Half - Lion: How P.V. Narasimha Rao Transformed India

by Vinay Sitapati

By 1921, pan-Indian nationalism was challenging these injustices. Mohandas Gandhi had just given a call for ‘non-cooperation’ against the British, transforming the Congress from a debating club of the Indian elite into a mass movement.

For a socialist who had staked his career on land reform, the insight unsettled Rao. Handouts to the poor did not solve their problems unless it also connected them to the market.

While the Congress had been decimated in northern and central India, it had held its own in southern states such as Andhra Pradesh. This was probably because the effects of the Emergency in the south had been less brutal.

Rao’s admiration for Deng’s ability to wrap change in the garb of continuity was evident in a later interview: ‘[Deng’s] thinking was the single largest factor in giving a new orientation to the Chinese political philosophy, still not doing away with prevailing beliefs in their external manifestations. I am reminded of the genius of the Hindu Law, which brought out different practical results from a particular Sutra to suit different areas and customs prevalent in them—by the method of multiple interpretation of the same Sutra by different commentators. Deng’s miracle is an object lesson to those wedded to different interpretations.’22

Rao’s behaviour on these crucial days recalls the lines of Tacitus, the first-century CE Roman historian: ‘The higher a man’s rank, the more eager his hypocrisy, and his looks the more carefully studied, so as neither to betray joy at the decease of one emperor nor sorrow at the rise of another, while he mingled delight and lamentations with his flattery.’34

Over the years, Rao would master two computer languages, COBOL and BASIC, and would also go on to write code in the mainframe operating system UNIX. Narasimha Rao’s love for learning had merged with his instinct for political survival. And survive he did. Indira’s handyman rebooted himself to be in sync with Rajiv’s programme of technology and modernization.

Rajiv’s incapacity to achieve economic reform was made worse by his artlessness in everyday politics. Rajiv had come to power with the largest mandate in Indian history. But faced with the usual cycle of state elections, allegations of corruption, and dissidents within his party—in short, the routine turbulence that any prime minister faces—Rajiv lost his appetite for bold changes.

All he knew of the ills of the licence raj were complaints from his son Prabhakara. A few years earlier, Prabhakara had carped about how licences for the production of aluminium conductors used in the transmission of power were being cornered by monopolists.73 Those who already had a licence would obtain the other licences under fictitious names, and then not use them. This artificially filled the ‘quota’ of licences without improving the supply, thereby increasing prices. While Narasimha Rao was appalled at how government policies were being manipulated thus, he did not learn the larger lesson of this story: that the entire system of controls needed to go.

He had, in other words, become the perfect courtier in the Delhi durbar—knowing when to act, when to connive and when to stay silent.

Sometimes people have been very kind to me, attributing good decisions to me and bad ones to someone else or to some inexperienced adventurist group. This has not always been the case, yet by and large, the hunch was correct. More decisions taken at my instance proved to be good and more taken against my view proved to be bad or harmful. I can say this honestly, although I never said it openly, for fear of creating controversy.’

It is a measure of his profile as a departing foreign minister that several world leaders found time to console Rao on this loss.

Aware that twilight was near, Narasimha Rao began to play elder statesman.

Even in the security of his personal diary, Rao would not say what he really thought: that Rajiv Gandhi had been a disaster.

In a land of cliques and coteries, castes and communities, Narasimha Rao’s greatest virtue was his loneliness.

In Rao’s archives lies a printed letter bound in light brown paper. While unsigned, on the top right corner, in Rao’s precise handwriting, is the word ‘Dhirubhai’.73 The letter begins by referring to the fiscal deficit and balance of payment crisis that India was facing. It does not suggest delicensing or external liberalization as the solution. Instead, it proposes that India raise 16,000 crore rupees by selling the government’s stake in public sector units. Such a suggestion would be soon implemented elsewhere. After the disintegration of the Soviet Union in 1991, the newly formed Russian republic would opt for the large-scale privatization of public sector enterprises. Many of these state assets were purchased at

Rao was also pragmatic enough to know the battles which he could not win. When the Opposition was livid that Manmohan Singh had allocated 100 crore rupees—then a considerable sum—to the newly formed Rajiv Gandhi Foundation, Rao swiftly cancelled the grant, but only after Sonia Gandhi had also rejected it.95 When protests over the removal of subsidies threatened to upturn his entire agenda, he ordered Manmohan Singh to decrease the hike in fertilizer prices from 40 to 30 per cent.96 The technique of first increasing the price then rolling it back by a meagre amount, punctured the protests while letting the meat of the policy stay.

While ignoring the long-term worries of big business, Rao was going out of the way to accommodate their proximate demands.

