Backstage

Title: Backstage – The Story Behind India’s High Growth Years

Author: Montek Singh Ahluwalia

Publisher: Rupa Publications, 2020 (First)

ISBN: 9789353338213

Pages: 434

 

Montek Singh Ahluwalia’s stature as an economist is perhaps exceeded only by that of Manmohan Singh. Both served in a range of official positions related to the finance portfolio. While Manmohan Singh returned to the centre stage as a politician first as finance minister and then as prime minister of India, Ahluwalia vacated the stage after his post-retirement stint as the deputy chairman of the Planning Commission. Perhaps more meaningful roles await him if ever the Congress comes back to power. This book is his memoirs that consist of three parts – that leading to the 1991 reforms, the 1990s and the decade in which UPA was in power (2004-14). It also includes an epilogue to make a brief commentary on the performance of Modi with a suggestion of required reforms for the government to consider. Montek Singh had a brilliant academic career both in India and England and he returned to India as a civil servant abandoning a highly-paid job with the World Bank. This book is a comprehensive catalogue of almost three decades (1980 – 2014) which redefined India on the world economic map.

 

Along with the author’s reminiscences of his college days and early career in Washington, Ahluwalia provides a snapshot of the economic scene up to 1980, without dwelling too much on the Nehru era. We would be shocked to find too much politicization of the economy, sometimes going against the national interest. India was always ridden with a balance of payments crisis. The World Bank used to extend long term soft loans to developing countries with interest rates close to zero. In order to protect their money, the Bank used to set conditions regarding mandatory changes in the debtor’s economic policy. Opposition politicians used to cite these as infringement on the nation’s sovereignty. In 1966, India devalued the rupee by 36 per cent in one stroke to meet a precondition to a World Bank loan. However, US President Lyndon Johnson intervened to reject India’s claim due to its hostile position on the Vietnam War which US was prosecuting with disastrous consequences resulting in devaluation of the rupee without getting a loan. Another valid instance is related to the Green Revolution. India’s agriculture was in a poor shape with no prospect of a change for the better. The Club of Rome had remarked that India would not be able to feed herself and was too large to be fed by the rest of the world! Import of high yielding varieties of Mexican wheat seed became essential to kick-start the revolution. However, the left parties opposed the idea of Mexican wheat because it was actually developed by the American agronomist Norman Borlaug under a grant from Rockefeller Foundation and perceived it as adoption of US technology. Such was the level at which politics played in economic decision making in India. In the first case, India’s affinity to Vietnam’s suffering population can be justified on moral grounds, but the latter case is a clear vindication of the left’s propensity to follow the Soviet agenda even in spite of collision with India’s national interests in eradication of hunger.

 

Ahluwalia is a darling of the Congress party and he treats the dynasty’s economic policies without any censure even when many of them openly blocked the country’s progress. The cozying up to the family starts with the panegyrical conclusion that ‘Nehru had a distinct vision for India as a post-colonial economy going through a public-sector led process of modernisation’. This is delivered straight without a tinge of criticism. Indira lurched to the left in the 1960s and 70s to exploit populist sentiments for her faction in the party when the Congress was heading to a split. She was, however, somewhat open to reforms in the 1980s, but it was by gradualism and ‘stealth’. Ahluwalia’s claim that Rajiv Gandhi prepared India for the 21^st century does not stand the negative observations that can be pulled out from the book itself. Rajiv was not a warm supporter of reforms. He reluctantly originated some reforms, but that were intended only to tide over the payments crisis India was facing. His attitude to reforms is clear from his well known remark that ‘we must give up controls, without giving up control. He never initiated the kind of systemic policy review that would reveal which strategic controls were to be retained. He was not even willing to issue a white paper on public sector reforms even after much persuasion. FDI remained pegged to priority sectors only and that too was capped at 40 per cent.

 

The real transformation came about in the early 1990s when Narasimha Rao dismantled archaic policies that stifled growth and spawned corruption in bureaucratic and political circles. He was ably assisted by Manmohan Singh handling the finance portfolio but Singh was not Rao’s first choice. It was only when I G Patel refused Rao’s invitation did the mantle fell on Singh. More details may be obtained from the book, ‘Half Lion’ by Vinay Sitapati, which was reviewed earlier. In a way, Singh reversed many of the policies which he himself had helped implement as a bureaucrat during Indira’s tenure. The author remarks that Rao was always cautious of leaving himself open to the charge of pushing through a new policy without consulting all concerned. The change in the world’s perception of India is evident from the response to Reliance Industries’ long term corporate bond with tenure of 100 years. These bonds for $100 million sold extremely well, while in 1991, India as a nation had to physically pledge its gold reserves in London as collateral to a loan from international banks.

 

This book attempts a comparison of Narasimha Rao and Manmohan Singh for the success of the 1991 reforms. It concedes that Rao recognized that the changes were necessary if India was to realise her full potential, but did not understand the full gamut of changes needed to unleash the economic prowess. Singh had been in government for twenty years as a senior civil servant and was aware of all ripples, however subtle, in Indian economy. Rao backed the policy changes while the crisis was raging and did little to educate the public on the need for continued reform. Singh was Ahluwalia’s mentor and the conduit through which he was absorbed into the civil service. So it is not astonishing to watch the author declaring that Manmohan Singh was the true architect of the reforms, but this would not have happened without Rao’s backing. The architect-backer dichotomy can be lucidly explained by another parallel. Ustad Ahmad Lahouri was the architect of Taj Mahal at Agra while Emperor Shah Jehan was the backer!

 

Ahluwalia devotes considerable effort to present the two tenures of Manmohan Singh as superlatives in performance almost as if he was a member of the cabinet. What he does by silence on Nehruvian policies is complemented by eloquence on Manmohan’s policies. While it may be true that Singh’s quiet leadership was the critical driving force that made the nuclear agreement with the US a reality, the overall failure and universal perception of horrible corruption is linked directly to Singh’s lack of roots in the party or with the public at large. Singh was a person with impeccable integrity but his ministers took him for granted. These aspects are not covered in this book that attempts to lionize Singh. It also tries its hand in whitewashing of 2G and coal block scams claiming that the presumptive loss calculations are flawed. It also contains an outrageous assertion that the CAG was unaware of basic accounting practices!

 

The author then makes a comparison of UPA ministries under Singh and the NDA ministry under Modi. This is just pure political discussion without any technical merit. Many factors are considered for evaluation but are riddled with naked cherry-picking. The contrast is made out between the best years of UPA with the worst of the NDA. For some parameters, he would take the year 2007-08 and for others it would be 2011-12 or any other convenient year. Looking at the statistical gymnastics one wonders whether Ahluwalia is really harping on the possibility of becoming the finance minister of the country in a future Congress regime.

 

The book is somewhat tedious to read at some places even though great effort has been made to make it palatable to the general reader. It provides an on-the-spot assessment of the events that unfolded in 1991 when the country made a paradigm shift from the socialist Nehruvian model. Overall, it gives a glimpse of India from 1980 to 2014.

 

The book is recommended.

Rating: 3 Star