July 12, 2020
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The Genie In The Shadows

Why few remember that it was Narasimha Rao who initiated reforms

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The Genie In The Shadows
Illustration by Sandeep Adhwaryu
The Genie In The Shadows

Destiny made P.V. Narasimha Rao the 12th prime minister of India. Even the day before he was sworn in (June 21, 1991), it wasn’t clear who would lead, for many in the Congress wanted Sonia Gandhi to succeed Rajiv Gandhi. It was Sonia who cleared Rao’s name and made him preside over the country for the next five years. Destiny also smiled at Manmohan Singh, whom Rao chose as his finance minister. Rao’s first choice was I.G. Patel, then director of the London School of Economics, but Patel politely declined the offer. (In fact, later, when Patel returned home on retirement, Rao offered him the job of commerce minister, but Patel declined again.)

Sitting in 12 Wellington Crescent, where he quietly prepared his cabinet list, Rao rang up Manmohan and offered him the post. Why did Rao look to an economist instead of choosing one of his senior colleagues as finance minister? There were two reasons. Rao was looking for a credible international face to bail out India from the financial mess inherited from his predecessor, Chandra Shekhar. Foreign exchange reserves were at an all-time low, with barely enough to last a few weeks. He could not expect public support for austerity measures. Secondly, Manmohan did not pose a threat to Rao’s leadership, unlike V.P. Singh, who had been a threat to Rajiv Gandhi’s premiership.

Rao let Manmohan take credit—perhaps because he preferred a low-profile style of leadership.

As the IMF and the World Bank had already provided the basic framework for liberalisation, Rao allowed Manmohan a free hand to take every measure needed to meet the obligations to these international financial institutions. As Congress president, CPP leader and prime minister, Rao bore the brunt of criticism from his party and the opposition, since both saw Manmohan as Rao’s creation. As head of a minority government, Rao found it very difficult to push economic reforms through. There had been many stormy parliamentary party meetings in which senior cabinet ministers like Arjun Singh led the attack on Rao and Manmohan for their departure from the Nehruvian model. The Left and other opposition parties like the BJP also wouldn’t support liberalisation. In these circumstances, Rao took care to protect Manmohan from criticism and did not accept the latter’s resignation letters when the tempo of attacks intensified.

It took two years for the government to come out of the macroeconomic crisis. The next four years—1993 to 1996—saw the highest growth rate in Indian industry but economic reforms lost steam after the initial impetus. The successive losses in assembly elections—including in Rao’s home state  of Andhra Pradesh—slowed the pace of reforms. Rao’s speech at the World Economic Forum in Davos was about India taking the “middle path”.

Simultaneously, Rao launched the policies of economic diplomacy in the aftermath of the Soviet Union’s collapse. He supported a “Look East” policy and saw integrating with the ASEAN market as the best option for India. The liberalisation launched by Rao’s minority government in 1991 has allowed India to achieve sustained high growth and rapid growth in the living standards of the people in just two decades. Despite the presence of the Left, reforms were kept alive by the successor governments of H.D. Deve Gowda and I.K. Gujral because of Congress support. The NDA, led by the BJP, also continued with these policies.

Ironically, Manmohan, who has been called the father of India’s economic reforms, could not launch second-generation reforms as prime minister during UPA-1. Vested interests, trade unions and the Left parties combined with votebank politics and populism to scuttle or slow down the pace of reforms. At the state level, regional parties in power delayed reforms. When the ruling DMK in Tamil Nadu, which was also a UPA ally, opposed the disinvestment of Neyveli Lignite Corporation, Manmohan promptly withdrew the measure. Above all, Manmohan was not able to market these reforms to the masses, as they had failed to generate employment corresponding to the high growth. The opposition parties dubbed the reforms as pro-rich and anti-poor. During UPA-2, the government is drifting and is bogged down by corruption, especially the 2G and CWG scams.

Despite Rao’s contribution to India’s liberalisation drive, the Congress seems reluctant to commend his efforts. On the contrary, it seems as if the party would like to black out the Rao period from its history. For instance, while celebrating its 125th foundation day last December, the party enumerated the achievements of every Congress prime minister—except Rao. It did not give him credit for implementing Rajiv’s dreams. Things haven’t really changed, even though Congress president Sonia recently took everyone by surprise when she mentioned Rao as someone who gave fresh impetus to the process of economic reforms.

Why does the Congress want to forget the Rao regime? It could be because the party believes that the Nehru-Gandhi dynasty alone matters. After the Congress lost power in 1996, Rao was embroiled in court cases while the party leadership went to Sitaram Kesri, who did not step up to the challenge. Sonia’s entry in 1998 stabilised the party and reinforced the party’s faith in the “family”. The Congress also has a tendency to gloss over periods ruled by non-Nehru family members. When Lal Bahadur Shastri succeeded Nehru, it was thought of as a stopgap arrangement. Shastri was a forgotten hero for some time but the Congress today recognises Shastri and his portrait has begun to appear at meetings and aicc sessions. So perhaps Rao’s achievements would be recognised after a suitable period has gone by.

Secondly, while constructing a lineage for the next generation (Rahul Gandhi), Rao’s five years appear as an interruption to the family’s grasp on power. Manmohan’s premiership, on the other hand, does not appear so because public perception is that Sonia is the real power. Thirdly, and crucially, Rao committed the mistake of not endearing himself to the Gandhi family and kept Sonia in the shadows during his rule. Although in the first year he used to visit 10 Janpath, he stopped after N.D. Tiwari and others opposed to him formed the All-India Indira Congress (Tiwari). Misunderstandings between Rao and Sonia worsened matters.

Finally, Rao, for his own reasons, allowed Manmohan to take credit for the reforms. One could argue that a natural tendency to be a low-profile leader—in conjunction with the need to defuse the attacks—made Rao reluctant to project his own achievements. In the twilight of his life, Rao often used to say that history would judge him better.

The writer is a senior journalist and political commentator

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