To the Brink and Back: India’s 1991 Story (2 page)

Then, when
V.P. Singh was prime minister for slightly less than a year (1989-90), he asked
Montek Ahluwalia
³
to put together a new policy package. In March 1990, V.P. Singh had gone to Kuala Lumpur—after a gap of almost a decade-and-a-half—and impressed with what he saw, directed his key economic aide to do some fresh thinking. This resulted in a truly radical agenda for reforms,
⁴
but this also never saw the light of day.

June-July 1991 represented a fundamental paradigm shift in economic policy. All that had been done prior to 1991 had aimed to make the system more flexible and responsive. But 1991 marked a whole new beginning. And there could not have been a more unlikely duo playing harbingers of this fundamental change. Both
P.V. Narasimha Rao and his finance minister,
Dr Manmohan Singh were pillars of the
ancien régime
, stalwarts of the very system they set out to replace. They were, to the Indian economy, somewhat like Richard Nixon was to the American embrace of China in early 1972. The ultimate insiders became the instruments of a profound change—a change that was initially resisted but that came to be embraced subsequently by all political parties. There may have been some mild tweaking here and there, but the fundamentals did not undergo a shift even after Narasimha Rao and Manmohan Singh left office in May 1996.

How did I get to being where I was in this epochal period of June-July 1991? I had quit the
Planning Commission in January 1991 and was working with
Sam Pitroda
⁵
and
R.D. Pradhan
⁶
as part of the ‘back office’ election campaign team of Rajiv Gandhi. My primary role was to prepare position papers on economic issues and give ideas for the election manifesto. As Rajiv Gandhi started his campaign in early May 1991, I started preparing talking points for his rallies and passing them on to his close friend
Suman Dubey
⁷
who travelled with him. I had no formal position in the Congress but was generally seen as part of Rajiv Gandhi’s circle of assistants.

A colossal tragedy struck on 21 May 1991 when Rajiv Gandhi was assassinated. Like everybody else, I was completely shattered. On 22 May, the
Congress Working Committee (CWC) had an emergency meeting at 5 p.m. This meeting, presided over by
P.V. Narasimha Rao, decided to elect
Sonia Gandhi
as Congress president. But the very next day, she declined, and a few days later, on 29 May, the CWC met again with
H.K.L. Bhagat presiding; Narasimha Rao was elected as Congress president.
⁸

I had never met Narasimha Rao, although I had been in the government for a decade in various capacities. I knew of him by reputation, of course, as someone who had been chief minister of Andhra Pradesh between 1971 and 1973, where he took land reforms promised by
Indira Gandhi seriously, but ended up paying a heavy political price by being ousted. I knew that Indira Gandhi and Rajiv Gandhi trusted his sage advice and drafting skills. I knew that Rao had been chairman of the committee to prepare the Congress’ manifesto for the 1991 Lok Sabha elections. But I did carry one negative impression of the man. In February 1987, Rajiv Gandhi—then holding the post of finance minister after the sudden transfer of
V.P. Singh from the Finance to the Defence Ministry—had promised a ‘white paper’ on the public sector in his budget speech as a first step to reforming state-owned enterprises. A group of six CMDs (chairmen and managing directors)— headed by
V. Krishnamurthy, then the chairman-cum-managing director of the Steel Authority of India Limited (SAIL)—was set up, and I had prepared the first working draft for the group to consider. Thereafter, the group submitted a final version to the prime minister, after which it went to a Committee of Secretaries. This committee then proceeded to mangle it—entirely unsurprising, since no bureaucracy would really like to give true autonomy to public sector companies. The revised draft went to the cabinet. Thereafter a Cabinet Committee was set up under the chairmanship of Narasimha Rao to finalize the white paper. The white paper was never published, and in my mind, Narasimha Rao came to be a symbol of procrastination, delay and the status-quo. I felt that a golden opportunity to redefine the relationship between public sector companies and the government—to delink management from ownership, to transform the managerial and technological capabilities of these companies that occupied ‘the commanding heights’ of the economy—was lost.

R.D. Pradhan took me to meet Narasimha Rao, if memory serves me, on 30 May 1991, so that he could be informed about how the ‘non politicos’ around Rajiv Gandhi were contributing to the election campaign. Rao said he knew of me and asked me to continue with whatever I was doing. He told me that he was not an expert on economic issues and that I should coordinate meetings with
Pranab Mukherjee
⁹
and keep briefing him on these subjects. He said that on 2 June he would be having his first interaction with the media and that I should quickly prepare a statement that he could use. I promptly did so, but was disappointed that what I had drafted was not used. This would not be the last time such an event would occur.

