The Turnaround Man

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Illustration : Anand Naorem

MANMOHAN SINGH will always be remembered as India’s ‘turnaround man’. He turned the Indian economy around in 1991-96, and once again in 2004-08. Never before 1992 had India registered a seven percent growth for three years in a row, as it did in the mid-1990s. Never before 2004 did India register a nine percent growth again for three years in a row, as it did in 2006-08.

Consider the facts. In 1991, India was on the verge of economic bankruptcy, and one of its key strategic allies, the Soviet Union, had just disappeared. There was domestic political turmoil, with the Indian National Congress forced to form a minority government after the assassination of Rajiv Gandhi. This came barely six years after the assassination of Indira Gandhi. No analyst would have regarded India a ‘rising power’ of the 21st century.

Yet, presenting his first Budget to Parliament in July 1991, Manmohan Singh dared to predict that the idea of India as a rising economic power was “an idea whose time had come”. The rest, as they say, is history.

In 1991, Dr Singh placed the Indian economy onto a new trajectory of growth. In 2008, he took the country into yet another new trajectory by securing global recognition for India’s nuclear power status. Few politicians in modern India have such a legacy to show in seeking a fresh mandate from the people.

THE ECONOMY

It was Dr Singh’s record as a successful economic manager that raised his national and global profile and made him the obvious choice for the Prime Ministership of India in 2004.

It is important to appreciate that the acceleration of India’s economic growth rate has been made possible by a rise in the domestic savings and investment rates. These are now closer to East and South-east Asian rates; at around 36 percent. The acceleration in India’s savings and investment rates has been made possible by the rise of a prudent middle class, of a more dynamic business class, a more efficient public sector, and an increase in Foreign Direct Investment, thanks to India’s increased globalisation — all of which are the legacy of Dr Singh’s “new economic policies”.

Viewing India from the outside in the past few months, I am constantly struck by how much more credit the Indian Government gets outside for its management of the economy than at home. The constant politicisation of all issues, the unrelenting party political debates, and the new media’s penchant for promoting argument rather than discussion, tends to divert attention from the fact that India is better placed than most countries as the world seeks a way out of the economic slowdown.

I recall he was one of the earliest, along with former Reserve Bank of India governor Bimal Jalan, to anticipate the global economic crisis. While former RBI governor YV Reddy took steps to ensure that Indian banks and the Indian financial system would not be hurt through excessive global exposure, the need for fiscal policy action to sustain growth was first highlighted by Dr Singh when he set the macroeconomic framework for the 2008-09 Union Budget.

India is better placed than most countries as the world seeks a way out of the economic slowdown. Without doubt, the credit for this goes to Dr Singh

Responding to concerns about fiscal laxity, Dr Singh said, even at that time, that India needed to sustain growth. Inflation was ‘imported’, he said, because it was largely fuelled by oil prices. Hence, a fiscal boost was in order. Why did Dr Singh react the way he did, against conventional wisdom at the time both at home and abroad? Because, his basic training is in Keynesian economics.

How deep has been the impact of the greatest economist of the 20th century, John Maynard Keynes, on Manmohan Singh came through to me on a flight with him to Mumbai in October 2006. The Prime Minister was to speak at The Economic TimesAwards function. I had a draft speech ready that he found time to read only on the flight. Apart from scribbling in some changes, he added a lengthy quote from Keynes’ book, The Economic Consequences of the Peace, from memory. He wanted it checked out from the original. After landing in Mumbai, we procured a copy of the book from the Bombay University Library, and were astonished to find Dr Singh had got his quote absolutely right!

Born in a village without a school and having to walk miles to it everyday, Dr Singh made it his mission to invest in a new educational revolution in India

The quote said: “If the rich had spent their new wealth on their own enjoyments, the world would long ago have found such a regime intolerable. But like bees they saved and accumulated, not less to the advantage of the whole community… they were allowed to call the best part of the cake theirs and were theoretically free to consume it, on the tacit underlying condition that they consumed very little of it in practice. The duty of ‘saving’ became nine-tenths of virtue and the growth of the cake the object of true religion.”

Economic man If Singh wins a second term, he should accelerate reforms
Economic man If Singh wins a second term, he should accelerate reforms
Photo: AP

He urged the gathering of Indian CEOs to save, to invest, and to use the domestic “inclusive growth” process to power the growth of their enterprises. A few months later, he told an annual meeting of the CII that Indian business must be proactive in making our growth process more inclusive. His vision of “inclusive globalisation” has been widely welcomed around the world, especially in Asia and Africa, and has found renewed expression in the G-20 discussions on the current global economic slowdown.

India has embraced globalisation thanks to the policies of Dr Singh, but it has also championed “inclusive globalisation” in all global forums during his Prime Ministership. That, after all, was the message of the South Commission, of which he was the Secretary-General in the 1980s.

UPA’S FLAGSHIP PROGRAMMES

As Prime Minister, Dr Singh chose to focus the attention of his government on three vital sectors — infrastructure, agriculture and rural development and education. While pushing for higher growth, he wanted to make the growth process more inclusive. Investing in these areas was one way to ensure this.

Dr Singh has taken personal interest in one major field of social development, namely, education. Born in a village without a school and having to walk miles everyday to it, doing his homework in the dim light of a kerosene lamp, because his village had no electricity, Dr Singh made it his mission to invest in a new educational revolution in India.

Each time there was a terror attack, Dr Singh always called for communal harmony. Gujarat 2002 must never be repeated, he would often say

The Eleventh Five Year Plan (2007-12) has been dubbed by him as India’s “National Education Plan” because of the steep increase in the financial allocation for education. New schools (literally thousands), new colleges (several hundred), and new Universities (at least 30 central universities), were funded by Dr Singh’s education plan.

