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KAUTILYA
Rao
Doesn't Deserve This
A
sherpa's reminiscences of those momentous days of June and July 1991
By
Jairam Ramesh
As
perhaps the first "victim" of P.V. Narasimha Rao's manipulations,
I should also be gloating at his plight. But I am genuinely sad at his
indictment. Here is one of the most erudite and scholarly of prime ministers
in the world found guilty of "fixing" a no-confidence motion
in Parliament. Here is an unusually multi-lingual prime minister who changed
our mindset on economic and foreign policy being subjected to public ridicule.
I
was Rao's sherpa for exactly 100 days between June and September 1991.
One morning, he asked me to shift to the Planning Commission. Thereafter,
for five years he would use me for various assignments, both official
and political. But things were never the same and I was summarily ejected
from his A-team.
 I
came into contact with Rao only after the assassination of Rajiv Gandhi.
On becoming Congress president, he called Pranab Mukherjee and me and
said, "You both will have to brief me on economics." Thereafter,
the three of us would meet regularly at 11 Safdarjang Road and go over
various briefs. My main objective in these briefs was to show that the
external crisis that had engulfed us had its roots in domestic profligacy.
Both saw the point.
On
his first evening as prime minister, Rao sent for me. He said he had just
been told by his finance minister that the country was facing an unprecedented
crisis and that something immediate had to be done. I told him that we
had basically four options.
First,
we could declare a default on our external payment obligations. That would,
however, be disastrous. Second, we could mobilise NRI funds. But at a
time when NRI's were withdrawing money from India, this would not succeed.
Third, we could issue gold bonds. But previous such attempts had failed
and in any case this would not give us ready cash. Fourth, we could go
to the IMF and the World Bank and work out a quick disbursing financial
package. But there would be conditionalities. However, these conditionalities
were policies that Indian economists and planners themselves had been
advocating for a long time. We left the discussion at that although I
could see that he was enamoured of the NRI option.
On
the second night as prime minister, he asked me to come to Hyderabad House.
We talked about how to approach the IMF. I had taken with me a one-page
policy statement highlighting immediate initiatives that the government
would take in the next seven-ten days and other initiatives that would
be taken in the mid-July budget and thereafter. In the immediate steps
were included reforms like the new trade policy, new industrial policy,
new oil and power policy as well as foreign investment while the budget
initiatives focused on fiscal restructuring. I told him that the imf would
insist on fiscal adjustments but we must proactively tell them that such
fiscal measures would be part of a broader agenda of economic reforms,
an agenda that had been worked out most recently in the Planning Commission
during 1985-87.
Change
with Continuity: Rao saw the one pager and asked me to fax it right
away to our executive director in the IMF, Gopi Arora. He wanted Arora
to take the note informally to the IMF managing director to show that
we had embarked on a course of major reforms and request the IMF to come
to our support quickly without insisting on too many tough steps to be
taken in the first few days itself. The note was faxed and Arora reverted
in a matter of hours to convey that the IMF would stand by us. On a parallel
course, Manmohan Singh, whose appointment itself had enhanced our credibility,
was already moving to restore confidence in the rupee. To ensure that
his personal rupee balance born out of modest dollar savings did not swell
from the devaluation, Manmohan wrote to Rao, depositing the windfall gains
into the Prime Minister's Relief Fund. Rao was bemused by this act of
rare integrity.
With
the IMF support assured, Rao pressed ahead. Trade policy reforms were
spearheaded by his commerce minister P. Chidambaram and did not raise
protests. Industrial policy reforms, in the formulation of which Rakesh
Mohan had played a key role, proved more controversial. Many cabinet members
objected. Rao then asked Manmohan, Chidambaram and me to brief them. We
produced a document showing how the 1991 policies marked a "change
with continuity". The substance remained the same but the packaging
was different! The Cabinet approved the very document it had rejected.
I
hold no brief for the corruption that flourished during the Rao regime.
But, on balance, considering Rao's manifold contributions, I do believe
that just as Gerald Ford pardoned Richard Nixon in 1974, Prime Minister
A.B. Vajpayee must display statesmanship and allow his good friend to
live out his remaining years in tranquillity. But at the very minimum,
this would require an apology of sorts from Rao himself.
(The author is with the Congress party. These are his
personal views.)
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