The conversation gave Manor insights into the political logic for these economic reforms. ‘[Rao] knew that the issues of growth and development were more mundane and less emotive than caste, religious or regional issues. But he welcomed this because . . . the more heated politics became, the less able a centrist party like Congress would be to compete with parties to its left . . . and its right . . .’

The party resolution at the end endorsed the prime minister’s liberalization policies. Narasimha Rao had done something even Rajiv Gandhi had not been able to. He had sold economic reforms to his doubting party.

But the biggest boost that Narasimha Rao offered software companies was free advertising. As Nilekani says, ‘Just the fact that the economy opened up, was in the news, made foreign companies think of India. That helped us market ourselves to them.’46

them. The usual Indian story is of businessmen profiting from fissures between India’s political parties. But here was the Narasimha Rao government practising Chanakya’s maxim by sowing dissension between old and new industry groups, all to pursue reform.

In most countries, a growing economy is a sign of the political strength of the leader. India is not most countries. Even as the economy was booming in 1995, Narasimha Rao was facing rebellion within his party. Arjun Singh and N.D. Tiwari—whom Rao had beaten to prime ministership—went public with their criticisms.

To give a sense of what it means when a government loses momentum on reform, the ‘no-brainer’ insurance law was finally passed by the Narendra Modi government in 2015—a full twenty years later. Sensing that reforms were slackening after mid-1995, foreign investment into India reduced.

In that same month, the political scientist James Manor spent a week with Narasimha Rao. He asked the prime minister about his ideological inclinations. ‘My model is not Margaret Thatcher but Willy Brandt,’ Rao replied. ‘I do not believe in trickle-down economics.’2

To show that he supported his socialist bureaucrats personally (if not policy-wise), Narasimha Rao decided to ‘gatecrash’ the engagement ceremony of Venugopal’s daughter, Anupama Priyadarshini, in 1992. Anupama was marrying the son of B.N. Yugandhar, Rao’s other left-leaning official. The groom’s name was Satya Nadella. Despite a father and father-in-law who were committed socialists, Nadella would go on to become the global head of that quintessentially capitalist empire, Microsoft.

The change in attitudes and opportunities for entrepreneurship (hitherto confined to the Bania, or mercantile castes) is typified in the rise of Dalit entrepreneurs.53

Like Willy Brandt, Rao was his country’s first social democratic leader, the first to realize that growth and redistribution were not in conflict. They were, and are, necessary for the other.

Another political constraint for the new prime minister was that his party organization was a shadow of its former self. The Congress of the 1950s and ’60s had penetrated every village. It was now a shell at the village level, with the party’s ground associations—the Seva Dal, for example—having long ceased to attract idealists.

Any semblance of inner-party democracy had also long been displaced by a ‘high command’ hand-picked by the Nehru-Gandhis. The conversion of the 106-year old party into a family enterprise had resulted in its ‘de-institutionalisation’.4 It had also diminished its regional leadership. Mindful of a glass ceiling above, state bosses either chose to leave or plotted in the shadows. A final feature of the Congress of 1991 was that the party ‘system’5—where ideological debate would take place through opposing groups within the Congress—had since been replaced by personality-centric factions squaring off at the state and Central level. These struggles involved very little principle; they were simply squabbles over patronage. This was the organization that Narasimha Rao inherited: absent in the periphery, bloated in the middle, hollow to the core.

Rao responded to the triumph of his rivals with a masterstroke. Some of his supporters had also been elected to the CWC. He made them resign, on the grounds that the elections were flawed since not a single woman or Dalit had won. These staged resignations forced both Arjun Singh and Sharad Pawar to also step down; after all, they could hardly risk appearing to condone social exclusion.

Two decades earlier, chief minister Rao had been a victim of the Congress ‘high command’ culture; he had no desire to now victimize others. The party, however, was still in feudal mode. The Congress general secretary Janardhana Poojary called up Ramu Damodaran to check who the prime minister had chosen as the new chief minister of Andhra Pradesh. Ramu communicated the response back to Poojary: ‘You decide, even if it is any man on the street.’ The next day, Poojary sent Ramu a follow-up. ‘Does he have any particular man on the street in mind?’37

This request for tighter American security for Rahul, enhanced protection for Sonia and Priyanka, regular visits to 10 Janpath, and ritualistic invocations of Rajiv’s legacy—all had the desired effect. A close of friend of Rao says that in early 1992, Mrs Gandhi trusted Rao enough to tell him, ‘People are asking me to come to politics. If I was your daughter, what would you advise?’

‘Since you are asking as my daughter, I would say don’t come.’

As Mulayam would later admit, the firing may have protected the mosque, but it cost him Hindu votes.13 State elections were held in Uttar Pradesh a year later. The BJP campaigned on two issues: the demolition of the Babri mosque (and the ‘martyrdom’ of the Hindu activists) and the wooing of backward-caste Hindus. It swept the elections, easily winning more than half the seats.

