Half - Lion: How P.V. Narasimha Rao Transformed India

by Vinay Sitapati

  Rao ensured the film was taken to Moscow. But nervous officials there replaced the film with a hagiographic documentary on Indira Gandhi. They forgot, however, to replace the banner outside the theatre. So, viewers who thought they were watching a Hindu god who was half-woman, half-man, were treated instead to a film on Indira Gandhi.

  On 16 April 1987, a Swedish radio broadcast changed the course of Indian politics. The broadcast alleged that during the purchase of Bofors artillery guns by the Indian Army, bribes had been paid to Indian politicians and defence officials. The needle of suspicion was to turn all the way towards the prime minister and devastate his reputation.

  Bofors was only one of many mistakes that Rajiv will be remembered for. Worried that Muslims were disillusioned with the Congress and voting for regional alternatives, Rajiv Gandhi overturned a Supreme Court decision that had enhanced the protections available to divorced Muslim women. This pleased the Islamic clergy, but led to allegations by the rising BJP that he was pandering to Muslim extremists. So, Rajiv decided to win over the Hindu vote bank by completely opening up the disputed Babri mosque in Ayodhya for Hindu worship in 1986. This upset Muslims, so Rajiv’s government decided, in 1988, to ban Salman Rushdie’s Satanic Verses for hurting Islamic beliefs—the first country in the world to do so. Three years later, in an attempt to consolidate his Hindu vote bank, Rajiv allowed the foundation stone ceremony for a future Hindu temple at Ayodhya, enraging Muslims even more. Such competitive communalism reinforced the image of the Congress as playing religious politics rather than standing by its professed secular creed.

  There is no evidence that Narasimha Rao advised Rajiv Gandhi against these missteps. In an anonymous article published later, he would be critical of Rajiv’s ‘naiveté’ on Ayodhya. But when writing under his own name, in a book on Ayodhya published after his death, Rao absolved Rajiv of any responsibility.57 Whatever the inner half of Rao may have thought, his public half never faltered in praise of the Nehru-Gandhis.

  Another policy that Narasimha Rao did not publicly oppose, despite knowing better, was on Sri Lanka. As the civil war between the LTTE and the Sinhala-led government endured, Narasimha Rao, careful by temperament, privately opposed any Indian attempt to get involved in its neighbour’s wars. He questioned the India-Sri Lanka accord, signed in July 1987, and was critical of Rajiv Gandhi’s decision to send troops to Sri Lanka soon after.58 ‘But as usual,’ Natwar Singh remembers, ‘he was unwilling to confront the PM.’59 When India finally brought home its 43,000 troops in the last months of 1989, more than a thousand Indian soldiers were dead, 3000 were injured, and a former prime minister was about to be blown up.60

  On Ayodhya and Sri Lanka, Narasimha Rao knew right from wrong, but chose to keep his own counsel. In the case of the economy, Rao was even more protectionist than his prime minister. When the gently liberalizing reforms that Rajiv began in 1985 sputtered to a stop two years later, Narasimha Rao did not have the conviction to steady his boss. The story of why Rajiv failed to open up the economy provides a vital context to understanding how prime minister Rao eventually succeeded in the early 1990s.

  Rajiv Gandhi began with the right idea, that state controls were throttling the Indian economy and needed to be dismantled. But this was an idea whose time had come several years earlier. In 1970 itself, the economists Jagdish Bhagwati and Padma Desai had criticized the three pillars of the licence raj:61 state control of entire sectors, rules that prevented Indian businesses from growing, and isolation from global economic trade. By the early 1980s, a variety of government reports was advocating some form of liberalization.62 The presence at the top of the bureaucracy of liberalizers such as L.K. Jha, Abid Hussain, Manmohan Singh and Montek Singh Ahluwalia ensured a critical mass of officials who could implement changes to economic policy as long as politicians gave the go-ahead. Many of the policies that Narasimha Rao and Manmohan Singh would implement in 1991 were, in fact, worked upon during this period. By the mid-1980s, Indian policymakers had become convinced of the need for economic liberalization. What was needed was a political environment to support them.