He has put in place the largest programme of scholarships and fellowships for school and college education, with a focus on Scheduled Castes, Scheduled Tribes, Other Backward Classes, Minorities (especially the Muslim minority), and the girl child and women.

COMMUNAL HARMONY

It is not often acknowledged in our political debates that the past five years have been a period of prolonged communal harmony. Almost every terrorist incident in the past five years was aimed at provoking communal conflict. Rarely, if ever, did these terrorists succeed. Each time there was a terrorist incident, Dr Singh would immediately call for communal peace and national unity. His first priority was to ensure that the public distress, anger and anguish caused by the terrorist attack did not translate into communal conflaconflagration. What happened in Gujarat in 2002 should never happen again, he would often say.

While communal tensions occasionally flared up, communal conflict never did. Even after the terrorist attacks in Varanasi and Ayodhya, and the foiled attack on the RSS headquarters in Nagpur, all of which were aimed at generating communal conflict and pogroms like in Gujarat, the government of the day ensured that there was no such response. Civil society activism also helped, and the coming together of all sections of society, as in Mumbai, ensured that the terrorists’ objective was never met.

FOREIGN POLICY

Bond with the USA Singh has moved India closer to the US politically, militarily and economically
Bond with the USA Singh has moved India closer to the US politically, militarily and economically
Photo: AP

In India, foreign policy has always been an exclusive domain of Prime Ministers. Hence, almost all major foreign policy initiatives have a Prime Ministerial imprint on them. Manmohan Singh’s personal imprint will be seen on at least two major foreign policy initiatives that he had taken: first, the civil nuclear energy cooperation agreement with the US, all the 45 members of the Nuclear Suppliers’ Group (NSG), and the International Atomic Energy Agency; and, second, the India-ASEAN Free Trade Agreement, which is waiting to be completed.

The “nuclear deal”, as it came to be dubbed by the media, is a historic turning point for India. The global community has come to accept India’s de facto nuclear weapons power status, while, at the same time, acknowledging India’s impeccable track record in nuclear non-proliferation. The agreement signed with the NSG and the US ends a regime of discrimination aimed at India that was a vestige of the Cold War. If Dr Singh had not held steadfast to his resolve to complete the negotiations and secure this agreement, it would never have happened, given the myopia of most politicians.

Dr Singh has also initiated a new approach to the Arab world, moving away from an overtly political agenda, as in the past, to a more economic agenda based on India’s energy and investment needs. A free trade agreement between India and the Gulf Cooperation Council states is in the making. The visit of the King of Saudi Arabia marked a new beginning in relations with this important Islamic nation.

Two important diplomatic initiatives that have not yet borne any fruit are the initiative to resolve the border dispute with China, and to resolve the dispute over Kashmir with Pakistan. On both fronts, Dr Singh had come forward with new, bold and innovative ideas. However, it appears internal constraints on the leaderships in Pakistan and China have hobbled them from reciprocating. When a final settlement of these long-standing disputes is made, it will not be very different from the solutions envisaged by Dr Singh.

Dr Singh also breathed new life into regional cooperation in South Asia by revitalising SAARC through his initiatives at the Dhaka, Delhi and Colombo summits. His decision to pursue “asymmetric liberalisation” by offering tariff concessions to Less Developed Countries in Asia and Africa, unveiled at the India-Africa Summit in New Delhi in early 2008, has opened a new chapter in South- South cooperation.

MANAGING A COALITION

While most commentators will credit Dr Singh for these initiatives on the economic and foreign policy fronts, political analysts will have to give him more credit than they have so far for running a fractious coalition for a full five-year term. This was not an easy journey, partly because the Congress Party is itself a coalition of contending platforms. To begin with, the excellent relationship between him and Congress President Sonia Gandhi enabled them to deal with many difficult situations within the party and the coalition. Theirs is not just a political relationship. It is a deeply personal one too. Both have great affection and regard for each other. Their deep mutual trust has enabled them to jointly weather many storms. Steering major policy initiatives and tackling major domestic challenges like terrorism, extremism, inflation and communal and regional tensions, as the head of a diverse coalition, requires wisdom, patience and astute political judgement and skills. This he has clearly shown he has.

As the head of a coalition government, he has always gone out of his way to carry his allies and senior colleagues along on each and every policy decision. Sometimes, this could be frustrating for those who wished to see faster movement on policy initiatives. But he was always conscious that securing an internal consensus on policy was vital to the initiative’s success outside.

The painstakingly long drawn negotiations on the Indo-US civil nuclear cooperation agreement is the most visible example of such consensus-building. But there have been other issues too, on which he would personally put in phone calls to all the UPA allies, to senior Cabinet colleagues from his own party, and sometimes even important opinionmakers outside the government.

This rare patience and willingness to listen to all is at the root of his success as the Prime Minister of an unwieldy coalition, and explains the durability of the UPA. No political adversary can claim that he or she did not get a fair hearing from Dr Singh. Be it in Parliament, at the National Development Council meetings, during the interminable meetings of Cabinet committees and forums like the Jammu & Kashmir Roundtable. Younger politicians and civil servants would doze off or slip away, but Dr Singh would sit through the entire meeting from beginning to the end, listening, taking notes and responding.

It is these qualities of the head and heart that have endeared him to the people of India, and their affection found full expression when he was hospitalised for heart surgery. The nation’s heart beat for Dr Singh, echoing his own!

The author is Visiting Professor, Lee Kuan Yew School of Public Policy, Singapore. This article is an invited piece