The Accidental Prime Minister: The Making and Unmaking of Manmohan Singh Read online

  This surprised me. I had thought the job was Montek’s. But, knowing the relationship between Montek and Dr Singh, I assumed a bigger job was in the works for him, should he return from Washington. That weekend I took a week’s holiday and flew to Hyderabad with my daughter, Tanvika, to celebrate my fiftieth birthday with my parents. My wife, Rama, had gone to Canada to take up a research fellowship. On Friday, 28 May, the day I turned fifty, we were in the dining room of my parents’ home when my mobile phone rang.

  ‘Is it Mr Sanjay Baru?’ asked an unmistakably sarkari voice from Delhi. ‘Principal secretary to PM, Mr Nair, will speak to you.’

  Nair came on the line and introduced himself. ‘Mr Baru, we have never met. I am principal secretary to the PM. The PM would like to meet you. Can you come this evening?’

  I informed him that I was in Hyderabad and would only return after the weekend. He said he would get back to me and called a few minutes later to schedule an appointment for Monday morning.

  That evening, when I was at a family party, I received another call from Delhi. The caller was N.N. Vohra, a distinguished former civil servant who had served as home and defence secretary and had been Prime Minister Inder Gujral’s principal secretary. I got to know Vohra intimately when he was director of the India International Centre in the late 1990s and I was the convenor of the centre’s economic affairs group. We had also both been members of the National Security Advisory Board (NSAB) from 1998 to 2001, and had, moreover, travelled together to many foreign capitals, notably Tokyo, as part of a delegation sent by the Vajpayee government to persuade Japan to end the economic sanctions imposed on India after the nuclear tests. Vohra had regaled us with jokes and humorous anecdotes from his varied career in the civil and intelligence services. During long walks in Tokyo, we discovered we had similar views on many issues and despite the several years that separated us, became good friends. Our most recent association had been as members of Mani Dixit’s foreign policy group.

  ‘Sanjaya,’ said Vohra, ‘you are meeting the PM on Monday? He will ask you to join his office. He asked me what I thought of you. I told him you were a good fellow!’

  Vohra laughed in his characteristic nasal tone. ‘He said he was planning to appoint you as his information adviser. I told him he had made a wise choice.’

  I thanked Vohra for his vote of confidence and returned to join the partying, feeling my excitement rising at what lay ahead. My professional life had been full of twists and turns. At the age of thirty- six, I had given up the staid world of a university campus in Hyderabad where I had taught economics, and entered the rough and tumble of journalism at a time of sweeping economic and political change in India and the world. Later, I had also ventured into the esoteric field of strategic policy as a member of India’s NSAB. Now, I would be making yet another turn and, to tell the truth, I was ready for it. Working in a PMO headed by Manmohan Singh, whom I had come to respect as a professional and a human being, was an opportunity not to be missed. However, while I discreetly shared Vohra’s news with my parents, I did not mention it to anyone else. That day, I was more than happy to celebrate turning fifty with family and friends for whom Delhi was a distant durbar.

  2

  Getting to Know Dr Singh

  ‘Sometimes in life it is wise to be foolish.’

  Raul Prebisch to Manmohan Singh, 1969

  I first met Manmohan Singh in early 1991 at his office in the University Grants Commission (UGC), across the road from my own office at Times House, on New Delhi’s Bahadur Shah Zafar Marg. The Economic Times, where I was then associate editor, was to celebrate its thirtieth anniversary in March 1991. I was put in charge of producing a special supplement for the occasion. We decided that it would carry interviews with economists who had shaped policy during those thirty years. We picked K.N. Raj, the doyen of the Delhi School of Economics, consulted by both Jawaharlal Nehru and Indira Gandhi; P.R. Brahmananda, who created a rival group dubbed the Bombay School of Economics; and Manmohan Singh, a disciple of Raj at the Delhi School, but one who had served the Indian government in important policymaking capacities for two-thirds of the period that was our focus.

