For the last month or so, we have been inundated with eulogies of PV Narasimha Rao and Manmohan Singh as the men who liberated India’s economy. But this is only technically true.



Had Rajiv Gandhi, in a demonstration of utter irresponsibility, not pulled down the Chandrashekar government in March 1991, the reforms that Rao and Singh are credited with would have been carried out by Chandrashekar and his Finance Minister, Yashwant Sinha, in early 1991.



In a recent interview Manmohan Singh said, as if he was only vaguely aware of what Chandrashekhar and Sinha had proposed, that he “believed” some such document was there. As the economic advisor to Chandrashekhar, how could he have not known? Those were dire times, after all, and everyone who was involved remembers them vividly.



How could they not? Thanks to Rajiv’s fiscal recklessness and VP Singh’s political adventurism since 1985, India had almost run out of foreign exchange and had been on the brink of a default. It was its worst balance of payments crisis ever. The government of India was literally running from pillar to post looking for dollars, and its ministers were being humiliated.



Three men saved India between January and July of 1991: Prime Minister Chandrashekhar, Finance Minister Yashwant Sinha and Reserve Bank of India (RBI) Governor S Venkitaramanan.



But guess who took the credit? Manmohan Singh.



That is the unvarnished truth. The rest is victors’ spin. And that spin has successfully hidden a most disturbing fact, namely, that Rajiv Gandhi had caused an economic disaster. Despite this, the Congress party with its abject slave-like mentality to the Gandhi family, awarded the Bharat Ratna to him in 1991.



What really happened



Apologists always try to obscure the larger truth in a cloud of small facts. And the largest truth in the case of Rajiv was this: in order to ensure re-election, he made the government borrow excessively from the RBI, which helplessly lent him whatever he needed by printing off the necessary amount of notes. He also refused to either devalue the rupee or go to the International Monetary Fund (IMF) in 1988 for the same electoral calculation. This was a recipe for disaster, waiting only for a political crisis, which came in the second half of 1990.

Manmohan Singh knew how dangerous it was to run up huge budget deficits. As RBI governor between 1982 and 1985, he had told the Maharashtra Economic Development Council: