By Nitya Chakraborty
On June 21, 1991, the 70-year-old Congress veteran P V Narasimha Rao took oath as the Prime Minister of a minority government amidst massive political uncertainty over its longevity. The Congress had got only 232 seats as against the usual majority of 272 in the Lok Sabha with the total strength of 543. Only one month ago, on May 21, Rajiv Gandhi was killed in the course of campaign for the 1991 Lok Sabha elections. Sonia Gandhi was in mourning and Rao was also acting as the Congress president.
The next 34 days from June 21 to July 24, the day, P V Narasimha Rao’s first budget was presented by the Finance Minister Dr. Manmohan Singh, had all the elements of a high octane political and economic thriller which can be made use of by an ace director to make a top-class eco-political film. The soft-spoken Brahmin, the former chief minister of Andhra Pradesh who knew 17 languages, created history by pioneering the economic reforms through his first budget and the new industrial policy presented on the same day July 24.
Dr. Manmohan Singh was his able implementer Those who had the opportunity to observe the developments from close quarters in those days, saw how resolutely, he protected his Finance Minister from all attacks by his senior Congress colleagues and led the senior bureaucrats to go ahead with the reforms programme despite continuous feedback from the Congress seniors that Rao was deviating from Nehruvian policies. Influential leaders like Arjun Singh, M K Fotedar and Natwar Singh were very angry and they were looking for gaps in the measures being proposed by Rao. Dr. N K P Salve even met the Prime Minister and told him that Dr. Manmohan Singh was a bad choice and he must remove him.
Dr. Manmohan Singh was under tremendous pressure since he was an outsider. Rao told him to go ahead as planned and he assured that he would take care of the political side of the budget. Rao as both PM and the Congress President organised a series of meetings to explain to the seniors — including Arjun Singh, N K P Salve and Natwar Singh — the precarious status of the economy and why the steps proposed by him were absolutely needed to salvage the situation. But still, the draft new industrial policy was disapproved at the cabinet meeting on July 19. Rao agreed to make some changes, but peripheral to the main thrust of the policy, and finally succeeded in getting it approved at the meeting on July 23, just one day before its presentation in Parliament.
The Rao government had the benefit of a qualified team of senior bureaucrats who worked till late night in fine-tuning the explosive new ideas of the Prime Minister. They were firmly behind the Rao-Singh team and did not waver even a little thinking that it was a minority government, even though Rao was also under fire from senior leaders from his own party. The team consisting of Naresh Chandra, A N Verma, Montek Singh Ahluwalia, S. Venkitaramanan and Dr. C Rangarajan was always available to assist Rao whenever there was any issue requiring any clarification. They were equally aware of the importance of their efforts in making a success of the economic reforms programme pursued by Rao. This team led by Naresh Chandra —the hefty general-like cabinet secretary, made the draft ready even before Rao took oath. They knew the priorities of the new government, irrespective of the combination and kept the emergency plan ready focusing on foreign exchange management, which was primarily the work of Dr. C. Rangarajan. It was a smooth affair as Rao took over and okayed their draft with small changes.
The big advantage of Rao was that despite all adverse talks in the media about the Chandrasekhar government, both the short-term Prime Minister and the Finance Minister Yashwant Sinha were persons with sharp mind and they prepared an ad hoc programme for implementation by the new government which would take over. The IMF-World Bank prescriptions were there and Rao’s advisers, after taking over, found many of the proposals made by the erstwhile Chandrasekhar government fit for implementation.
The foreign exchange reserves dipped to its lowest level and the situation was going from bad to worse as the investors were losing confidence. The Rao government opted for rupee devaluation as per the IMF-World Bank prescription and the first phase of 9 per cent was announced on July 1. This was followed on July 3 by another 10 per cent devaluation. The political tempers ran high as both the anti-Rao Congress MPs, BJP and the Left voiced strong protests against devaluation. Rao did not care for others but he had to take into account the views of his party MPs.
But the Prime Minister in his stoic manner dealt with the dissidents resorting to different tactics and by the time, the budget was being presented, the tempers in the Congress party came down. They were waiting for the final budget presentation and its impact on the parties and the people. At the trade policy level, the new Commerce Minister P Chidambaram got his job ready and he presented a thirteen-point policy package which was announced on July 4. The tempo was thus being built up for the final budget presentation on July 24.
On the D-Day, July 24, Prime Minister was quite nervous in the morning. He confided to a senior journalist that he needed God’s blessing since the day was his biggest test in his political career. He must have prayed to God in the morning with his Sanskrit slokas. At the other end, Dr. Manmohan Singh was also equally strained. He was aware that he was performing a historic task and its failure in any way, would impact his fate as also of the future of this Government. He was determined that he would not let the PM down. He was looking nervous when he was entering the Lok Sabha but soon he got back his composure.
Finance Minister gave a Nehruvian dimension in his first budget speech when he said quoting Victor Hugo: “No power on earth can stop an idea whose time has come.” Then he said: “I suggest to this august house that the emergence of India as a major economic power in the world happens to be one such idea. Let the whole world hear it loud and clear. India is now wide awake. We shall prevail. We shall overcome.” The speech had the ring of Nehru’s address on the first Independence day on August 15, 1947. That was a call to the world to take note of India that had gained political freedom. Dr. Singh wanted to impart a new dimension to that by conveying that the world has to take note now of India’s great battle for economic freedom that had started.
At my professional level, this writing on the 1991 budget was my biggest challenge in the Hindustan Times, after taking over as the Business Editor. The owner, the veteran K K Birla was the chairman of the company and his daughter Shobhna Bhartia had just joined as Editorial Director and vice-chairperson. The new economic reforms would have impact on their industries which were being run till then as family-run business and were comfortable in a sheltered environment under licence raj. I was not sure how to put this big event in perspective. Thankfully, no instructions came from the top and I organised the budget coverage in an objective manner highlighting the major changes in the policies that would make the real difference.
I had excellent colleagues in the business bureau including Kalyani Shankar who covered the PMO and broke a number of policy-related stories in the pre-budget days. K Badarinath, Deepak Joshi, Arun Kumar and others were also formidable colleagues. The business bureau worked as a composite team and the editing desk was aptly managed by Nilima Sinha and Michael Xavier. It was an exciting demanding evening when work went on till midnight. But we enjoyed every bit of it. I went to the Press Club in between and gulped down two pegs to restore some energy and came back to write the intro of the main budget story. When I left office at midnight, I thought it was a battle for me too, just like Rao and Dr. Singh. Next day’s HT would show how I fared in the battle. (IPA Service)