The IB sent two reports that November. The first claimed that the mosque was under threat, but stopped short of recommending President’s rule. The second report, around early December, contained rumours that a VHP suicide squad was being trained to blow up the mosque on 6 December. This was an explosive claim, and the IB took great pains to stress that it was unverified. The lack of a clear message was typical of IB reports, a confidante of Rao says. ‘All IB reports present both arguments. If the mosque fell, they would say we predicted. If it didn’t, they would say we predicted.’

The difference lay in his idea of secularism. As Haidar puts it, ‘He was well aware of India’s communality.’47 Unlike the westernized Jawaharlal Nehru, Rao did not see India as a nation of individuals but as a federation of caste and religious groups.

Rao’s Hindu self-identity also led him to a naïve portrait of the BJP.

Rao had never had this experience; he thought of the BJP as misguided Hindus rather than dangerous adversaries.

In his book on Ayodhya, Rao blames Congressmen for a ‘subconscious inhibition that any expression of [Hindu] religious sentiment on our part, even if we felt it strongly, would be seen as “non-secular”. As a result, the BJP became the sole repository and protector of the Hindu religion in the public mind.’49

Rao’s desperation to protect his own minority government also clouded his instincts. Salman Khurshid says, ‘The tragedy about Rao sahib is that his attempt to do consensus building is what destroyed him.’109 This ‘consensus building’ was driven by Narasimha Rao’s interest in appeasing both the Hindu as well as Muslim vote bank, instead of a single-minded focus on protecting the mosque. Rao wanted to protect the mosque and protect Hindu sentiments and protect himself. He ended up with the mosque destroyed, Hindus unattracted to the Congress, and his own reputation in tatters.

To convey that economic diplomacy was to be his priority, Rao’s first overseas visit, in late 1991, was to Germany, the economic engine of Europe. Ramu Damodaran remembers: ‘Before going, Rao read all the briefs given to him . . . he planned for it six weeks in advance.’8 Once in Germany, Rao made sure to extoll the virtues of investing in India—something almost no prime minister had done before. A businessman in the audience remarked that Rao’s style ‘reminded us of a corporate chief executive’.9

India had historically supported the Palestinian quest for nationhood, and refused full diplomatic relations with Israel. There were three reasons for this: the need for Arab oil; fear of the Muslim vote bank within India; and an anti-colonial ideology that opposed white settlements on brown land.

Now in 1991, prime minister Rao realized that the road to Washington, D.C., ran through Tel Aviv.

Ties between Israel and India have strengthened much since Narasimha Rao’s time. In 2012, defence contracts alone were worth nine billion dollars a year.26 India no longer automatically votes against Israel in the United Nations. That this friendship has been able to flower without affecting India’s relationship with the Iranians and Arabs owes much to Rao’s efforts to disguise change in the garb of continuity.

convincing sceptical countries and corporates required more than a rule change. It required economic diplomacy. This had almost never been attempted before. Indian diplomats were used to either pontificating about Third World solidarity in the United Nations or petitioning the West for wheat and dollar loans. They had little experience selling the economy to private investors abroad. A few months after he took over power, Rao sent a note to all Indian missions, asking them to promote India as an investment destination.

It was not just this capital that Rao found in East Asia; it was also an alternative economic model. East Asian growth had been based not on free-market policies, but on what the Princeton political scientist Atul Kohli calls ‘state-directed capitalism’, i.e. the government assisting big business houses to achieve growth.54 Rao—who had been a fervent believer in the redemptive power of the state for much of his career—was instinctively attracted to this aspect of the model.

Narasimha Rao was keen to meet CEOs of top American companies. He asked the Indian embassy in Washington to fix appointments. But the embassy, used to four decades of shunning capitalists, did not have the contacts. Rao turned to a man with even more connections in the US than his own diplomats. The tantrik Chandraswami had a network of American devotees, from CEOs to senators.

But the economic power of post-1991 India—for which Rao gets the lion’s share of the credit—meant that the West could not afford to alienate India. This mix of economic might and an unbending nuclear programme is what has led to new status for India in the international system. Seen thus, Narasimha Rao is not just the ‘true father’ of the 1998 nuclear tests. He is also the crafter of a fresh vision for India in the world. This new self-image, at odds with Nehruvian idealism,40 emphasizes economic muscle alongside a conventional military and large nuclear programme. It is a vision not without its critics.41 But for better or for worse, it is likely to be the dominant way in which India sees itself in the years to come.

How does one use power to do good, if gaining and wielding power requires one to do evil?

Vani Devi, who was present, says of her father, ‘He was usually a sthithapragya’—the description in the Bhagvad Gita of one ‘undisturbed by distress, without desires’.16 But that November, Rao lost his temper—something his children had never seen him do. He decided to stop eating.