  That political will to reform, somewhat seen in the chastened Indira Gandhi of 1980,63 was clearly visible in her eldest son. Prime minister Rajiv Gandhi was young, educated abroad, and had businessmen friends. His closest advisors, Arun Nehru and Arun Singh, had worked as executives in multinational corporations.64

  In his first year as prime minister, Rajiv Gandhi pried open the economy ever so slightly. In the finance budget presented to Parliament in March 1985, the word ‘socialism’ was not even mentioned once.65 Tax concessions were offered to corporates and to the middle class, and imports were somewhat liberalized, encouraging entrepreneurs to purchase machinery and raw materials from abroad. The relaxation of anti-monopoly rules allowed companies such as Reliance to grow. Most important, the private sector was allowed to participate in some areas traditionally reserved for the public sector. The Indian business group Tata had long wanted to make wristwatches through its brand Titan. But, in the words of Xerxes Desai, then spearheading the Tata effort, ‘Our entry into watches was attempted to be blocked by various lobbies—the anti-big business lobby, the smugglers lobby, Indian manufacturers like HMT, bureaucrats, etc. It was only after Rajiv Gandhi became prime minister that the situation changed and we were given the go-ahead.’66

  The economic reforms of Rajiv Gandhi were baby steps, not leaps, and helped existing businesses rather than new ones.67 But so underperforming was the Indian economy that even this slight shift in attitude led to rapid economic growth. Imports grew substantially and exports steadily, and industrial growth grew from 4.5 per cent in 1985–86 to 10.5 per cent in 1989–90.68

  The problem was that imports grew at a much faster rate than exports, and India lacked the savings or foreign investment to fund the difference. The result was deficit-led growth, with India relying on borrowings from abroad to pay for both investments as well as imports.69

  Sustainable growth required deep-seated changes—devaluation of the rupee, an end to the byzantine system of licences and permits, tariff reduction, and the removal of anti-monopoly laws—that were opposed by vested interests so powerful that Rajiv was unable to overcome them. As the political scientist Atul Kohli points out, the businessmen who were benefitting from a controlled economy stymied Rajiv’s attempts at levelling the playing field, as did Left intellectuals and parties who saw it as a sell-out to capitalism.70 The most virulent opposition, however, came from within the Congress. An example makes clear exactly how the party was able to block its leader on economic reforms.

  Soon after becoming prime minister, Rajiv had wanted to announce his economic vision in the December 1985 session of the Congress party, to be held in Bombay. In anticipation of the session, his vision was first presented to the Congress Working Committee (CWC), the select decision-making body of the party. But these market-friendly ideas were so bitterly opposed there that Rajiv decided to abandon any further references to economic reform.71 And so, when Rajiv finally spoke to party workers in Bombay that December, he had the pluck—as is now famous—to criticise the ‘power brokers’ in the party, but could not muster the courage to criticize economic socialism.

  Rajiv’s incapacity to achieve economic reform was made worse by his artlessness in everyday politics. Rajiv had come to power with the largest mandate in Indian history. But faced with the usual cycle of state elections, allegations of corruption, and dissidents within his party—in short, the routine turbulence that any prime minister faces—Rajiv lost his appetite for bold changes.

  This was particularly so after 1987, when allegations of corruption in the Bofors scam made their way to the very top. A document drafted by the planning commission, circulated in May 1987, called for a larger role for private corporations in industrialization. It was quietly shelved because the prime minister had, by then, limited political capital to expend.72 A better set of counsellors—such as those that prime minister Narasimha Rao would c
ultivate around himself—may have steadied Rajiv. But the advisors at Camelot, more school chums than experienced mandarins, were not equal to the task. By 1987, few new reforms were being pursued and the old ones had lost steam. Meanwhile, India continued living off borrowed money, the very problem that would lead to the foreign exchange crisis of 1991.

  Narasimha Rao was neither part of Rajiv’s early reforms nor his later rollback. He had never worked in the ministries of finance, commerce or industry. His visit to the United States in 1974 had made him question his own socialism, but it had not converted him into a devotee of capitalism as yet. His experience with cotton planting in his village in 1974 had taught him that the poor needed access to the market, not just handouts. But he had only a vague sense of what the Indian marketplace actually looked like.

