The Telegraph | 31 January 2016
New Delhi, Jan. 30: Big bang reforms, something industry has been hoping for since the Modi government came to power in May 2014, require political leadership and risk-taking of the kind then Prime Minister P.V. Narasimha Rao displayed in 1991.
This was the refrain of policy wonks gathered at Ficci here today to look back on the summer of 1991, when Rao along with finance minister Manmohan Singh ushered in "momentous changes in economic policy" that went on to transform the country.
Through the hour-long discussion, there was a clear effort by the moderator to keep the focus on 1991 but the question-and-answer session and oblique references to the political climate for change drew attention to the elephant in the room - the failure of the Modi government to deliver on the promised reforms agenda.
In highlighting the ground realities of 1991, the sub-text was how much more conducive the climate is today for another round of reforms.
A key aide to Rao who went on to become a part of Manmohan Singh's ministry, Jairam Ramesh, admitted it was the balance of payments crisis the Rao dispensation had inherited from Chandra Shekhar's government that offered the push factor for opening up the economy. But he was quick to add that Rao showed the political will to lead the change.
"1991 was a jugal-bandi (duet) of technocrat Singh and political Rao. The technocratic design was not an overnight one. Several people had been working on it and writing about it for a dozen years but it required the crisis of 1991 to make the change. But it still was more of a political exercise; the will to do it. What needed to be done was known for long; Rao showed the political leadership," Ramesh said.
Former chief economic adviser to the government Arvind Virmani added: "That political risk had to be that of the Prime Minister; without that nothing would have been possible."
Asked if the reforms of 1991 were the result more of compulsion than conviction, Ramesh maintained that it was a mix of both. "Manmohan Singh came to reforms out of conviction; Narasimha Rao out of compulsion," he said, recalling how there were serious misgivings across the political spectrum, including within the ruling Congress. "After the reforms worked, many came forward to take credit, success has many fathers," the Congress leader said.
Ramesh's stock reply to repeated questions on the politics of reforms was: "There is no substitute for political management, alliance building, reaching out and communication. Narasimha Rao and Manmohan Singh had no critical mass of people supporting reforms."
Even industry chamber Ficci, he pointed out, had apprehensions about the red carpet being rolled out to foreign companies back then. "Industry then wanted faster internal liberalisation first and external liberation thereafter," he said, quoting what Mahindra Group chairman Anand Mahindra had said then.
That industry was wary of liberalisation in 1991 was also acknowledged by Virmani.
On this count there was consensus among all three key speakers with moderator Praveen Chakravarty, a fellow in political economy at the Infrastructure Development Finance Company Institute, adding: "Today when we talk of big bang reforms, we can see that in 1991 there was no section which was for it then including the business community."
Ramesh said the way Singh convinced the sceptics and Rao dealt with the political challenge has lessons for today.
The discussion was organised by the Centre for Civil Society to mark the 25th anniversary of the reforms. In a bid to show what pre-reforms India was like to the generation born after, the CCS has launched a portal - www.indiabefore91.in - to crowd-source stories from citizens.
Read the news on The Telegraph website.