Books

India’s economic history retold

Seetha | Updated on April 06, 2020 Published on April 06, 2020

Title: Backstage: The Story Behind India’s High Growth Years Author: Montek Singh Ahluwalia Publisher: Rupa Price: ₹595

A good record of India’s economic journey, but the bits about the UPA years evoke scepticism

The title of this book is misleading on two counts. One, it gives the impression that this will be a kiss-and-tell account of what first went right and then so horribly wrong with the economy during the United Progressive Alliance (UPA) years. But anyone with more than a nodding acquaintance with the author — seasoned economic administrator Montek Singh Ahluwalia — will know better than to expect this.

Two, it is not just about the high growth years of the 2000s. Ahluwalia describes the book as a ‘travelogue of India’s journey of economic reforms’. The travelogue actually starts with the 1970s and often goes back to the 1960s as well. So this is an extremely engaging and readable account of the history of Indian economic policy, strewn with several anecdotes that pithily bring out the follies of those times. He also talks about how he and other reform-oriented bureaucrats navigated the very socialist-inclined policy environment.

According to Ahluwalia, the crux of the problem was the ostrich approach of the establishment in the 1970s. “Had we asked why growth had slowed down in India when other countries were able to do well, the search for an answer would almost certainly have highlighted the shortcomings in our policies that could have been corrected.”

But he is perhaps being too kind. Because he also talks about the ample advice that was available on tap. That makes one wonder whether it was indeed a reluctance to ask the right questions or just stubborn, ideology-driven refusal to accept the answers to those questions that led to India being held back for so many decades. Was Rajiv Gandhi a reformer? Ahluwalia is best placed to answer this question, having played a very important role in economic policy-making in Gandhi’s PMO (Prime Minister’s office). He admits that Gandhi “changed the nature of the discourse on India’s economic policy by legitimising the goal of moving towards a less-controlled economy with a much greater role for the private sector” but then goes on to list his many misses: not liberalising trade policy to take advantage of booming world trade, not articulating a new policy towards foreign direct investment (FDI), not ushering in reforms in the public sector. And above all, not willing to give up control beyond a point; Rajiv Gandhi, he recounts, would often say ‘we must give up controls without giving up control’.

1991 reforms

Predictably, the most engaging parts of the book are those dealing with the 1991 reforms. He readily accepts mistakes that were made. Ahluwalia is an ardent liberaliser and he would have preferred a faster pace of liberalisation. But his experience within the government made him accept that this was not possible. He draws a distinction between gradualism and reforms by stealth, and does a nice comparison of the Indian and Chinese approaches to reform.

Where the book hugely disappoints is when it deals with Manmohan Singh and the UPA years. Ahluwalia makes no bones about his admiration for Manmohan Singh and no one would have really expected him to be objective about his mentor. But did he really need to downplay the contribution of PV Narasimha Rao?

Singh is described as a ‘genuine gradualist’ while Rao’s was a strategy of reform by stealth, which Ahluwalia dubs ‘opportunistic’. There’s so much praise for Singh that it makes one wonder if it has anything to do with the relatively recent Rao-versus-Singh discourse. Ahluwalia writes that Rao had no desire to be recognised as the architect of the reforms. As a standalone statement, that is fine, but when seen in the context of the Rao-Singh credit debate, it is a tad problematic.

Ahluwalia does deal with the policy tussles he was involved in during his ten years as deputy chairman of the Planning Commission in the two UPA governments. He is frank about the battles he had to wage on NREGA, the National Food Security Act, the unique identity project and the measurement of poverty. So also about his disappointment with the stimulus package of 2008 focussing more on tax cuts instead of expanded investment expenditure as well as the Land Acquisition Act and the massive farm loan waiver. But even accounting for his circumspect nature, it’s difficult to shake off the feeling that the criticism is somewhat muted. Especially problematic is the way he deals with the various scams of the UPA era. Ahluwalia will be hard put to defend how he can compare the New Telecom Policy (NTP) of 1999 with the shenanigans in the telecom sector that happened under Singh’s watch. He says that the Vajpayee government managed to make post-bid changes in the terms of licences and the Comptroller and Auditor General had indicated loss of revenue without attracting the kind of charges of cronyism that similar action during the UPA time did. But that’s comparing apples and oranges.

Telecom scam

The issue during the UPA time was not just about loss of revenue but equally about the vitiation of the bidding process. Two statements — that the CAG did not quantify the revenue loss in 1999 and that most of the explosion in telecom connectivity following the NTP-99 came during the UPA years — give the impression of him trying to rationalise, if not justify, the telecom scam. That’s also the case when he writes about the Commonwealth Games scam. He glosses over the fact that the bunch of bureaucrats Singh appointed to the Games Organising Committee to clean things up was not able to be effective and notes that in the end the Games infrastructure got created well in time!

Towards the end, the book starts to read like a Plan document, listing, in a rather dry manner, the various initiatives the UPA took. Manmohan Singh has always refused numerous requests for him to pen his memoirs. He doesn’t need to, for this book plugs that gap. So read the book as a good record of India’s economic history, but take the bits about the UPA years with some scepticism.

The writer is a senior journalist and editorial consultant

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Published on April 06, 2020
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