It is said that history will judge P.V. Narasimha Rao more kindly than his contemporaries. More than his comment about how a decision can mean not making a decision or sleeping through the afternoon when the Babri Masjid was demolished, he will be remembered as an initiator of the epoch-making economic reforms although the nitty-gritty was handled by his Finance Minister, Manmohan Singh between 1991 and 1996.
The latter, however, may not be so lucky with the verdict of history. Although he picked up the threads of this unfinished task in 2004 to carry on with the reforms, Singh took the foot of the accelerator towards the end of his tenure, as his Finance Minister P. Chidambaram has said.
The deceleration was uncalled for because, as the present government’s chief economic adviser, Arvind Subramanian, had pointed out, the reduction in poverty levels when the reforms were in full flow was one of the fastest in Indian history between 2005-06 and 2011-12. According to one estimate, the percentage of people living below the poverty line dropped from 37 in 2004 to 21 in 2011. Evidently, the process of liberalisation and globalisation were bearing great fruit.
This remarkable achievement was proved by the Congress’s political success when it won in 2009, raising its tally of Lok Sabha seats from 145 to 206. The people know a good thing when they see one. But the person who didn’t see it was Sonia Gandhi. She persuaded the government, therefore, to shift its focus from the reforms to populism presumably because as Aruna Roy, a member of Sonia Gandhi’s kitchen cabinet, the Left-leaning National Advisory Council, complained that the government was placing too much emphasis on growth.
If Manmohan Singh hadn’t listened to the Congress president at the time, or used his formidable knowledge of economics to insist on continuing with the so-called neo-liberal policies, he might have not only been adjudged India’s best Prime Minister with a further reduction of poverty, but also won the Congress yet another term in 2014.
However, it was his excessive loyalty to the party president which let him down. The same devotion can be seen this time, too, when he has been criticising the Narendra Modi government’s demonetisation apparently at Sonia Gandhi’s behest. On the two occasions when he spoke in Parliament, he has displayed his calibre as a disciplined soldier of the Congress rather than as a distinguished economist. His interventions were political in nature instead of being a fair economic appraisal.
The people at large, not to mention the Prime Minister and the Parliamentarians themselves, would have expected an honest assessment from Manmohan Singh of one of the most momentous decisions of recent times. It might have been a case of “monumental mismanagement”, as the former Prime Minister said about the lack of adequate preparation for demonetisation, but to say that it amounted to “organised loot” and “legalised plunder” was to speak as a blinkered partisan instead of as a scholar. Besides, it is odd for a person whose tenure as prime minister was notorious for scams, to speak of loot and plunder.
To quote Jagdish Bhagwati, another prominent economist, such criticism represented a “cock-eyed” approach because it failed to see the Big Picture of demonetisation whose potential benefits included curbing the parallel economy, hurting the terrorists and counterfeiters and expanding the tax base by digitalising many economic transactions.
Bhagwati’s critics might say that he has always been a votary of Modi. But what his views showed was that there were aspects of the issue which Manmohan Singh had ignored. Had he been more broad-minded, he would have presented a more comprehensive picture. Instead, his pursuit of the party line placed him in the category of the Anand Sharma and Ghulam Nabi Azad. The only difference between them and Manmohan Singh is that the latter can quote John Maynard Keynes about all being dead in the long run in the context of Modi’s promise that there will be an improvement in the situation after a short while. But even the quotation was palpably an overstatement if only because notwithstanding the severe inconvenience faced by the people, including the deaths of about 100 people while standing in queues, there have been no overt signs of discontent.
Whatever demonstrations that have taken place have been the handiwork of political parties. However, the bandh which was called by the Left failed in West Bengal because as the Left Front chairman in the state, Biman Bose, said, the people have faith in the efficacy of Modi’s initiative.
The basis of this faith is the belief that someone is seriously trying for the first time to tackle the problem of black money unlike previous governments, including Manmohan Singh’s, which paid only lip service in public perception to eradicate the menace. Clearly, the masses are ready to give Modi the time to fulfil his promise and are prepared to put up with their present difficulties. The BJP’s recent successes in the Maharashtra, Gujarat and Rajasthan civic polls underscore this point. The unwashed hoi polloi have understood what the celebrated economists haven’t.
(The author is a political analyst. Views expressed are strictly personal.)