1991 was a watershed year for India in many ways, but two stand out.
One, Rajiv Gandhi was assassinated and became the last member of the Nehru-Gandhi dynasty to be prime minister. That paved the way for P. V. Narasimha Rao to become prime minister. Two, under Rao, India decisively turned away from the socialist path it had taken till then and openly embraced a more open, market-oriented economy. It had little choice in the matter--the economy was teetering on the brink of collapse and the IMF loan conditions required this to be done.
Much of the liberalisation action--helmed by Rao and his finance minister Manmohan Singh--happened in the first 100 days of the Rao government and the drama was wonderfully captured in the mid-nineties in an article by T. N. Ninan and P. G. Mathai for BusinessWorld, based on conversations with all those closely involved in the exercise.
One of these key players--Jairam Ramesh--has now written his own account: From the Brink and Back: India’s 1991 Story. It’s an even smaller slice of the story than the BusinessWorld essay--it deals with the first 90 days when Ramesh was part of the Prime Minister’s Office, playing what he calls a sherpa’s role in the design of some of these changes.
Some parts of Ramesh’s account are now well known. Such as the blueprint for the economy that Rajiv Gandhi, while out of power between 1989 and 1991, had got a group of economists and technocrats to draw up, which was then incorporated in the Congress manifesto for the 1991 elections. Or how Manmohan Singh was brought in as finance minister, or the rolling back of the fertiliser price hike, among other things. But it is still a valuable account of current history and more books like these are needed.
It is a definite must-read for those interested in political economy issues. There’s a wealth of original material in the annexes--and some in the book itself--that is so useful given the sorry state of libraries and archives and the limited access people have to them.
Ramesh gives a peek into a lot of the behind the scenes activity--the consultations, the lobbying by industry, the intellectual attack on the reforms from the Left, the opposition from within the Congress, and most importantly, Rao’s political management of the reforms process.
Calling Rao’s leadership “transformational”, Ramesh notes that he “did not put a foot wrong forward in the initial months, and displayed both political manoeuvring and statesmanship of the highest order”.
And yet, there were moments when Rao felt the envelope was being pushed a bit too far. “He expressed some frustration with economists not being sensitive to politics. He was worried that this could create a backlash against the government within the party.” Rao tried to stop the second devaluation of the rupee, except that the then Reserve Bank of India governor, C. Rangarajan, had already done it before Rao got through to Singh.
Perhaps those impatient with the lack of reforms under Narendra Modi should read this book to understand how tough it is to carry bold measures through. The 1991 reforms were the easy ones--the stroke-of-pen reforms as they were called--ending the licence-permit-quota raj, freeing up exports and the like. Modi has far more difficult reforms--the second generation of reforms--on his plate. Though he has a far, far stronger political mandate than Rao, who headed a minority government.
There is a never-ending debate about who deserves the mantle of the great reformer--Rao or Manmohan Singh. A reading of Ramesh’s book makes it clear that each could not have done without the other; in fact Rao comes off a notch ahead. Singh’s technocratic approach could never have carried the reforms process forward; Rao’s backing was essential, though he did, on occasion, leave his finance minister alone to face the music.
What come through--not explicitly, though--is that Singh was at times as helpless those days as he was during his ten years as prime minister. But there were times when he was aggressive in defending what he was doing.
Importantly, the book gives a peek into Ramesh’s stand on economic policy--he does seem a reformer at heart. And that leaves an unanswered question--how could Ramesh do the U-turn he did when the United Progressive Alliance came to power? He started criticising disinvestment in Navaratna public sector undertakings, pension reforms and threw his weight behind Sonianomics over Manmohanomics.
In 2006, this writer had written an article on Ramesh’s inexplicable left turn. He justified his stand, saying he was not in favour of unthinking reforms and that reforms have to be acceptable to everybody. Does he really think the 1991 reforms were unthinking and technocratic? That doesn’t come across in this book. There seems to be a Reformer Ramesh hiding somewhere. Can he please come back?
To The Brink And Back: India’s 1991 Story has been published by Rupa Publications.