On 3 June 1991, Narasimha Rao asked me to accompany him on his first election tour to Farrukhabad, Hardoi and Lucknow in Uttar Pradesh. He was most agitated about the fast-unto-
death that the
Telugu Desam Party (TDP) supremo
N.T. Rama Rao had been observing in Hyderabad, demanding justice for the victims of the violence that had erupted after Rajiv Gandhi’s assassination. I kept giving periodic updates on the situation there—and this was an era when there were no mobile phones! Apart from this, there was hardly any conversation between us. Besides, we were mostly in a helicopter. However, Rao did say that
Dr Zakir Husain had been one of the most urbane and cultured Indians and that he was happy to launch his election campaign
as Congress president from the constituency of his grandson,
Salman Khurshid.

Subsequently,
Pranab Mukherjee and I met Narasimha Rao at 12, Willingdon Crescent (now Mother Teresa Crescent)—then the office of the Sanjay Gandhi Memorial Trust—on three separate occasions, between 5 and 18 June 1991, to discuss the state of the economy, the tasks ahead for a new government and the immediate priorities if the Congress came back to power. While Mukherjee would do most of the talking in these sessions—his phenomenal memory for detail and his vast knowledge of economic management on full display—I would be asked for my views every now and then. One session was taken up to look at the interim budget that the
Chandra Shekhar government had presented on 4 March 1991. In another session,
N.D. Tiwari
¹⁰
and
Margaret Alva
¹¹
were also present and we discussed a check-list I had prepared on the immediate tasks for the incoming prime minister. It read like this:

Narasimha Rao was elected as the leader of the
Congress Parliamentary Party (CPP) on 20 June 1991.
¹²
He asked me to prepare a speech and, once more, in my enthusiasm, I offered a draft assuming that it would be used. Again, it was totally ignored. Rather, at the meeting, after being felicitated by many of his colleagues, Narasimha Rao spoke in both English and Hindi without relying on notes. As he communicated with his audience, Rao seemed especially nostalgic about Rajiv Gandhi and sought the support of MPs (members of Parliament) in the name of his departed leader. Then, focussing heavily on the manifesto, he said that perhaps, Rajiv Gandhi had a premonition that this would be his lasting legacy because he had ensured that the 1991 manifesto would be the most competent and meticulous programme of action. Finally, Rao likened the Congress’ performance in the recently-concluded elections to that of a great cricketer missing his century by a solitary run.
¹³
More than this, what I vividly recall is the beginning of Rao’s address; he claimed that he preferred dialogue to speech and promised more such sessions in the future. Little did he realize that he would be forced to fulfil this assurance much sooner than he had planned, on account of the budget of 24 July 1991—a budget that would change the country.

After the
CPP speech, Narasimha Rao asked me to meet
Mani Shankar Aiyar
¹⁴
and
M.J. Akbar
¹⁵
and work out a ‘broadcast to the nation’ for him to deliver the next day. The three of us met at Akbar’s residence and exchanged ideas. As in the past, I put together a draft and promptly gave it to Narasimha Rao. A few hours after becoming prime minister, Rao did give his broadcast to the nation. But once again, Rao relayed what he himself had prepared with the assistance of the cabinet secretary,
Naresh Chandra, and the principal information officer, I. Ramamohan Rao.

On the evening of 20 June, Naresh Chandra met Narasimha Rao and handed over a top-secret eight-page note highlighting the urgent tasks awaiting the new prime minister. While the note had been prepared by different ministries, especially the Finance Ministry, it was the cabinet secretary who finally put it all together. When he saw the note, Narasimha Rao’s first response was: ‘Is the economic situation that bad?’ To this, Naresh Chandra’s reply was, ‘No, sir, it is actually much worse.’ He quickly briefed the incoming prime minister about what needed to be done and added that a default had to be avoided at all costs. He also informed Narasimha Rao about the efforts of the
Chandra Shekhar government in seeking assistance from the IMF, adding that it would be better to do whatever had to be done immediately—rather than wait for IMF assistance, then respond, and give the impression of acting under international pressure.

On the evening of 21 June 1991, the new prime minister—before informing me that he would be getting
Ramu Damodaran, who had worked with him earlier, as his private secretary—said that I should join his office soon and basically focus on what had to be done immediately.
¹⁶
He asked me not to wait for formal orders and instead, start working closely with his newly-appointed finance minister, Manmohan Singh—someone I knew well since he had recruited me into the Planning Commission in August 1986. Indeed, when
Manmohan Singh saw me at the prime minister’s residence on the evening of 21 June, where he had come to give a detailed briefing, he smiled at me and said, ‘Jairam, now is the time to do all the things you wanted us to do while in the Planning Commission.’ My appointment as officer-on-special-duty in the Prime Minister’s Office (PMO) was notified a day or two after the prime minister had, at the suggestion of Dr
P.C. Alexander,
¹⁷
appointed as his principal secretary,
A.N. Verma
¹⁸
—another man I knew and enjoyed a warm personal relationship with. I could even share a joke in his company—on one occasion, suggesting that with him,
Naresh Chandra and
Suresh Mathur (then industry secretary), the ‘Kayasth mafia’ would rule. Verma only laughed and said, ‘
Badmaash ho tum!
(You are a trouble-maker!)’