1991: How P. V. Narasimha Rao Made History

by Sanjaya Baru

While Nehruvians defined this combination of socialism and capitalism as a ‘mixed economy’, Marxist critics dubbed it ‘state capitalism’ and free market critics labelled it ‘bureaucratic socialism’.

after Nehru passed away, political scientist Rajni Kothari argued that Nehru’s greatest contribution to nation-building was ‘not to have started a revolution but to have given rise to a consensus’. He called it ‘the Congress system’.

The Congress, he said, was a ‘party of consensus’—an umbrella party

containing within itself a wide range of interests and opinions from across t...

Ideology of congress as a party

Indira Gandhi returned to power in 1980 and was assassinated in 1984. Her brutal assassination in her own home by her own bodyguards resulted in a tsunami wave of sympathy that delivered 404 seats to the Congress under Rajiv Gandhi.

It is worth noting that he was the only prime minister who had the political courage to confer a business

leader with the nation’s highest honour, when he bestowed the Bharat Ratna on J. R. D. Tata. No businessman has since been so honoured.

The story that most economists like to tell is that in 1991 good economics drove out bad economics. Few have made the point that in that historic year, good politics also drove out bad politics. By good politics I mean good political management. PV’s wisdom came to India’s rescue.

Chandra Shekhar too could have been India’s man of destiny. But destiny chose PV.

one must compare the nation, the polity and the economy that a person inherits the day she takes charge with the state of affairs when one demits that office.

After the controversial, and dubious, tenure of Giani Zail Singh as president, Venkataraman was viewed as a textbook president.

Zail Singh thrived on politicking.

Chandra Shekhar’s growing confidence, even though he was heading a minority government, began to worry Rajiv Gandhi. Some of his advisers were convinced that Chandra Shekhar, the old war horse, would get a section

of the Congress Party to challenge Rajiv’s leadership.

Rajiv was taken aback by Chandra Shekhar upping the ante. ‘Rajiv wanted Chandra Shekhar to crawl,

not resign’, read the headline of an Economic Times news report filed by Seema Mustafa that week.

Chidambaram wears his brilliance on his sleeve. He assumed the prime minister would turn his offer down. PV was, however, very annoyed with Chidambaram. How could a minister go public with a resignation tendered in response to allegations of misconduct and then expect the prime minister to reject it, thereby giving him a clean chit? What did PV owe Chidambaram? Nothing. So the prime minister promptly accepted the minister’s resignation. Chidambaram was stunned.

The lesson was not fully learnt by all. In early January 1993, an Uzbekistan Airways plane had crash-landed in Delhi airport. The airport response was tardy and came in for widespread criticism. Civil Aviation Minister Madhavrao Scindia, another close friend of Rajiv Gandhi’s and a maharaja to boot, resigned his post, owning moral responsibility for the mishap and the mess-up. The prime minister promptly accepted his resignation. Scindia was flummoxed! PV was not inclined to accept

the resignation but was irritated by the minister’s bravado. He had sent word to Scindia asking him to withdraw his resignation. Scindia wanted the prime minister to reject it. That way he could occupy the high moral ground of having offered to quit and yet retain his job as an expression of respect for the prime minister. PV saw through the act, was not willing to grant him the halo, and so accepted the resignation. After these two incidents, every Congressman knew who the boss was.

Sir, I do not minimise the difficulties that lie ahead on the long and arduous journey on which we have embarked. But as Victor Hugo once said, ‘no power

on earth can stop an idea whose time has come.’ I suggest to this august House that the emergence of India as a major economic power in the world happens to be one such idea. Let the whole world hear it loud and clear. India is now wide awake. We shall prevail. We shall overcome.

Expectations shape outcomes in a world of uncertainty. Expectations about the economy end up being self-fulfilling prophecies. If you expect tomorrow to be better than today, you

take economic decisions that ensure that tomorrow is indeed better. If, on the other hand, one believes the future to be bleaker than the present, one ends up taking decisions and making choices that contribute to a less than satisfactory outcome.

‘A finance minister is like the numeral zero. Its power depends on the number you place in front of it. The success of a finance minister depends on the support of the prime minister.’

The Polish economist Michał Kalecki described non-alignment as ‘a clever calf sucking two cows’, drawing attention to the policy’s pragmatic rather than ideological basis.