  All he knew of the ills of the licence raj were complaints from his son Prabhakara. A few years earlier, Prabhakara had carped about how licences for the production of aluminium conductors used in the transmission of power were being cornered by monopolists.73 Those who already had a licence would obtain the other licences under fictitious names, and then not use them. This artificially filled the ‘quota’ of licences without improving the supply, thereby increasing prices. While Narasimha Rao was appalled at how government policies were being manipulated thus, he did not learn the larger lesson of this story: that the entire system of controls needed to go. Congress leader Jairam Ramesh, who interacted with Rao in this period, remembers him as the ‘symbol of procrastination, delay, and the status-quo’ on economic policy.74

  On a visit to London as Union minister in the late 1980s, Rao had asked to meet Dr Manmohan Singh. Manmohan, a former governor of the Reserve Bank of India (RBI), was then secretary general of the South Commission. He travelled from Geneva to meet Narasimha Rao. Nearly three decades later, Manmohan Singh vividly recalls this meeting: ‘I had no inkling that Rao was in favour of liberalization, based on his past record.’ Manmohan was making a deeper point. In the late 1980s, Narasimha Rao was not an economic reformer.

  In 1990, when in the Opposition, Rao would write to the commerce minister, Subramanian Swamy, complaining that the electrolytic manganese metal from abroad was being allowed easy import into India under the ‘open general license’.75 Rao grumbled that this was hurting domestic producers. His complaint reflected economic protectionism at its worst. On foreign policy, ‘he had realized that the old shibboleths, that book, had become obsolete. He needed a new approach and vocabulary.’76 But on the economy, Rao would come to this realization only in the debt-ridden days of June 1991.

  By 1987, just as Rajiv’s star was on the wane, Narasimha Rao believed his was on the ascent. Rao felt that he was the clear number two in the government, close to the leader, as well as uncommonly experienced. He had served as state minister for nine years, chief minister for two. In Delhi, he had overseen changes to Indian foreign policy towards the United States; as home minister, he had involved himself in the problems of Ayodhya, Kashmir, Punjab and Sri Lanka. Put in charge of education and health, he had stirred up ministries that were traditionally considered backwaters. Where he was given a free hand, he had made an impact. Where his correct advice had been ignored—as in Punjab and Sri Lanka—he had remained a team player, never publicly chiding Rajiv. And where his instincts were wrong—like on the economy—he had neither volunteered advice nor had it been sought. He had, in other words, become the perfect courtier in the Delhi durbar—knowing when to act, when to connive and when to stay silent.

  Since he could not express his true feelings publicly for fear of recrimination, he typed his reflections on this period in his life in a digital diary he maintained on his computer (these diary entries—so crucial to accessing Rao’s innermost thoughts—remain to this day private): ‘For many years now, I have had this dilemma. I have been seen as a wise person, No. 2 to the leader. Sometimes people have been very kind to me, attributing good decisions to me and bad ones to someone else or to some inexperienced adventurist group. This has not always been the case, yet by and large, the hunch was correct. More decisions taken at my instance proved to be good and more taken against my view proved to be bad or harmful. I can say this honestly, although I never said it openly, for fear of creating controversy.’77

  When President Zail Singh’s term ended in 1987, Narasimha Rao’s confidence in his own stature led him to lobby for the post. For a man who had built his career by never displaying ambition, this was a rare slip. Kiran Kumar Reddy, who would eventually become the last chief minister of unified Andhra Pradesh, remembers how Narasimha Rao asked him to canvass Andhra MLAs to vote for him for the presidency.78 All this effort came to naught when Rajiv Gandhi chose R. Venkataraman, the vice president and a close friend of Narasimha Rao’s, for the position of President of India.

  A reflective Rao took the hint. He had reached the summit of his career, and there were no further promotions that Rajiv had in store for him. The tantrik Chandraswami, known for predicting the political fortunes of leaders such as Margaret Thatcher,79 met him during this time. He prophesied that Rao would one day become prime minister.80 Rao did not take him seriously.

  He turned once again to writing. Rao had built a parallel reputation as a short story writer and translator from Marathi and Telugu. He had also been an unnamed contributor to Mainstream, whose left-wing editor Nikhil Chakravartty was a friend. In 1984 itself he had published an article titled ‘Reshuffle’, whose sarcastic tone would have cost him his job had his authorship been made public. He wrote under the pseudonym ‘The Other Half’ or sometimes simply as ‘Anonymous’. The October 1987 issue of Mainstream, for instance, has pieces by E.M.S. Namboodiripad and L.K. Advani. It also has an essay titled ‘Light and Dark’ by ‘Anonymous’. The essay would later be published as part of Narasimha Rao’s novel, The Insider.

