To the Brink and Back: India’s 1991 Story (19 page)

The Government responded to a situation of grave importance. Indo-Soviet relations were involved and the Government did respond with ineptitude blinkered with timidity. It responded in a situation where it appeared that the Government’s response was grooved in yesterday’s clichés. We have there on record not just that statement but an observation by the Prime Minister filled with unnecessary homilies, that reformists must be careful […]

It was a baffling day which flummoxed all of us who were working with the prime minister. He had—as I told his principal secretary and the finance minister—‘thrown a googly’, the impact of which would be felt in the days and months to come.

As I tried to reconstruct the sequence of events that led to the prime minister’s observations, it turned out that the Youth Congress had arranged a massive rally. Reports reached the prime minister that the crowd was restive, with speakers arguing vociferously both in favour of and against Manmohan Singh’s policies of liberalization. The
special protection group (SPG) advised the prime minister against going there, given how charged the atmosphere was. The prime minister, however, disregarded this advice and, in the words of someone who had worked closely with him for over a decade, ‘phrased his own domestic concerns—and those of many in his audience—in an international metaphor that was as elusive as it was effective.’

Whatever the context may have been, there is no question that Narasimha Rao’s elliptical remarks cast a shadow on our bilateral relationship with the Soviet Union and evoked a sharp response from the foreign policy establishment. One of Rao’s own colleagues,
K. Natwar Singh, who was minister of state for external affairs under him in Rajiv Gandhi’s government, blasted him in a letter made public on 25 August, which pretty much summed up what most people were thinking:

You are not unfamiliar with international affairs and have rightly earned a reputation for using words carefully. It is therefore a matter of surprise that you should have expressed the views you did on the current events in the Soviet Union. Those dealing with foreign affairs at high levels should think twice before saying anything. On the removal of Mr. Gorbachev, you, the External Affairs Minister
Mr. Madhavsinh Solanki, the Minister of State Mr.
Eduardo Faleiro have made different pronouncements. This has caused a lot of confusion and become a subject of adverse comment in Central Hall of Parliament and among senior journalists. It is possible to make a good case for each of these statements. It is equally true that each can be demolished with effortless ease. What worries me is that taken collectively they add up to an incoherent management of our foreign policy. Such a fragmented and piecemeal approach to momentous decisions is fraught with danger.

India was caught flat-footed by the Soviet coup attempt. Indeed, in an interview to the journalist
Shekhar Gupta on ‘Walk the Talk’, broadcast on NDTV on 8 May 2004, roughly seven months before he passed away, Narasimha Rao allowed himself a rare admission of a mistake, saying, ‘I blurted out something which perhaps wasn’t proper at that particular moment.’

It wasn’t just Rao who seemed to have egg on his face. The CPM fared no better.
Harkishan Singh Surjeet had issued a statement on 23 August that the coup was a natural corollary to the policies followed by Gorbachev. There appeared to be considerable jubilation in the CPM camp (with the CPI showing less happiness) at the prospect of the permanent departure of Gorbachev from the political scene.
The Hindu
went on to report:

Speaking with the authority of a man who had first-hand knowledge of the events in Moscow, Mr Surjeet claimed that the coup had the support of the people, and had not been imposed from above as the men behind it were party leaders who had been involved with the reforms initiated by Mr. Gorbachev.
⁷⁷

It is difficult to estimate the impact of the reactions of Rao and Surjeet on USSR’s policies towards India. The Soviet ambassador in New Delhi, Vladimir Isakov, did meet with the prime minister on 23 August and Gorbachev himself wrote to the prime minister a few days later. But the fact remains that some unease crept into the bilateral relationship. Perhaps as an immediate fallout, on 6 December 1991, for the first time, USSR voted for a proposal sponsored by Pakistan and Bangladesh at the United Nations for creating a nuclear-free zone in South Asia.

⁷⁴
The dissolution of USSR (Union of Soviet Socialist Republics) was formally enacted on 26 December 1991.

⁷⁵
Sam Pitroda has a more detailed account of this meeting in his forthcoming autobiography.

⁷⁶
Mohammad Reza Pahlavi, the Shah of Iran (1941-1979), undertook a radical modernization programme in his country, the ‘White Revolution’, encouraging land reform, developing complex infrastructure and extending suffrage to women. However, some analysts suggest that the pace of change was so rapid that in 1978 a revolution broke out that forced the Shah of Iran to flee the country the following year.

⁷⁷
‘More on
Communist Reaction’,
The Hindu
, 23 August 1991.

he last week of August 1991 involved a lot of housekeeping. On 22 August, the establishment of a
Foreign Investment Promotion Board (FIPB) was announced.
Rakesh Mohan and I had prevailed upon a more-than-willing
A.N. Verma that the FIPB should be small and compact, and the ‘P’ in FIPB should stand for ‘promotion’ and not ‘processing’. This was a victory of sorts for the two of us because a view had gained ground that the FIPB would be a large bureaucratic body meant largely to facilitate quick clearances. Much against the wishes of the cabinet secretary and others, we had managed to convince the principal secretary to have the FIPB in the PMO itself, since its credibility needed to be projected speedily.