  His career had been brilliant by any reckoning. After studying economics at Punjab University, Manmohan Singh went on to secure an honours degree in economics from Cambridge University, followed a few years later by a doctoral degree from Oxford University. He then taught economics at his alma mater, Punjab University. Sometime in the early 1960s, his neighbour in Amritsar, the writer Mulk Raj Anand, took him to Delhi and introduced him to Nehru, who invited the talented young economist to join his government. Dr Singh could not do so at the time, since he was serving out a contract with his college, which had funded his studies abroad.

  In 1966, Dr Singh, who had written his doctoral thesis on India’s export trends and prospects, joined the United Nations Conference on Trade and Development (UNCTAD) in Geneva. However, three years later, India beckoned and Dr Singh came home to join the faculty of the Delhi School of Economics at K.N. Raj’s invitation. The Delhi School had acquired global prominence under Raj, and Dr Singh became part of an enormously talented faculty that included Amartya Sen, Jagdish Bhagwati and Sukhamoy Chakravarti. Taken aback by his promising colleague’s decision, the head of UNCTAD, Raul Prebisch, advised Manmohan Singh to stay back and not return home. Manmohan explained to Prebisch that the Delhi School appointment was a prestigious one and that he would not like to turn down an invitation from Professor Raj.

  ‘You are being foolish,’ Prebisch admonished Manmohan, but then added thoughtfully, ‘Sometimes in life it is wise to be foolish.’

  It was a line I heard Dr Singh repeat many years later in his modest office in the prime minister’s official residence on New Delhi’s Race Course Road, a small room that could accommodate just a table and two chairs but overlooked a lovely lawn where peacocks strutted around. Faced with a veritable avalanche of advice urging him to drop the idea of pursuing the civil nuclear energy cooperation agreement with the United States, including from many of his closest aides—advice that he did not finally take—Dr Singh said to me with a smile, ‘It is time, again, to be foolish.’

  However, at our first meeting that afternoon in February 1991, I had no sense of what, if anything, was remarkable about Manmohan Singh. I was in awe of K.N. Raj, who had been my teacher, and I saw Dr Singh as just another student of his who had spent most of his life in the government. True, he had held a series of important positions, including chief economic adviser to the Government of India, economic affairs secretary in the Union finance ministry, governor of the Reserve Bank of India, deputy chairman of the Planning Commission and secretary general of the South Commission, and had just demitted office as an adviser to Prime Minister Chandra Shekhar. But I was not brought up to be overawed by authority.

  I was also less than reverential because the world in which I grew up overlapped with his. Both my father, whose term as finance and planning secretary of Andhra Pradesh coincided with Dr Singh’s stint as secretary in the ministry of finance in Delhi, and my father-in-law, who had been in the Planning Commission, knew Dr Singh well. Indeed, my father and Dr Singh had several close friends in common, most importantly, K.N. Raj, the economist; Amrik Singh, the educationist; and Mohit Sen, the communist.

  When I walked across Bahadur Shah Zafar Marg and into the UGC office that day, I expected to meet an officious and self-important bureaucrat, another VIP belonging to the Delhi ‘durbar’. However, the first thing that struck me when I came face-to-face with Manmohan Singh was his gentle politeness. He greeted me warmly, got up from his chair and suggested we sit on a sofa, and offered me a cup of tea. I switched on my tape recorder and began asking my questions. A few minutes into the interview, the tape recorder stopped working. Feeling a little rattled, I tried shaking it, took the batteries out and put them back in, but nothing helped. Dr Singh was patient, but gently warned me that he had a meeting to go to and was travelling over the next few days. He
suggested we try finishing the interview.

  While I was contemplating writing down his answers in longhand, it occurred to me that it would take very little time to summon Mr Anand, the stenotypist from ET, who duly arrived and wrote down Dr Singh’s replies in shorthand. At the end of the interview, Dr Singh suggested I show him the typed draft before it went into print. Since Dr Singh was travelling, I managed to show him a draft only a week later. This he promptly returned with several changes made with a ballpoint pen, in a handwriting that was neat, legible and compact. Requesting Mr Anand to incorporate his changes and forward the file to my colleague who was handling the production of the special pages, I left Delhi on work.

