militants, soldiers and civilians.
• Aftermath. The operation caused deep anguish among Sikhs worldwide. Many left the army, and some Sikh units mutinied.
• The assassination. On 31 October 1984, Indira Gandhi was shot dead by her own Sikh security guards, Beant Singh and Satwant Singh, as she walked to her office, an act widely seen as revenge for Blue Star. Rajiv Gandhi was sworn in as Prime Minister that very evening, chosen unanimously by the Congress leadership. Indira's legacy is mixed: pro-poor measures and decisive leadership in war, but also eroded democratic values, sycophancy, and dynastic politics.

Rajiv Gandhi, the youngest Prime Minister in India's history, began amid tragedy but with enormous goodwill.

• The anti-Sikh riots (1984). After the assassination, organised mob violence against Sikhs broke out, especially in Delhi. Thousands were killed. The police and administration looked away or helped the mobs, and several Congress leaders were accused of instigating them. Many called it a genocide, though many Hindus sheltered Sikhs.
• The Bhopal Gas Tragedy (3 December 1984). Toxic methyl isocyanate (MIC) gas leaked from the US firm Union Carbide's pesticide plant at Bhopal, killing thousands. It was one of the world's worst industrial disasters, and the firm later paid a much-criticised settlement.
• A record mandate. In the December 1984 elections, the Congress (I) won over 400 seats, the largest-ever Lok Sabha majority, on a sympathy wave.
• The Anti-Defection Act (1985): disqualified any elected member who defected to another party, to stop legislators switching sides to make and break governments.
• Peace accords. The Punjab Accord (1985) was signed with Longowal, who was soon assassinated. The Assam Accord (1985) with the All Assam Students Union led to the Asom Gana Parishad. The Mizoram Accord (1986) with Laldenga made Mizoram the 23rd state in 1987.
• Modernisation. Rajiv set up six technology missions (drinking water, immunisation, literacy, edible oils, dairy, telecom). With Sam Pitroda he drove telecommunications (MTNL) and computerisation, helping spark the later software boom. The National Policy on Education (1986) brought Operation Blackboard, Navodaya Vidyalayas and IGNOU.
• Early reform. His first budget, under finance minister V.P. Singh, cut controls, duties and tax rates. The Environment Protection Act (1986) followed Bhopal. He tried to give panchayati raj constitutional status but did not succeed at that point.

A series of missteps then tarnished his modern image.

• The Shah Bano case (1985-86). The Supreme Court granted maintenance to a divorced Muslim woman, Shah Bano, under Section 125 CrPC, and suggested a uniform civil code. Bowing to conservative protests, the government passed the Muslim Women (Protection of Rights on Divorce) Act, 1986, which effectively overturned the verdict and was widely seen as appeasement.
• The Babri Mosque gates (1986). To placate Hindus in turn, the government allowed the locks on the disputed Babri Mosque site at Ayodhya to be opened for worship in February 1986. This emboldened the VHP and the Sangh Parivar.
• The Bofors scandal (1986-87). India's 1986 deal with the Swedish firm AB Bofors for Howitzer guns (~$285 million) blew up when a 1987 Swedish radio report alleged bribes to top Indian politicians and defence personnel. The scandal wrecked Rajiv's clean image.

The 1989 election was the first in which no single party won a majority, marking the start of the coalition era. Two forces, Mandal (caste and reservation) and Mandir (religion and the Ayodhya campaign), drove the churn.

• The V.P. Singh government. After leaving the Congress, V.P. Singh built the Janata Dal and the National Front, which formed a government in December 1989 with outside support from the BJP and the Left.
• Kashmir. Militancy worsened sharply. In December 1989 the JKLF (a militant separatist group) kidnapped the Home Minister's daughter, and the Centre capitulated. Pakistan's help grew, and the Kashmiri Pandits fled the valley in an exodus, refugees in their own land.
• Mandal. In August 1990, V.P. Singh announced implementation of the Mandal Commission report: 27% reservation for OBCs in central government jobs. It sparked large protests and self-immolations by upper-caste youth in the north. The Supreme Court upheld it in 1992, capping total reservations at 50% and barring the "creamy layer".
• Mandir. The BJP answered Mandal with the campaign for a Ram temple at the Babri Masjid site in Ayodhya. Party president L.K. Advani set out on a Rath Yatra (1990) from Somnath, meant to culminate at Ayodhya. Bihar Chief Minister Lalu Prasad Yadav had Advani arrested en route, and the Mulayam Singh government in UP arrested many kar sevaks (temple volunteers). The BJP withdrew its support, and V.P. Singh lost the confidence vote and resigned in November 1990.
• Chandra Shekhar (1990-91): broke from the Janata Dal, formed the Samajwadi Janata Party, and became PM with outside Congress support, leading just 64 MPs.
• The balance-of-payments crisis. Foreign exchange fell to a dangerous low, made worse by the Gulf War and rising oil prices. Facing possible sovereign default, the government pledged the country's gold reserves in March 1991. The humbling move set the stage for the 1991 reforms.
• Rajiv's assassination. Chandra Shekhar resigned and elections were called. On the night of 21 May 1991, Rajiv Gandhi was assassinated by a suicide bomber of the LTTE at Sriperumbudur in Tamil Nadu, in retaliation for the IPKF intervention in Sri Lanka. On a sympathy wave, the Congress emerged as the largest party (244 seats).

P.V. Narasimha Rao led a minority government from 1991 to 1996, yet changed India more lastingly than many majority ones. Inheriting the balance-of-payments crisis, he chose to liberalise rather than tighten controls, inducting the non-political economist Manmohan Singh as Finance Minister.

• The New Economic Policy (1991) rested on three pillars: Liberalisation, Privatisation and Globalisation (LPG).
• Key measures. The rupee was devalued, the fiscal deficit was cut, and import duties and tax rates were reduced. The industrial licensing system (the "licence raj") was dismantled for most industries. The list of industries reserved for the public sector was drastically cut, and foreign investment was gradually liberalised. SEBI (1992) was set up to regulate the securities market, and the National Stock Exchange was started.
• A middle path. Rao chose reform that would cause the least pain: no wholesale bank privatisation, no opening of the farm sector, and labour laws left untouched.
• Local self-government. The 73rd and 74th Constitutional Amendments gave panchayats and municipalities constitutional status, completing what Rajiv had begun. New Parts (IX and IX-A) and the Eleventh and Twelfth Schedules were added, with reservation for SC/ST and women in local bodies.
• Security and space. The Prithvi missile was inducted, military spending rose, and the nuclear programme was quietly advanced. The ASLV and PSLV launch vehicles were tested.
• Foreign policy. After the Soviet collapse (1991), Rao launched the "Look East" policy to deepen ties with ASEAN and Southeast Asia, and improved relations with the US and Israel.

The gravest blot on the Rao years came at Ayodhya.

• On 6 December 1992, thousands of kar sevaks, mobilised by the VHP and the Sangh Parivar, converged on Ayodhya and, despite assurances, demolished the Babri Masjid within hours. The UP government under the BJP's Kalyan Singh did nothing to stop it, and the Centre was criticised for failing to act in time.
• Aftermath. Communal riots broke out across the country, especially in Bombay, followed by the 1993 Bombay bomb blasts. The demolition left a lasting fracture in Hindu-Muslim relations.
• The Liberhan Commission, set up days later, took 17 years to report (in 2009). It indicted top BJP leaders and the Kalyan Singh government but largely absolved the Rao government.