One of the very first proposals that came on the FIPB’s agenda was a joint venture between
IBM and the Tata Group.
Ratan Tata and senior IBM executives, led by
Kailash Joshi, met with the principal secretary to the prime minister and—thinking that this should get the widest publicity—I called up Reuters and gave them a briefing. Shortly thereafter, there was a news-item in the
International Herald Tribune
saying that India meant business and was welcoming foreign investment. But I think some complaints reached the prime minister about my private enterprise, and the principal secretary told me that the principal information officer ought to be doing such briefings.

On 26 August 1991, the prime minister made a hard-hitting speech in the Lok Sabha while replying to the demands for grants for the Ministry of Industry. He was somewhat like the boxer Muhammad Ali that day—a jab here, a jab there, floating like a butterfly, stinging like a bee.

The BJP welcomed the 24 July
industrial policy reforms on the grounds that they were a total repudiation of Nehruvian policy that had run its course. Narasimha Rao, however, emphasized the continuity aspects of the reforms and how they were not deviations in any way from the vision of India’s first prime minister.

The Left and some other parties like the
Janata Dal, on their part, attacked the 24 July industrial policy package as not just an abandonment of Nehru’s vision but as something that would erode national sovereignty and lead to greater unemployment. To these critics, the prime minister stressed the change aspects of the package and spoke eloquently of the need to give up shibboleths of the past when confronted with new challenges.
⁷⁸

The exchanges were sharp and the prime minister kept getting interrupted. However, he more than stood his ground:

Prime Minister: Coming to technology, Nirmal Babu has told us something about appropriate technology. If you have a washing machine, how many people are you throwing out of employment? The only thing is, if you have a lakh washing machines being made, to how many people you are giving employment on the other side? (
Interruptions
)

Nirmal Kanti Chatterjee (West Bengal; CPM): How many?

Prime Minister: Let us calculate. And what kind of employment are you giving, what kind of employment are you diversifying… (
Interruptions
)

Nirmal Kanti Chatterjee: Those resources which are utilised for producing washing machine could be utilised for other purposes… (
Interruptions
)

Prime Minister: That is the point. If you take that as the criterion then you will remain a country of maid-servants only. This is the point… (
Interruptions
)

Nirmal Kanti Chatterjee: That is your idea… (
Interruptions
)

Prime Minister: You are condemning our women folk to life of drudgery permanently. This is where diversification is necessary. That is why, we have not given them any education so far. Let her be educated. She will refuse to do the washing, the moment you educate her. Today, we are talking of a society which itself is fast changing. And if you do not admit that this change is coming, you will be overtaken by events. This is what I would like to say. It is very simple to say that ‘you are throwing people out of employment’. But what kind of employment? (
Interruptions
)

This sparring went on, and towards the end, in an unusual turn of events, one of Rao’s ministers from West Bengal,
Ajit Panja, joined the fray.

Ajit Panja: Sir… (
Interruptions
)

Basudeb Acharia (West Bengal; CPM): Sir, how can a Minister seek a clarification from the Prime Minister? (
Interruptions
)

Ajit Panja: I want to know from the Prime Minister whether he is going to send a team of CPI-M members to Moscow, as they say they do not appreciate our policy, for studying the New Industrial Policy… (
Interruptions
)

Somnath Chatterjee (West Bengal; CPM): Sir, I would like to know the Prime Minister’s reaction to this flippancy on the floor of the House… (
Interruptions
)

Prime Minister: Sir, there is another forum to discuss this. Do not worry. […]

Ram Naik (Maharashtra; BJP): Sir, my point of order is this. It is a collective responsibility of the Cabinet. If the Minister wants any explanation, he can ask the Prime Minister in the Cabinet. This is not the forum where any Minister can ask any explanation or any information from the Prime Minister… (
Interruptions
) […]

Speaker: I uphold your point of order…

Prime Minister: Sir, I understand my Minister perfectly. It was not for an explanation. It was a little provocation… (
Interruptions
)

It was parliamentary debate at its cut-and-thrust best.

On 29 August 1991, the
Committee on Tax Reforms under the chairmanship of
Dr Raja Chelliah, India’s pre-eminent expert on public finance, was announced. I had enjoyed a close relationship with Chelliah in the
Planning Commission, of which he had been a member during 1985-89. He would insist on speaking to me in Tamil and I had to keep telling him that it was my wife who was a true-blue Tamilian and not me.

When
Manmohan Singh had asked Abid Hussain (another member of the Planning Commission) and me to prepare an agenda for industrial policy reforms in September 1986, he had asked for a similar agenda on tax policy reforms from Chelliah. But like the industrial policy proposals, the tax reforms proposals went nowhere and died a natural death, only to be resurrected in Chelliah’s speeches once in a while.