  Rao also began to spend hours alone in his house on Motilal Nehru Marg, watching Dev Anand movies, and listening to cassettes of Bismillah Khan playing the shehnai. When public life limited Narasimha Rao, music and writing provided him the space to be himself.

  In June 1988, Narasimha Rao was reinstated as foreign minister. Eight years earlier, Indira Gandhi had given Rao this job as reward; her son was now giving it to him as consolation.

  It was also a ministry quite different from the one he had left. Indira’s slight turn towards the United States had become pronounced under Rajiv, whom the historian Srinath Raghavan terms as one of the most pro-American Indian prime ministers until that point.81 Mikhail Gorbachev had come to power in the Soviet Union, and his policies of glasnost and perestroika were reshaping how Indian policymakers thought of their own country. And in 1988, Rajiv Gandhi made a landmark visit to China, sweetening relations that had soured after the 1962 war.

  Narasimha Rao was looking forward to meeting Deng Xiaoping, whose decade in power had already transformed China. He was thus enormously hurt when Rajiv Gandhi decided to meet Deng without either Rao or the foreign secretary, K.P.S. Menon (Jr). It was another signal that Rao was slipping out of favour. He would nurse this slight even after becoming prime minister and transforming Indo-Chinese relations in 1993, accusing an intelligence bureau (IB) man of conspiring to keep him out in 1988.

  Foreign minister Rao visited Singapore in 1989. His grandson Shravan recalls, ‘He came back and told me, “There is a theme park called Sentosa. There is a sound and light show. There is excellent technology. The way they aligned the lights and sounds is superb. There is one show, that show is conducted on the beach in the night.”’82

  In that same visit to Singapore, he spent the day with an Indian-origin businessman, buying laptops to take back home.83 These visits to East Asia would shape his ‘Look East’ policy as prime minister a few years later. It would also shape his dislike for the barriers that technology imports into India faced. Returning from one such visit, the foreign minister was irritated at the level of duty that customs officials levied on the laptop and electronic gadgets he was bringing b
ack. He came away from the airport seething.

  Cast aside by Rajiv Gandhi, Rao would spend the day typing away on his laptop, and evenings chatting with friends. Velcheru Narayana Rao, the Telugu scholar whom Narasimha Rao had met at the University of Wisconsin in 1974, came visiting. ‘He gave me an hour after dinner,’ Narayana Rao remembers. ‘I was talking about Henry Kissinger and what was going on in the international [arena]. He knew all about that. He kept up with what was happening in the world very closely.’84

  In November 1989, general elections were held for the ninth time. Rajiv had squandered the largest majority ever given to any Indian leader. Reformist and eager when he came to power, he had lacked the political skills to navigate the roadblocks to reform in his own party, in Parliament, and among the media and intellectuals. The Congress manifesto for the 1989 elections shows how far Rajiv had moved from the reformist promise of 1985. The manifesto did state that the Congress would continue with removing bureaucratic controls on the economy and industry so that entrepreneurs could concentrate on generating wealth.85 But it did not mention specific measures—such as disinvestment, devaluation of the rupee, delicensing or removal of anti-monopoly laws—that Rajiv’s own policymakers had been advocating.

  The people of India expressed their disappointment with Rajiv’s leadership by reducing the Congress to 197 seats. Rajiv was replaced as prime minister by a multiparty National Front coalition led by friend-turned-enemy Vishwanath Pratap Singh. The BJP, meanwhile, won eighty-five seats, a stunning rise from its previous tally of two.

  It is a measure of his profile as a departing foreign minister that several world leaders found time to console Rao on this loss. On 6 December 1989, he received a letter from the Australian foreign minister: ‘Please accept my commiserations on your loss of office,’ Gareth Evans QC began. ‘It is always sad to see colleagues and friends become victims of the turn of the political wheel. But congratulations on your re-election: at least your own constituency showed some judgment.’86 A few weeks later, on 23 December, the American secretary of state, James Baker, sent Rao his commiserations. ‘I greatly admired your understanding of issues and the diplomacy with which you handled them . . . As you take up your seat in parliament as a member of the opposition, I want to wish you good luck in your continuing service to India and the world.’ Narasimha Rao kept this letter in his archives. His reply, in flowing red ink which was then typed up, thanked Baker and recalled their association.87