On the occasion of the 25th anniversary of the economic liberalisation programme, many of the accounts looking back have tended to work at placing the Prime Minister at the time, P.V. Narasimha Rao, at the centre of the rewriting of economic policy. Is this historically valid?

Narasimha Rao was a complex political personality whose career spanned half a century. Any historical reckoning of his personality must first take cognisance of the fact that he was at the centre of two of the three most violent events of India after 1947: the anti-Sikh violence of November 1984 and the destruction of the Babri Masjid in December 1992. Vinay Sitapati’s meticulously prepared biography of Narasimha Rao, Half Lion, is a sympathetic account (the second heading is “How P.V. Narasimha Rao Transformed India”), which nevertheless recounts important events of 1984 and 1992.

From 1984 to 1992

Narasimha Rao was Home Minister when Indira Gandhi was assassinated in New Delhi on October 31, 1984. He was therefore in charge of the police in the Capital and had the responsibility of maintaining the peace. Sitapati reports senior lawyers Ram Jethmalani and Shanti Bhushan meeting Narasimha Rao after the widespread murders of Sikhs began and pleading for his intervention. The Home Minister did nothing. The biographer also reports an interview with an unnamed bureaucrat who recalls a phone call the Home Minister received from an unnamed personality in the Prime Minister’s Office. The instruction: the Home Minister should do nothing. The master survivor did just that as Sikhs were being killed around him in the city: nothing. Sitapati calls it Narasimha Rao’s “vilest hour”.

There was another vile hour to strike in the years ahead.

The role — or rather inaction again — of the Prime Minister, Narasimha Rao, in the events leading to the destruction of the Babri Masjid on December 6, 1992 remains a mystery. The Prime Minister was later accused of silently agreeing to the destruction of the mosque. There is no evidence of such diabolical inaction. But there is evidence, according to Sitapati’s account, of Narasimha Rao asking, of all people, an assortment of babas, sants and gurus to persuade the Bharatiya Janata Party (BJP) to rein in its storm troopers during the kar seva planned in Ayodhya. The national leaders of the BJP also separately promised Narasimha Rao a peaceful assembly in Ayodhya. So despite there being many signals of a likely catastrophe during the kar seva, Narasimha Rao chose to rely on babas, believe the BJP and did nothing. He had once again abdicated his responsibilities in a matter of critical national importance.

If in 1984 the Home Minister deferred to his political bosses, in 1992 the Prime Minister of India, no less, who had immense powers in his hands, chose to do nothing. December 6, 1992, we now know, changed the face of India for the worse and the wound festers.

The role/inaction of Narasimha Rao in these two events should be enough to damn him in History. Yet we forget all that and now want to honour him as an architect of India’s economic liberalisation programme. But while Narasimha Rao as Prime Minister was the final decision-making authority, did he make an imprint on the liberalisation programme?

Here is a conjecture and an alternative understanding. Whichever the government and whoever was going to be the Prime Minister after the May-June 1991 elections, there was, given the existing framework of economic policy, only one package on the table awaiting implementation.

Everything points in that direction.

Making the shift

In the second half of the 1980s, Rajiv Gandhi as Prime Minister had begun the slow and hesitant shift towards the market. In the background was the global shift towards the market, the gradual collapse of socialism in Eastern Europe and the changes in China’s economic policies. All this built up to a set of intellectual, political and economic arguments for India to change course.

In the closing years (1988 and 1989) of the Rajiv Gandhi government it was known that a balance of payments (BoP) crisis was building up. This gained momentum through the V.P. Singh government (December 1989-November 1990) and, after the Iraqi invasion of Kuwait in August 1990, developed into a full-fledged crisis during the apology of the Chandra Shekhar government (November 1990-June 1991). India had obtained loans from the International Monetary Fund (IMF) in late 1990 and early 1991, and was possibly in negotiations for a larger structural adjustment loan which did not go far because of the collapse of the Chandra Shekhar government.

Even as fire-fighting by unstable governments was going on, plans for a larger restructuring were being prepared within the government. For instance, Montek Singh Ahluwalia, Special Secretary, had, at V.P. Singh’s behest, prepared a major set of proposals to completely overhaul the existing economic policy regime. This package was discussed internally and came to be reported in the press. Later in April 1991, the future Finance Minister, Manmohan Singh, in a public speech laid out a framework of change which was remarkably similar to what was finally put in place. (This has also been recounted by Mr. Ahluwalia in Economic and Political Weekly, July 16, 2016)

So the broad features of the liberalisation programme had already been drawn up. All that was needed was a stable government to fill in the details and implement it. That was provided by the new government of Narasimha Rao. Or to put it more strongly, unless the Left had formed the government in 1991 (an impossible eventuality), whichever shape and colour of the new Central government, it is more likely than not that the same set of measures would have been implemented. (We do not know and may never know if the package had also been formally or informally discussed with the IMF and the World Bank.)

When a series of measures were finally announced — dismantling of industrial licensing, devaluation, relaxation of FDI norms, reduction of import tariffs, changes to the export-import policy, etc — they were all found to have closely followed the proposals that had earlier been discussed within the government.

There was a “TINA” mood in the government. The severe BoP crisis that had engulfed India at the time was therefore used as an opportunity to introduce sweeping structural changes. As an accidental prime minister, Narasimha Rao had only endorsed a set of proposals that any other Prime Minister would have found placed before him at the time.

The inevitability of 1991

The larger point is that an understanding of the major changes that took place in 1991 cannot be framed in terms of the decisions taken by a handful of personalities.

The many accounts of liberalisation written on the occasion of the 25th anniversary of the economic liberalisation programme have been more of “I-did-that” accounts of some of the participants and less about the processes at work, which is what is more important from the perspective of history. We therefore remain without a comprehensive account of what led to the decisions of July 1991, the economic and political forces at play, and why some decisions were taken and others were not.

Let us wait for government records of the time to be opened up so that historians can tell us the complete story of July 1991. And let us wait for more scholarly work so that History can pass judgment on the political persona of Narasimha Rao.

C. Rammanohar Reddy is Readers’ Editor at Scroll.in