  Early in the morning of 5 March the ET special edition arrived at my doorstep. But even before I could open it, the phone rang. It was Manmohan Singh on the line. His tone was even, but his displeasure was sharply evident. ‘You did not make all the corrections I asked you to,’ he said. ‘I had added an entire paragraph that I do not find published. It was an important point I was making. This is highly irresponsible. I didn’t expect you to be so careless.’

  He put the phone down even as I kept saying, ‘Sorry, Sir, I haven’t seen the paper yet.’

  That was the first of the two admonishments I have received from Dr Singh. The second was to come sixteen long years later, when he chastised me for crediting him with an important decision that the Congress party was eager to claim was Rahul Gandhi’s idea.

  The mistake turned out to be the kind of embarrassing mix-up that does occasionally happen in newspapers. While Mr Anand had done his job properly, the person making the page had accidentally downloaded and placed on the page, the earlier, uncorrected version of the interview. I was curious, now, to discover the contents of that additional paragraph that Dr Singh had scribbled on to the draft, and had been so upset to find missing in the printed version. It turned out to be about his recent visit to South Korea and the important lessons India ought to learn from South Korea’s model of development. He had pointed out that South Korea had invested in education and had an open economy, and India ought to do the same.

  It was only years later that I fully understood why Dr Singh had been so upset at this omission. He was signalling the relevance of his own views, views that he had articulated decades ago in his doctoral thesis, on the importance of foreign trade and greater openness to the world economy in India’s own development. No Indian policymaker had till then held South Korea up as a role model. In fact, in the mid- 1980s, Professor Raj had had a high-profile spat with Bela Balassa, the Hungarian economist at the World Bank, in which he disparaged the so-called lessons to be learnt from the East Asian growth experience which Balassa was advocating. Indian-trained economists like myself were taught to pooh-pooh the relevance of the Korean experience for India on the grounds that the strategies followed by small-sized economies that had tied their fortunes to American power were not relevant for a large, independent nation like India. In February 1991, weeks before he was unexpectedly summoned to become India’s finance minister, Dr Singh was once again drawing attention to his own views about trade and development.

  Indeed, Dr Singh was always more open-minded than his critics have painted him to be. Contrary to the mischievous remarks of some of them that he had been converted to economic liberalization after becoming finance minister, the fact is that he had always been an advocate of trade liberalization and a critic of export pessimism. (This is the now-discredited theory that India had little to supply to the world economy and therefore ought to reduce its demands on it.) As he told me in this March 1991 interview:

  I was a critic of the export pessimism of the fifties, although I must say that there was some change in thinking after the foreign exchange crisis in 1957. If you recall, it was the Second Plan which made the assumption relating to exports not being an option. At the time, textiles and engineering goods were the leading industries and we must remember that in 1945 India was a leading textiles exporter. But we lost ground because we failed to modernize.

  On the other hand, countries like South Korea which came to the field only in the fifties were able to modernize and emerge as leading textiles exporters. We missed the sixties boom in trade because we believed that there was no scope for labour-intensive techniques in the world market. We failed to recognize the scope for technological change and to evolve a trade policy suited to that purpose. There is inadequate recognition in our country that on a per capita basis, India is not well endowed with natural resources and that we have to be a major trading nation to fill this gap.

  Clearly, Dr Singh wanted, through these comments and those accidentally omitted from the published interview, to bring his views to bear on the ongoing debate in India at the time on issues like trade liberalization and industrial policy. In fact, he had been moved out of the PMO where he had been an adviser to Prime Minister Chandra Shekhar, because the PM’s more left-wing advisers were unhappy with the kind of policy advice that Dr Singh was offering the PM. Sitting in the UGC, he was now keen on giving a clearer public expression to these views. And I had botched it!

