The road to India's economic miracle

Way back in 1991, when the then Prime Minister PV Narasimha Rao and his hand-picked Union Finance Minister Manmohan Singh decided to unleash economic reforms and dismantle the Nehruvian economic model, they hit two birds with one stone. On the one hand, the duo freed the entrepreneurial potential of the people and fast-tracked the Indian economy. On the other hand, they gave an opportunity to the Hindus to prove themselves.

Until then, ‘secular’ economists (both the Right and the left), blamed the Hindu religion for India’s poverty and termed India’s low growth as ‘Hindu rate of growth’.

India was indeed a rich country and it’s share in the global gross domestic product (GDP) stood at 33 per cent, same as China’s, till the 16th century. With the British take over, local talent and industry was strangulated. By 1947, our country was at the bottom and poverty became it’s signature tune.

With the departure of the British, the rule of aliens ended and the alienated stepped into their shoes. India’s first Prime Minister Jawaharlal Nehru who was in awe of the Soviet Union’s rapid industrialisation, had little faith in Indians and, hence, introduced centralised economy. The result was disastrous.

The post-1980 generation would not even know what it was to live in an era where from daily supply of milk to motor cars, one had to stand in a long queue. A plane journey, even domestic, was a luxury. Since there was only one domestic airline, even if you could afford getting a seat, was a privilege.

A residential telephone out of turn from a 10-year wait meant knocking at the doors of an MP, each of whom had a quota of 15 connections per year. It was an economy of shortages and a country where most of the ordinary, hard-working and honest citizens were forced to be a part of ‘black market’ operations and thus turn into criminals.

This needs elaboration. From sugar to cement, there was always a ‘quota’ and to avail it, one had to get a ‘permit’, a ‘license’ or an ‘approval’ from an appropriate authority. Needless to say, these were available mostly at a price, to be paid under the table. Ordinary citizens had to bribe the authorities to manage their day-to-day miserable lives. So, most people were either bribe-givers or bribe-takers!

But what was the explanation for this sorry state of affairsIJ The establishment was too dishonest to accept that it’s socialist model had flopped. It needed a scapegoat. Therefore, in 1978, Raj Krishna coined the term ‘Hindu rate of growth’ to describe India’s miserable economic performance. He attributed the country’s problems to it’s Hindu religion - it’s outlook of fatalism and contentedness. The then World Bank Chairman, Robert McNamara used this term frequently.

Then a miracle happened.  The Soviet Union collapsed.  With that, the biggest fraud of history was exposed. Behind the iron curtain of communist ‘utopia’, there was a hell - an economy of shortages, sans human rights and dignity. The Soviet regime was corrupt to the core and ruthlessly oppressive.

India, a fellow traveler of the Soviet Union since independence, too was in deep trouble. By 1991, it’s foreign exchange reserves had dropped dangerously low. The country had no money to pay for a fortnight of imports. India was forced to suffer the humiliation of pawning it’s gold to meet it’s international obligations.

It is at this crucial juncture that Rao took over as the Prime Minister and picked Singh, a technocrat till then, as his Finance Minister. Between the two of them they dismantled the socialist framework which had chained the enterprising Indians. They initiated reforms in the system and unleashed suppressed potential of Indians. Rest is history.

The GDP today has touched two trillion dollars, 2,000 from just about 273 billion in 1991, that is almost eight times and per capita income is almost 15 times in terms of current and 12 times in constant prices. The era of shortages is over and the world is looking at India as a promising economy.

For the first five years, from 1991-1996, Singh was the Finance Minister. For the penultimate 10 years of this quarter century of reforms, he was the Prime Minister. From being the ‘father’ of the so-called radical and beneficial reforms under the Congress’s leadership in 15 out of the 25 year bloc, Singh and the party should be the dominant celebrants — and rightly for the quarter century that transformed the country.

Then, why are they not talking about their achievementsIJ  Why is there no mention about RaoIJ Not even in the Congress’ agendaIJ Not even a salute to his memoryIJ And why is Singh silently sulking after his 10-year stint as the Prime Minister of IndiaIJ In fact, it is almost as it happens in Sherlock Holmes novel. The key question in the mystery is why is the dog not barkingIJ

Following 2009 elections, scams after scams eroded the Congress’s credibility. Whatever the then Opposition, the BJP said, was fully confirmed when the highest court of the land cancelled the series of licenses the Government headed by Singh had given, both in the 2G telecom spectrum and in the allocation of coal blocks. Under pressure of exposure, the Congress Government had to scrap the contract given to the tainted Italian firm for the helicopter purchase for the defence forces.

Of course, the party could publicly display its cussedness at its humiliation by refusing to co-operate with the succeeding Government. Whether it will bring back its credibility with the public or much less get the public power, whether in Uttar Pradesh or elsewhere, is for the party to mull over.

In the emerging digital age if the Congress is unable to trim its sails to the wind under its present dynamic leadership, the grand old party has to blame itself like it did in economic policy in the 1990-1993 period when it dropped the Nehruvian socialism to save the country from bankruptcy and recovered some political ground as well for itself.

For that to happen it needs a new leadership rising from the ground not brewed up at 10, Janpath. Indications unfortunately are that it is not happening which is pushing the party to the dustbin of history on its own steam.