Debating India

Quiet Goes The Don

Monday 17 January 2005, by JHA*Prem Shankar

As PM, his silences were pregnant. In his last years too, he suffered ignominy in quietude.

With the exception of Jawaharlal Nehru, no prime minister did as much to transform the future of India as P.V. Narasimha Rao. But such is the ingrate nature of Indian politics and politicians that no PM received less recognition than he did in the years before his death, least of all, within his own party. Today, Rao is being remembered as the father of the economic reforms that finally broke the shackles of the command economy, and set India free. Yet the reforms are only a part of Rao’s legacy. Those who worked closely with him, and those who followed governance closely in those tumultuous years know that it was Rao, and Rao alone, following not bureaucratic advice but his own political intuition, who took the key decisions that ended the militancy in Punjab and took the steam out of the insurgency in Kashmir.

Rao’s contribution to India’s economic reforms was of crucial importance, but he wasn’t their architect. Through the ’80s, there had been a growing realisation within the government that the command economy, which minimised links with the world market, was bound to run into foreign exchange crises and was therefore ceasing to be viable. The first reforms, involving a substantial relaxation of industrial licensing, removal of price controls on steel, cement and drastic reduction of fertiliser subsidies, had taken place under the spur of the second oil price shock in ’80-81.

In 1985, PM Rajiv Gandhi changed industrial licensing rules again to free about 40 per cent of industry from its constraints on growth. He also redefined the concept of monopoly to take around 1,000 of the 1,100 monopoly companies out of the ambit of the Monopolies and Restrictive Trade Practices Act, but was frustrated by resistance from the bureaucracy. In 1987, finance minister V.P. Singh announced a long-term fiscal policy that would lower and rationalise excise duties. But this too remained a statement of intent.

After coming to power in 1989, V.P. Singh tried another round of tepid industrial liberalisation, but was frustrated by a revolt within his Stalinist planning commission aided from outside by soon-to-be-PM Chandra Shekhar.

The spine of India’s do nothing, learn nothing, bureaucracy was finally broken by the forex crisis brought on alarmingly by Iraq’s invasion of Kuwait. This became the catalyst for a refusal by the international banking system to advance any more loans to India. With past loans coming due every week, India’s forex reserves sank to a mere $1.1 billion and in order not to default on repayments it was forced to pawn all of the 55 tonnes of gold in the vaults of the Reserve Bank of India. That was when, thanks to the tragic death of Rajiv Gandhi, Rao became PM.

As I found out in several conversations with him after he ceased to be PM, Rao wasn’t a convinced reformer. But he had the intelligence to listen to experts and the courage to act upon their advice. His key contributions were first that he did away with the reluctant tinkering that had characterised the reforms of 1980, 1985 and 1990 and opted for the complete dismantling of the command economy; second that he broke completely with Congress tradition and made a seasoned professional economist who was not even a member of the party his finance minister; and third, that having done so he backed him unflinchingly through thick and thin-brushing aside the demands and complaints of virtually every other minister in his cabinet. This was the very essence of leadership in a cabinet system of government.

Rao’s contribution to ending the insurgency in Punjab, which had by 1991 taken more than 50,000 lives, is almost unknown but no less important.

It consisted of insisting upon holding elections in the state in February 1992, in the face of dire threats by the militants, a boycott by the frightened Akalis, and deep misgivings even among some of his close advisors, that elections would expose the narrow base of support for democracy and could easily push the already seriously weakened Akalis into the arms of the militants.

I was among the sceptics then. When I voiced my misgivings to the then cabinet secretary, he told me that the decision had been taken solely by the PM, who was determined to bring back an elected government in Punjab no matter how narrow the electorate base. Only this, he believed, could isolate the militants from the majority of the Sikh population. Rao’s insight proved prophetic. The polls brought the Congress to power under a Jat Sikh chief minister, Beant Singh. Beant established an immediate rapport with police chief K.P.S. Gill and ended the lack of comprehension and support that Gill had suffered for years while dealing with the home ministry in Delhi. Beant was also able to mobilise the mainly Jat Sikh villagers in the border areas to resist the infiltrators. Caught between the villagers and the Punjab police, the militancy collapsed within a year.

Rao followed a similar strategy in Kashmir, although with only partial success. In August 1994, he quietly asked the Election Commission to update the voter rolls for the state and re-demarcate the constituencies. This created a furore in Kashmir. Sick of the unending violence, a majority of the people welcomed the chance to elect a government of their choice. This put the militants on the defensive; for while they believed that participating in the polls would amount to betraying thousands of their comrades who had died, they had to explain this over and over again to the people of the state. In the end not all were convinced, and militancy lost most of its shine in the Valley.

During the last eight years of his life, Rao was shunned by his own party which had managed to convince itself that thanks to the Babri demolition, he was a red rag to the Muslim bull. It must have hurt him terribly, but characteristically he never complained. One can only hope that history will restore him to the place that’s rightly his.

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