India at 70: Saluting PV Narasimha Rao, the man who transformed our economy

Last Updated: Wed, Aug 16, 2017 11:12 hrs
P V Narasimha Rao (Reuters image)

In the 70 years since independence, the single biggest transformational leap for our economy was the liberalisation of 1991. Ironically, the man, who championed this move and saw it through, was no economist. In fact, he was a die-hard protectionist up until a few days before he became Prime Minister.

The transformation of Pamulaparthy Venkata Narasimha Rao, according to his biographer Vinay Sitapathi, came just two days before his swearing in, when, as part of his preparation for the job ahead, the then 69-year-old "read a note given to him by cabinet secretary Naresh Chandra on the economic crisis. It took just a few hours for Rao to change his mind and become an economic liberaliser."

Jairam Ramesh, Officer on Special Duty in the Prime Minister's Office when these monumental changes were rolled out, recounted Rao's first reaction on reading the note in his book To the Brink and Back: India's 1991 Story. "When he saw the note Narasimha Rao's first response was: 'Is the economic situation that bad?' To this, Chandra's response was, 'No, sir, it's worse.'" Ramesh remembered.

A radical plan of action did not take too long in coming. As Sitapathi, whose biography of the former PM is titled Half Lion, told a newspaper, "The stereotype of Rao as indecisive is incorrect. When he saw that the right policy was also politically navigable, he could act speedily."

Dwelling on the circumstances in which Rao opened up the economy helps us to appreciate the enormity of his decisiveness.

In the two years before the veteran politician took over as Prime Minister in 1991, India had seen the arrival and departure of four governments and four finance ministers. Even more worryingly, for six months, there had been no budget and gold bullion was being sold to pay off debts. India's then external debt had ballooned to 72 billion dollars, the world's third highest. The previous government had to even pledge 20 tonnes of gold in London for $240 million to stop the nation from being declared bankrupt.

Into this grim scene, Rao arrived leading a minority government. His party was forty seats short of majority, but he wasn't going to let that stand in his way in this dire period.

His popularity, it must be remembered, was on very shaky grounds even within the Congress Party of which he became the leader after Rajiv Gandhi's assassination on May 21, 1991. Most Congressmen saw Rao as an interim leader - one without ambition; an indecisive man, who proved the best bet only because it was believed that he would accommodate everyone and stay loyal to the party's first family. But Rao proved even the sagest commentator wrong and without much ado thumbed his nose at the policies of the one leader Congress swore by, Jawaharlal Nehru.

Instead of turning to the Sharad Pawars or the Pranab Mukherjees, Rao handpicked then political greenhorn Dr Manmohan Singh, an economist with the required credentials and credibility, as the Finance Minister and gave him his head with a clarion call: "Desperate maladies call for drastic remedies."

Manmohan himself had been surprised by the offer, a fact he later recounted to his daughter in the book Strictly Personal. "I had gone to the Netherlands for a conference. I came back late at night - I was asleep - and PC Alexander (Rao's informal advisor) rang up frantically saying that he wanted to see me immediately. Then he came over and told me that Narasimha Raoji was considering me for the position of the finance minister. I didn't take it seriously. The ministers were being sworn in the next day. They were searching for me. I was at the University Grants Commission office. They said I must go home and get dressed and come for the swearing-in ceremony. Everybody was surprised to see me as a member of the new team lined up to take oath of office. My portfolio was allotted later, but I was told straight away by Narasimha Raoji that I was going to be Finance Minister."

In July 1991, Dr Singh presented his budget with Victor Hugo's famous line "No power on earth can stop an idea whose time has come" emphasing its motif. The abolition of License Raj, a Nehruvian monolith, was soon underway and so radical was the change it unleashed that foreign investment shot up from $ 132 million in 1991 to $ 5.6 billion just four years later in 1995.

Successive governments would go on to ride this newly-unleashed tidal wave and transform the nation's destiny in the process.

The man who helped us achieve all this didn't promise us achhe din. He was no charmer who could tug at people's hearts with his mesmeric oratory and with his mann ki baats. He was just an erudite old man, a polyglot with a pout and flaws.

As the nation turns 70, that though doesn't mean that we avoid celebrating PV Narasimha Rao. He is and will remain the leader to whom most of us net-savvy, cell-phone toting, and so-called upwardly mobile folk owe our careers. It is thanks to the vision and courage he displayed in the years 1991-96 that we have jobs and hopes, which aren't confined to the places of our birth or upbringing. He set us all free (from a stifling and ponderous state economy), allowed us to sally forth into the wide world and made India the rapidly surging economy it now is. It is high time we gave this unlikely hero his due.

Also read other India@70 stories:

India at 70: Top ten moments from our economic journey

Women after Independence: A retrospective of India's finest

A timeline of 70 years of Indian Independence