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Narasimhanomics and the middle way

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P.V. Narasimha Rao provided political leadership to a nation adrift at a particularly difficult moment in recent history. He may not have been the ‘architect’ of post-Nehruvian economic policy, but he demonstrated greater political courage in advocating and leading it than his predecessor. He was also, without doubt, the ‘architect’ of India’s post-Cold War foreign policy

The government of India has decided to honour the memory of former Prime Minister P.V. Narasimha Rao, more than a decade after his passing away, with a memorial in the national capital. New Delhi has streets named after all and sundry, from conquerors to councillors, and at least three members of PV’s Council of Ministers (Arjun Singh, Madhavrao Scindia and Rajesh Pilot) each have a street named after them, but not PV.

While PV’s loyal Finance Minister, Manmohan Singh, respectfully paid tribute to him every year during his prime ministership, his government was neither able to build a memorial nor award PV the nation’s highest honour for his contribution to economic and foreign policy. Interestingly, the move to honour PV has come from non-Congress political leaders of Andhra Pradesh and Telangana.

Architect in his right

There are two ways of viewing this issue. One is to say that since successive governments have honoured other former Prime Ministers and senior political figures in a certain way, by naming streets, institutions or localities after them in the national capital, PV also deserves a similar honour. Even his critics would agree that the charges they level against him for various acts of omission and commission are no more than what could be levelled against many political leaders whose memory has nevertheless been honoured in one way or another by the national government.

However, this constitutes a weak line of defence. PV deserves more. He provided political leadership to a nation adrift at a particularly difficult moment in recent history. He may not have been the “architect” of post-Nehruvian economic policy, since the new turn in economic policy began in the 1980s, but he demonstrated greater political courage in advocating and leading it than his predecessor Rajiv Gandhi. He was, without doubt, the “architect” of India’s post-Cold War foreign policy.

That many of us have forgotten PV’s contribution to economic liberalisation undertaken in 1991 came through vividly to me at a public lecture in, of all places, Hyderabad. My audience of business leaders and managers recalled without hesitation the names of the Ministers of Finance (Manmohan Singh) and Commerce (P. Chidambaram) of the time but were nonplussed when asked to name the Industries Minister of the day.

Setting off reforms

Long before the Finance Minister managed to get the fisc under control and the Commerce Minister managed to bring India’s tax rates and tariffs down to “ASEAN levels”, it was PV, as Industries Minister, who signed off on the famous “Industrial Policy Statement” of July 24, 1991, that ended India’s infamous “Licence Permit Quota Raj”. Indeed, the most radical policy action taken in 1991, if one were to discount the July 1991 devaluation as an inevitability, was the delicensing decision taken by PV as Industries Minister. The trio, of PV, his principal secretary, A.N. Verma, and the Economic Advisor in the Industries Ministry, Rakesh Mohan, were responsible for that bold move.

With hindsight, one understands why PV first reached out to Dr. I.G. Patel, a former Governor of the Reserve Bank of India, and invited him to join his Council of Ministers as India’s Finance Minister. Dr. Patel had famously authored an essay in the 1980s calling for “a bonfire of controls”. It was only when Dr. Patel declined the offer, opting instead to go into retirement and live in his modest home in Baroda, that PV turned to Dr. Singh. But, it was PV who took the all-important decision to strike a match and light the bonfire that Dr. Patel had called for.

PV went beyond merely liberating Indian enterprise from bureaucratic controls. He celebrated the rise of Indian business by being the only Prime Minister to award a Bharat Ratna to a business leader, when he named J.R.D. Tata to that honour in 1992. When these facts are recounted, I am often asked why the media refers to the economic policies of the current government in New Delhi as “Modinomics” while referring to PV’s policies as “Manmohanomics”!

The middle way

It is worth recalling that when the policy initiatives of 1991-92 came under attack, not just from the Left and the Bharatiya Janata Party (BJP) but also from within the Congress, it was PV who convened an All India Congress Committee (AICC) session at Tirupati and personally defended them in his presidential address. Titled ‘The Tasks Ahead’, PV’s address outlined his approach to economic reform and policy, which he named ‘The Middle Way’.

Long before British sociologist Anthony Giddens provided legitimacy to the policies of British Prime Minister Tony Blair with his espousal of ‘The Third Way’, a mixture of Thatcherite liberalism with traditional Labour welfarism, and academic seminars were held on the idea, PV defined ‘The Middle Way in economic policy thus: “In the past ten months, our Government has initiated far-reaching industrial, fiscal and financial reforms… Simultaneously, we have also taken measures to mitigate any hardship likely to be caused in the process. We propose to continue, in fact increase, the thrust of our employment, poverty alleviation and welfare programmes… these are two parallel and complementary programmes. Between the two of them, all sections of the people are covered, at all levels of the social pyramid, with particular emphasis on the base of the pyramid… the dynamic leadership and clear voice of the Congress are needed for the upliftment of the oppressed, even while we carry out reforms in the economy as a whole.”

This formulation captures the essence of what policymakers in India and abroad have since called “inclusive growth”. Under pressure from Western economists and their Indian pupils to opt for “Big Bang” reforms, à la Margaret Thatcher in Britain and Boris Yeltsin in Russia, PV opted for the ‘Middle Way’, telling Michel Camdessus, the managing director of the International Monetary Fund that he would do whatever it takes to boost investment and economic growth in India but do nothing that would put even one worker out of employment. Narasimhanomics, if one may so dub The Middle Way, was not “neo-liberal”, an epithet that the Left hurls at Manmohanomics.

Look East and West

But 1991 was not just about a new turn in India’s economic policy. In fact, the turn in foreign policy was equally radical. It was PV who authored India’s ‘Look East Policy’, reaching out not just to Singapore and South-East Asia, but also to Japan and South Korea. PV was the first Indian Prime Minister to visit Seoul. His visit triggered a surge in Korean investments into India, making Korean brands a familiar sight in middle class households. PV also overturned India’s West Asia policy by establishing diplomatic relations with Israel. In doing so, he ensured India retained good relations with both Iran and the Gulf nations. This was classic non-alignment at work in West Asia. PV also reached out to both the United States and China and to all of India’s neighbours. Assisted by his able and clever Foreign Secretary, J.N. Dixit, PV crafted Indian foreign policy for the post-Cold War era — a policy that has stood the test of time.

We have now been told by former Prime Minister Atal Bihari Vajpayee’s confidante and press secretary Ashok Tandon that it was PV who encouraged Mr. Vajpayee to conduct nuclear tests in 1996, passing him a chit at Mr. Vajpayee’s swearing-in ceremony at Rashtrapati Bhavan that said, “now is the time to accomplish my unfinished task”. PV had tried unsuccessfully to conduct these tests and the fact that he did not have to say more about what that task was in that chit to Mr. Vajpayee suggests that he may well have kept Mr. Vajpayee in the loop. PV was a consensual leader who befriended all, reached out to all.

PV had his failings. Which Prime Minister did not? He made his mistakes. Which leader would not? But none of his failings and his mistakes were such that he did not deserve even a street named after him in this national capital of tombs and tablets.

(Sanjaya Baru is Honorary Senior Fellow, Centre for Policy Research, New Delhi, and the author of The Accidental Prime Minister: The Making and Unmaking of Manmohan Singh .)

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Printable version | Dec 13, 2017 1:49:31 AM | http://www.thehindu.com/opinion/lead/narasimhanomics-and-the-middle-way/article7061858.ece