21 June, The Day When the Reformist PM Narasimha Rao Took Over 
Former PM Narasimha Rao on completing 5 years as Prime Minister. 

21 June, The Day When the Reformist PM Narasimha Rao Took Over 


(This story was first published on 21 June 2016. It has been reposted from The Quint’s archives to mark the birth anniversary of PV Narasimha Rao.)

21 June. It is a momentous day in India’s political history. It was this day that P V Narasimha Rao was sworn in as prime minister. It was on 21 June 1991, that the nation embarked on the voyage for economic freedom – the dismantling of the licence-permit-quota raj, the opening up of the Indian economy.

In 2016, India is the fastest growing economy. Half of India’s current population, however, was not even born in 1991 and would scarcely know of an India when consumer choice was dictated by the state, when parents booked scooters at the birth of a girl for dowry, when the choice of cars was limited to a black Ambassador, a white Padmini or a red Maruti 800, when Indians waited years for a telephone connection, when travellers were left stranded between a delayed flight and a cancelled flight.

Rao was India’s first accidental prime minister. He was the first family’s second choice the first choice, Shankar Dayal Sharma, politely declined. Rao was also an accidental reformer. The phrase “liberalisation” was hardly part of the everyday political lexicon of the polyglot who spoke over a dozen languages.

Fact is, a day before he took the oath, then Cabinet secretary Naresh Chandra handed over three files for bed-time reading. One of the files detailed January 1991 IMF bailout – the promissory note of 25 conditions that formed the premise for liberalisation.

Contemporary discourse about reforms is dense with alibis about the difficulty in implementing reforms. It is true that the 1991 reforms were compelled by an unprecedented crisis. What is equally true is that

Rao confronted the challenge with courage and converted it into an opportunity.

Known for Guerrilla Politics

And this was a man who rose from the ashes of a political career to reinvent himself. India’s political history is dotted with missed opportunities, it is a litany of how change has often eluded the political economy. The saga of 1991 reforms is an instructive testimony on engineering transformative change. Without doubt, the individual is critical. Also critical is the institutional mechanics of the transformation.

Rao, a voracious reader, fluent in Sanskrit and Latin, knew his Chanakya and Machiavelli. At the leadership level, he leveraged the lack of an absolute majority to blunt the high command. Within the party, he split and pit individual interests to overcome institutional resistance – licence and controls was after all an article of faith within the Congress party.

Rao enjoyed uncommon bonhomie with political leaders. On being called the political guru, Atal Bihari Vajpayee crowned Rao as “guru ghantal”, the master of guile. In Parliament, Rao deployed guile and guerrilla politics – leveraging conflicting interests and competing compulsions, pitting the BJP against the Left on economic policies and the secular brigade against the BJP in social policies.

A True Reformist

At the operational level, Rao planned well – reflected in the choice of ministers and the fact that he chose to retain the critical ministry of industry. Helped by P C Alexander, he set up his core team. Manmohan Singh was brought in as the face to deal with the lenders, P Chidambaram, a Rajiv protégé, was inducted for legal acumen and to counter “Congressism”. And there were others. As his Principal Secretary, Rao chose the seasoned Amarnath Verma – who, along with Rakesh Mohan, had authored the original draft of the new industrial policy.

Rao also sculpted the re-engagement of India and the Indian economy with the world. He focused on building relations with the US (addressing the US Congress along the way), European Union, Brazil, Israel and South Africa. He also authored the Look East policy, creating new avenues. India was opened to foreign investors and foreign markets to Indian business. Despite vociferous opposition, Rao ensured India’s entry into WTO. The 1991 reforms happened because Rao led it from the front. And it was –like it or not – a Congress government.

The Congress though has been in the proverbial ostrich asana. It would seem the institutional memory of the party – of the Rao era – has been reformatted. The party has often anointed Rajiv Gandhi as the architect of reforms. Yet loyalists in the Rao Cabinet voted against the draft of the industrial policy in July 1991– it was passed only after the induction of six paragraphs of obeisance to the Nehru-Gandhi family. Worse, in 1998, when India was flagged as an emerging economic power, the Congress appointed a committee under A K Antony to study if reforms were anti-poor.

 (Photo: Reuters)
File photo of former Prime Minister, PV Narasimha Rao.

Credit for Ushering in Liberalisation

There was more to the Rao regime than liberalisation. Rao came to power at the end of the cold war and what was billed as the beginning of the unipolar world. Internally, he re-energised the nuclear and ballistic missile programmes – although he did balk at going through with the tests in 1995. His push for engagement with Iran and his deployment of Vajpayee at the UN Human Rights Commission are acknowledged strategic and tactical master strokes.

For sure, the Rao regime was far from perfect. The Congress blamed him and Rao himself could never live down the demolition of the Babri Masjid – born out of a combination of gullibility, complicity and incompetency. There was also the stench of corruption – like it was in UPA II. Means often justified the end as Rao split parties, courted controversy, and engulfed the regime in the JMM scandal. In a seminal lecture on Mahatma Gandhi at the UNESCO in May 1995, Rao observed “the political actor in Gandhi, through his long career, was subordinate to the moral actor”. The thought must have weighed on Rao.

There is though no disputing the transformation Rao engineered. He paved the way for successors to build on. Rao enabled and ensured that the shibboleth of the state knows best – who should produce what at how much to be sold to whom—was taken apart. It is this man that India must credit for laying the foundation for the $ 2-trillion economy the country boasts of today, for the transformation from penury to the promise of prosperity.

(This article first appeared in The New Indian Express. Shankkar Aiyar is the author of Accidental India: A History of the Nation’s Passage through Crisis and Change.)

Also read:

‘Hope Narasimha Rao’s Role in 1991 Reforms Will Be Re-evaluated’

Rajaji’s Free Market Principle: What if India’d Taken His Path?

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