A few years ago, in 2013 to be precise, two of India’s best known economists — Amartya Sen and Jagdish Bhagwati — had a rather unseemly public spat which played out in the media. Bhagwati and his Columbia University colleague Arvind Panagariya (now NITI Aayog Vice-Chairman) argued that the ‘Kerala model’ of development had run out of steam and the ‘Gujarat model’, which gave prominence to growth, industry and infrastructure development over social development, was the way forward for India. Sen, a long-time proponent of the Kerala model — where active state intervention helped raise the social indices such as infant and maternal mortality and education — vehemently disagreed.
Bhagwati argued that growth was the magic pill and once an economy is on a high growth path, social development would follow. For Sen, growth was necessary but not a sufficient condition to ensure social development, for which active state intervention was required. Bhagwati also took pot shots at Sen for not being sufficiently supportive of the economic reforms of 1991 which put India on a high growth path.
Unresolved problem
After all the sound and fury the debate remained unresolved but one could sense that both economists were right in their own way. For a country like India, where still an unacceptably large number of people struggle to survive, a high growth rate is absolutely essential. At the same time to assume that growth and the market will take care of every social need of the population was at best naïve. So, state intervention was crucial in the social development realm.
As a long-time proponent of pro-market reforms, Bhagwati was trying to earn some brownie points for the 1991 reforms — after all, he had advocated similar reforms more than two decades ago when the ideological environment, both in the academia as well as in the political stage, was still firmly anchored in Nehruvian socialism and the ‘mixed economy’. He was also berating Sen for not supporting reforms earlier.
Real hero
So this brings us to the crucial question: who really were the architects of the 1991 reforms — politicians or economists? There are at least two people who have no doubt that it is the politician who was the real hero of the 1991 reforms. Sanjaya Baru, in his new book, 1991: How PV Narasimha Rao Made History is unequivocal in crediting the politician Rao, who had just become India’s Prime Minister then. A disclaimer here is necessary — I haven’t read this book yet, so much of what I have gleaned about it is from reviews in newspapers and interviews with the author.
The other book by Vinay Sitapati, titled Half a Lion: How PV Narasimha Rao Transformed India pays rich praise to Rao for turning around the economy.
Though Baru is careful in not dismissing the role of the economists — several prominent ones such as Manmohan Singh, Montek Ahluwalia, C Rangarajan and Rakesh Mohan played crucial roles — he feels that the political leadership of the day is not given sufficient credit. Baru is also careful in giving bureaucrats their due. But he argues that it was the political leadership of Narasimha Rao that carried the day. Also, the reason why reforms succeeded was because Rao carried the Congress Party along and managed to stifle the dissent from the party old guard against reforms.
Sitapati, at a recent talk at the Kumaon Literary Festival, said that Rajiv Gandhi had also taken a few baby steps towards economic reform when he came to power in 1985 but by 1987, when the Bofors scandal hit the headlines, he backtracked on the reforms agenda.
Perfect timing
PV Narasimha Rao became the Prime Minister at a time when the country was faced with deep economic and political crises. On the economic front there was a severe balance of payments crisis, with a potential debt default staring at the country. On the political front, two coalition governments fell between late 1989 and mid 1991. Besides, the BJP’s Rath Yatra, led by LK Advani, left a trail of destruction and communal violence behind it, especially in northern and western India. VP Singh in his short stint as Prime Minister had also decided to implement the Mandal Commission report on reservation for backward classes in government jobs, leading to protests. In this environment, Narasimha Rao did provide the crucial economic and political stability which was so desperately needed.
The only other person I can recall who wrote glowingly about Rao’s contribution in the past was veteran journalist Shekhar Gupta.
It’s interesting to see a politician being given credit instead of the flak they usually receive. Politicians are usually perceived as playing to the gallery and shying away from taking tough decisions. Given how the middle class in this country gives primacy to the technocrats over the politician, it is gratifying to see Baru and Sitapati give credit to a politician for the most important piece of economic policy since Independence. Not only does Baru praise Narasimha Rao, he also gives credit to his predecessor Chandrashekhar who ran a coalition government with outside support from Congress for six months.
So at last a long forgotten politician who changed the face of the economy and politics is being given his long-deserved due.