Rao and Modi: Difference in the Politics of Economic Reforms

Amidst the orchestrated and well-planned agitation against the Modi government by alleged farmers, there emerges clear difference between the approach of P V N Rao and Modi in managing the political aspect of economic reforms. A comparison can be done keeping in mind that both of them were facing different challenges, but the crux of the issue was economic reform. The magnitude of Rao’s economic reforms was much more than what Modi is trying and has done so far. Rao became the PM of India in June 1991 and within a month, he had taken three key economic decisions – devaluation of rupee in two steps, bringing the new industrial policy which did away with public sector monopoly and licensing, and a truly transformative budget. The only excuse which Rao could give was the imminent Balance of Payment Crisis but, that didn’t mean a justification for the means adopted by Rao.

Rao faced opposition from all the directions – within his own party, Communists, BJP, trade unions, big industrialists and others. And Rao adopted a different strategy to deal with each of the groups. For the committed Congress party members, Rao realized that the mental slaves of Nehru clan would only understand the language in which Nehru and his descendants hold the key importance. To this group, Rao said that he is merely continuing the legacy of Nehru’s industrial policy which was later distorted by others. In the Tirupati session of Congress in 1992, his rhetoric of linking reforms with Nehruvian socialism was enough to make economic liberalization feature in the resolution document symbolizing a formal approval of reforms within the party. Rao obviously didn’t have any respect whatsoever for Nehruvian socialism, but he was employing the rhetoric effectively.

After the 1991 budget, 50 Congress MPs had signed a letter criticizing the budget which favoured economic liberalization. The commitment of Rao for economic reforms could be seen from the fact that he had asked Intelligence Bureau to prepare a note providing the list of all Congress MPs who were against the liberalisation and also the particular aspect of liberalization on which they had disagreement. [1] For Communists and Left wing economists, Rao practiced indifference as he knew that they’re incorrigible and it’s futile to waste time with them. When the big industrialists expressed their discontent over allowing foreign capital, he didn’t roll back any of his policies though he met them personally and conferred Bharat Ratna on J R D Tata.

Rao also played an extremely smart move of projecting Manmohan Singh as the face of economic reform. He let Manmohan face all the questions on economic reform within the parliament and outside it as well. This ensured that Rao didn’t have to explain what he didn’t know, and divert attention from himself which he had learnt through experience. Until Rao became the PM of India, he was a committed socialist. When he was the CM of Andhra Pardesh in 1970s, he brought legislation on land ceiling for which his justification was completely ideological while making himself the face of this contentious act. The result was disastrous for Rao culminating into being forced to resign.

Let’s look at the Modi government now. The biggest drawback of Modi is that he is surrounded by people who are either less competent than him or completely incompetent. The three bills which have become the subject of controversy, Modi’s communication on them is unclear. He had the best option of advertising it as bills which would enhance the economic freedom of farmers but his communication has been more focused on addressing the concerns of MSP. MSP in this particular case has been used as a diversion tactic which would have been supplementary to the central narrative for the government.

The government’s figures counting the numbers of text messages and mails sent to raise awareness are simply nonsensical because most of the people don’t read such things. Modi was telling his party workers to raise awareness about these bills in September, and if his party workers indeed did so, it doesn’t add up when we consider that government allowed such well-planned agitation to grow while it would have had considerable intelligence input on the brewing protest. The lesser said about his ministers is better. Agriculture Minister Narendra Singh Tomar seems to have the sole competence of telling the media that his government would talk with the farmers. Nirmala Sitaraman is a liability who can neither do anything good with her economic policies nor put a spirited defence of government on economic issues. At least Jaitley had the ability to defend the government formidably. This government has already squandered the first six year in bringing incremental economic changes and the current protests would probably make the government skeptical of any big changes in the remaining tenure.


1. Half-Lion: How P. V. Narsimha Rao Transformed India by Vinay Sitapati

Published by Satish Verma

Read. Contemplate. Write.

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