Last week, former Prime Minister Narasimha Rao was back in the news. This time because the Bharatiya Janata Party (BJP)-led National Democratic Alliance (NDA) had decided to honour the man by building a memorial for him in Delhi.

The agenda of the BJP, more than the NDA, is clear. Every time it eulogises former Congress leaders such as Sardar Patel, the legendary home minister of the first government in independent India, or former prime minister Lal Bahadur Shastri, a person, who, if he had remained alive, would have guided India to a rules-based economy faster than it is doing otherwise, the BJP is seeking to make a point: It is, not so subtly, rubbing in the claim that the country’s oldest political party is run like a mom-and-pop store and, consequently, only the Gandhi-Nehru legacy would be acknowledged.

If we leave the politics aside for the moment, it is indeed important to remember Rao, but for the right reason. Plucked out of retirement, following the assassination of Rajiv Gandhi, to lead the Congress party into its first coalition experiment, Rao did not disappoint. Some believe he excelled, and that was eventually his undoing in the palace intrigue of the Congress party.

Now, this is where the story skews. There is one lot that argues that he was the real hero of the economic reforms story. And there is another that argues that he was not really a believer in reforms, but the real architect was his self-effacing finance minister: Manmohan Singh.

Both views are misplaced. They stem from a flawed assumption: economic reforms began in 1991. Absolutely not. Have stated this before (and will continue to reiterate it) that the real story of economic reforms began in 1980 under the leadership of Indira Gandhi.

India encountered a severe balance of payments (BoP) crisis in 1979. The only way out was to take recourse to a structural adjustment loan from the International Monetary Fund (IMF), which would entail the usual Washington formula of import tariff reductions, freer and greater participation for the private sector, paring of government presence in economic activity, and so on. However, it coincided with a recalibration of public policy towards a more market-based economy—captured so well in the Sixth Plan document piloted by Indira Gandhi.

So, the politically savvy prime minister decided to make virtue out of necessity. She volunteered the desired reforms—which included the dismantling of industrial licensing among other things—rather than accept them as humiliating conditionalities. And the finance minister who pushed it along was none other than Pranab Mukherjee, a true Indira loyalist.

Within three years, India came out of the crisis. Indira Gandhi promptly prepaid the loan and managed to avoid implementing most of the conditionalities, even as she rapidly started losing her way in domestic politics. The lessons of the BoP crisis were soon forgotten, till the country plunged into another one by 1989-90—which forced India to mortgage its gold reserves to raise money to avoid an external debt default.

At this stage, a minority government under prime minister Chandra Shekhar was in power, with Yashwant Sinha as the finance minister. They had access to a solution—entailing the revival of economic reforms and stepping on the accelerator—that had been readied by a high-level panel of serving technocrats. Sinha and his boss were convinced and readied to implement it in the upcoming Union budget.

However, the Congress, then headed by Rajiv Gandhi, withdrew support and the government fell, forcing a fresh general election. But not before it had presented its vote on account—keen readers can check for themselves that Sinha laid out the broad contours (including disinvestment of public sector equity) in his budget speech for that year.

So, when Rao found himself as the PM, he was well aware of what had to be done. On advice, he picked Singh as the FM—a technocrat with a squeaky clean image; he was a breath of fresh air. Very cleverly, Rao, a politician, preferred to stay in the background, while he allowed his technocrat FM to grab the headlines.

In fact, it was Rao, who was holding the commerce portfolio, who announced a massive delicensing of industries (the centrepiece of the 1991 economic reforms agenda) on the morning of 24 July 1991. Later in the evening (then, the budget was presented at 5pm), Singh announced more measures, including the devaluation of the rupee. The next day’s newspaper headlines combined the two stories, and the budget got precedence—as a result, Rao’s role stood diminished.

So, yes, it is important to remember Rao, for the right reasons though. But for his firm backing of the FM, the acceleration in reforms may have been a non-starter. And this is no mean task as we have seen with the last regime. But it is entirely fallacious to credit Rao (or Singh for that matter) for authoring reforms. The duo implemented an existing blueprint. Give him credit for what is due.

Anil Padmanabhan is deputy managing editor of Mint and writes every week on the intersection of politics and economics. Comments are welcome at capitalcalculus@livemint.com. His Twitter handle is @capitalcalculus

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