P Chidambaram writes: Dr Manmohan Singh, R.I.P

Steel Within

The devaluation of the rupee was announced on July 1, 1991 by the RBI. The prime minister called me to his office on the morning of July 3 and shared some of his cabinet colleagues’ misgivings (actually, his own misgivings) on the devaluation. I narrated the familiar script that the rupee was overvalued, that exports were suffering, that foreign exchange reserves were low, that foreign investors were reluctant to invest in India, and so on. Rao disclosed that there was one more devaluation and asked if I would go across to the finance minister and request him if the second step could be postponed if not aborted. I was certain I was not the only emissary he had deployed.

Although sceptical, I bounded off to North Block and was ushered in. It was my first official meeting with the FM. I conveyed the request, not a direction, of the prime minister. Dr Singh was puzzled — I could see that on his face — by the message or, perhaps, the messenger. He listened politely and told me that the second step had already been taken within minutes of the markets opening at 10 am. The story of how Dr Singh “spoke” to Dr C. Rangarajan, RBI deputy governor, and the latter’s famous words “I have jumped”, are now part of the folklore surrounding the devaluation. That single act stamped Dr Singh — the accidental finance minister — as a determined finance minister with nerves of steel to do what he thought was the right thing to do.

That steel was exhibited again a few years later when the survival of the government was at stake. The proposed India-United States Civil Nuclear Agreement ran into fierce opposition of the Left parties, especially the CPI(M). The party general secretary, Mr Prakash Karat, threatened to withdraw support to the UPA government if the deal was concluded. Many Congress leaders, otherwise supportive of the prime minister and the deal, had reservations on sacrificing the government for a deal that will, any way, be aborted if the government lost its majority. Dr Singh stood firm: he told me he would have no option but to resign if the Congress party forced him to abandon the deal. I saw force in his point but encouraged him to explore support from other parties. In a master stroke, Dr Singh persuaded the former President, Abdul Kalam, to issue a statement of support, and used the statement to win the support of Mulayam Singh Yadav and the Samajwadi party. The bluff of the Left parties was called, the government won the vote of confidence, and the deal was concluded in due course. Even after the Left parties withdrew support, true to his nature, Dr Singh treated their leaders with respect and maintained cordial relations with them.

Compassionate Liberaliser

Few people realize that without Dr Singh’s unequivocal support the major signature programmes of the UPA could not have been launched or implemented. Two examples, among many, were the Agricultural Dept Waiver (2008) and the Right to Food programme (2013). Dr Singh was strongly in favour of both welfare programmes, but he repeatedly cautioned me to keep an eye on their impact on the fiscal deficit. He, more than any political leader, was acutely conscious of the fact that if macro-economic stability was lost, no welfare programme could be implemented in the medium or long run. When he was satisfied that the government would meet the target of the fiscal deficit, he approved the welfare programmes.

Dr Singh was an instinctive reformer but consciously leaned in favour of the poor. He was a strong votary of welfare programmes that had multiple externalities. He taught us that economic reforms could go hand-in-hand with generous welfare measures. I also firmly believe that Dr Singh’s policies created the present middle class.

History is Here

The present generation (born after 1991) scarcely believes that there was an India with one television channel, one car, one airline, one telephone service provider, trunk calls, PCO/STD/ISD booths and long waiting lists for everything from two-wheelers to train tickets to passports. The seeds of change were sowed by Dr Singh, a fact belatedly acknowledged by Prime Minister Modi’s tribute to him and the Cabinet resolution.

Whether history will be kinder to Dr Singh or not, I believe that there are two indelible foot prints of Dr Singh on the pages of history: one, during his ten-year tenure, he delivered an average GDP growth rate of 6.8 per cent. Two, according to UNDP, the UPA lifted out of poverty an estimated 270 million people in ten years. Both were unprecedented and not been emulated since. History’s judgement is already here.