  That was the last I heard from Dr Singh till June 1991, when he became India’s finance minister. Narasimha Rao took charge as the Congress party leader after Rajiv Gandhi’s assassination in May 1991, in the midst of an election and a balance of payments crisis. He needed a finance minister who enjoyed international credibility and could negotiate a loan with the IMF. Rao’s first choice was I.G. Patel, a former secretary in the ministry of finance who had just returned to India after a stint as director of the London School of Economics. A critic of many of Indira Gandhi’s policies, Patel had called for a ‘bonfire of controls’ in an influential essay written in the 1980s. However, Patel chose not to return to public office and went into retirement in his home town, Vadodara. Dr Singh’s name was then suggested to Narasimha Rao by P.C. Alexander, who had been principal secretary to Prime Minister Rajiv Gandhi. Alexander had called Dr Singh and informed him that he was to become the finance minister. However, Dr Singh either did not take the offer seriously or wanted to hear it directly from the PM. So he just stayed at home until he was summoned by Narasimha Rao at short notice to the swearing-in ceremony at Rashtrapati Bhavan.

  On the day Dr Singh assumed charge, I called his home and left a message congratulating him. That night the phone rang just as I had finished dinner. ‘Sanjaya, this is Manmohan,’ the new finance minister said. ‘I received your good wishes. Thank you. We will meet after I have settled down.’ I was relieved that he had either forgotten the ET special-edition fiasco or was now ready to forgive me for that lapse. It clearly helped that a finance minister handling a crisis needed to be on good terms with an economic journalist.

  For six months after that I enjoyed a cordial equation with him. Those were exciting and heady days for an economic journalist in India. It all began with the two-step rupee devaluation on 1 July and 3 July, dubbed by Dr Singh and the Reserve Bank’s deputy governor C. Rangarajan as ‘hop, skip and jump’. Major policy announcements followed, including the end of India’s infamous ‘Licence Permit Raj’, as its web of bureaucratic controls was popularly described, and an across-the-board reduction of import tariffs.

  Dr Singh’s first budget speech on 24 July 1991 concluded with the now-famous quotation from Victor Hugo: ‘No power on Earth can stop an idea whose time has come.’ He went on to say: ‘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.’

  At ET, we were generally supportive of the government’s initiatives, though some of us remained sceptical of the likely impact on growth and welfare of the economic liberalization measures. I also knew, from my conversations with the then chief economic adviser to the Union government, Deepak Nayyar, a former colleague from our time together in the mid-1980s on the faculty of economics at the Jawaharl
al Nehru University (JNU), that there were internal differences within the finance ministry on what ought to be done. Even on a matter such as exchange-rate policy there were divisions, with C. Rangarajan and Y. Venugopal Reddy, then a joint secretary in the Union finance ministry, opting for more graduated changes in the exchange-rate regime, while others, like Montek, were votaries of the ‘big bang’ approach.

  These differences found their reflection in the wider public space. There was a lively debate, for instance, in the press on the merits of ‘gradual’ reform versus ‘big bang’ reform. My columns reflected the views of the gradualists and, therefore, attracted those who agreed with me. One such person was Charles Clift, a junior diplomat in the British High Commission in Delhi. Charles had done his PhD in economics from Sussex University and his doctoral supervisor was Biplab Dasgupta, a Marxist economist who later returned to India to become a CPI(M) member of Parliament. (He died in 2005.) Charles told me that every document and letter sent by the Indian finance ministry to the IMF was circulated among all IMF directors and the British had a policy of sending the papers dealing with a programme country to their diplomatic outpost in that country.

  This meant that every letter Dr Singh wrote to the IMF’s managing director Michel Camdessus found its way back to Delhi, to the British High Commission. Given his loyalty to Biplab, who as a CPI(M) member would have been only too happy to have the finance minister’s dealings with the IMF subjected to public scrutiny, Charles had no qualms about handing over some of those documents to me. It helped that Biplab had once mentioned to him that I, as a former member of the Communist Party of India (Marxist) during my days at the University of Hyderabad, was a ‘fellow traveller’. Thanks to Charles’s generosity, I was able to write some interesting news reports and columns.