Geopolitics

Just Honor to Rao, a Rare Reformer
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Issue Net Edition | Date : 12 Feb , 2024

By honoring P V Narasimha Rao with the most coveted civilian award Bharat Ratna, PM Modi has struck a rare combination; of recognizing his economic paradigm shift of Nehruvian socialism andhis political sagacity of not allowing paramilitary forces to intervene during the demolition of the Babri Majid. Dr MD Godbole who was the Home Secretary at that time writes in his book “Unfinished Innings” (1996) how herepeatedly tried to contact the PM to exercise the Centre’s power under Article 355’ to protectthe state against internal disturbance and ensure that the government of every state is carried on by the provisions of the Constitution’, unsuccessfully, prompting him to resign prematurely. This momentous passivity and indecision, many believe, led to the successful campaign for a Ram Mandir at the Babri Majid site by Advani,a recipient of Bharat Ratna nowand Mr Modi finally building the Ram Mandir. Quite clearly it cost the Congress dearly in terms of the Muslim minority vote in UP, the rise of Mulayam as the savior of the minority, and Modi Adityanath duo cementing the craving to have a Ram Mandir at his birthplace. This blur in his political judgment, however, does, not obliterate the pioneering role he played inushering economic reforms in India in 1991, and turning on its head dirigiste policies of Nehru and Indira and fast-pacing India’s growth story. It is to the credit of the BJP that despite ideological differences with the Congress, they have persisted with the economic liberalization process, besides giving it added momentum.

Architect of Reform

It is often debated as to whether it was Rao or Dr Manmohan Sigh who was the real architect of the cataclysmic reforms of 1991. People generally refer to Dr Singh’s memorable quote in the 1991 budget when he recalled Victor Hugo “No power on earth can stop a moment whose time has come”. Elaborating further Dr Singh said: “the emergence of India as a major economic power in the world happens to be one such idea”. Dr Singh’s upbeat optimism turned out to be remarkably prescient and a decade later, a Goldman Sach’s research team identified India which is likely to be the main source of global growth in the future. It is today the fifth largest economy by nominal GDP and third largest by Purchasing Power Parity. Despite the accolade which is received by Dr Singh and his team, it must be recognized that Dr Singh was a political greenhorn and the left intellectuals accused him of selling the country to foreign interests. The P (privatization) word was still an anathema among the Congress party loyalists wedded to the Nehruvian ideology of public sectors being ‘temples of modern India’.

During a book release function in Delhi a few years after he stepped down as PM, Mr Rao said: ’ Without the PM’s backing the FM will be a zero. It is the PM’s backing that puts a one before the zero making it a 10’. It could not have been put more neatly. Rao deserves full credit for choosing Manmohan Sigh as FM because of his acknowledged expertise in managing the economy as Secretary ofMoF and later as Governor of RBI. Rao was once asked by a journalist how he had managed to make a 180-degree turn on Nehruvian socialist policies. He replied cleverly: ‘I have not turned at all. I am facing the same direction. It is the world that has turned 180 degrees under me’. He was alluding to the fall of the Berlin wall in 1989, abandoning the statist policies in East Europe and the disintegration of the USSR by December 1991 under the cry of glasnost and perestroika by Gorshkov. Monek Singh Ahluwalia, a protégé of Dr Singh writes in his autobiography ‘Backstage’(2020) how Rao had given the go-ahead todo what is needed. “if the reforms succeed, I will claim my share of the credit. If they do not, you will be blamed’, Rao had told him.

Strategy By Stealth

Rao’s was a ‘strategy by stealth’. You point in a broad direction without committing any particular pace of change and then take a step forward whenever it is politically opportune to do so. Dr Singh was a gradualist, who conceptualized a complex and multidimensional structure of reform. The tax reforms under a Committee under Raja Chellah, the banking reforms under Narasimham and trade reforms articulated by Montek gave flesh and substance to this gradualism. Rao did not want to hog the limelight as the architect of reforms. Neither did Dr Singh go overboard about it;  earning encomiums globally. They were like the famed Jugalbandi of Bharat Ratna sitarist Pandit Ravishankar with Alla Rakha, the table player who was responsible for introducing the tabla to the Western audience. Rao and Singh connected India to the headwinds of globalization and the prosperity that flows out of freeing markets out of asphyxiating state controls.

The Impact of Economic Reforms (1991-2014)

The fall of the Berlin Wall coincided with the Washington Consensus and IMF conditionality, where they insisted that the member countries adopt free market practices, reduce and rationalize tariffs and taxes, and increasingly privatize their public sector entities. By adopting free market policies India’s GDP has grown from US$266 bn to almost US$ 3 trillion now. Extreme poverty has decreased from 36% in ‘93-‘94 to around 23.7% as per the Tendulkar Committee Report by 2011. In terms of savings as a ratio to GDP, share of exports, and GDP growth rate, each parameter has doubled after economic liberalization. The FDI inflow has more than doubled and was not dented during Covid 19.

Reforms after 2014

The most significant reform has been the introduction of GST, one nation,one indirect tax. The GST Council headed by the FM has demonstrated remarkable fiscal agreement between politically divergent states and promoted the cause of fiscal federalism. The revenue flowing out of GST is humungous.The Planning Commission, a relic of the Soviet system, has given way to the policy-making body Niti Ayog. Air India has been privatized. The FDI norms have been liberalized even for the defense production establishments. Infrastructure, particularly roads and national highways, has seen a quantum leap with the PPP model operating well.

Concluding Thoughts

However, many reforms like privatizing PSBs, Coal India, and LIC are yet to take place. Labor reforms are still to strike roots. Skilling and quality education remain a serious challenge. The dichotomy in the pace of improvement in human development parameters and pure economic growth remains worrisome. As Jeffrey Sachs, the architect of the Millennium Development Goals wrote “Our greatest illusion is that a healthy society can be built around the mindless pursuit of wealth”. Mr Rao who was also the HRD and external minister was completely trusted by Indira, with his balanced approach to contentious issues. Dr Kalam, who received full support from Rao for his missile programs called him a patriotic statesman who believed that the nation was bigger than the political system. He had the rare distinction of completing a tenure with a minority government, starting India’s Look East Policy, rekindling India’s program, and establishing diplomatic relations with Israel. But the Chanakya of India’s politics would be remembered as the quiet conductor who waded India through the economic crisis in 1991, by reposing full faith in his team led by Dr Singh. However, unlike Dr Singh he never acted subservient to the Congress dynasty.  The party showed scant respect to honor his legacy when he passed away.

By honoring Rao, Mr. Modi has shown that those who shun the Congress dynasty and left behind indelible footmarks in the sands of time deserve state recognition of the highest order.  History as Marx said, repeats itself as tragedy first, then as farce. Political flip-flops of our time best demonstrate this adage. For all his warts and moles, Rao was an intellectual colossus like Nehru, politically astute like Indira, and the independent mind of a statesman. He could read both the political and economic currents wafting through the country, a tad better than most, at the cost of sacrificing secularism during the desecration of the Babri Masjid, albeit inadvertently. He was the unconscious hand of history to bring a cultural crescendo to PM Modi.

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The views expressed are of the author and do not necessarily represent the opinions or policies of the Indian Defence Review.

About the Author

Prof (Dr) SN Misra

was previously Joint Secretary (Aerospace), Ministry of Defence, Government of India.

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