It’s curtains for India’s Dream Team

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Brave men who scripted the reforms story ride into sunset

It’s curtains for India’s Dream Team
It’s finally curtains for the Dream Team that ushered in and sustained India’s economic reforms for the past two decades and more, starting way back in 1991, even as the reforms themselves are expected to gather momentum and new meaning under the next dispensation at the centre.

With reforms archan­gel Manmohan Singh set to move out of 7 Race Course Road a day ahead of the election results on May 16, calling it a day from active politics and governance, many of the stalwarts who helped him preside over the demise of the licence-permit raj are also set to take their final bow.

Among them are remnants of the ancien regime who stayed relevant in shaping the policy discourse of the day through much of the past two decades – finance minister P Chidambaram, planning com­mission deputy chairman Montek Singh Ahluwalia, chairman of the prime minister’s economic advisory council C Rangarajan, rural development minister Jairam Ramesh and chairman of the knowledge commission Sam Pitroda. And of late, billionaire entrepreneur-turned-politician Nandan Nilekani as head of the unique identity programme.

A legion of other notables has quietly faded away over the years. All of them helped Singh script the India Story through the at-times-momentous-at-times-tumultuous years of change and growth.

Way back when it started, in 1991, Team Manmohan, as part of prime minister PV Narasimha Rao’s regime, not only revived the economy from the brink of a balance of payment crisis, it eventually steered the economy to new peaks through years of phenomenal economic growth and bulging foreign exchange reserves fuelled by huge foreign investments.

After years of pursuing a socialist agenda under successive prime ministers starting with the late Indira Gandhi, Singh went on to shape his original Dream Team around successive Reserve Bank governors S Venkitaramanan and C Rangarajan, his economic affairs secretary Montek Singh Ahluwalia and other able bureaucrats. P Chidambaram as minister of state with independent charge of commerce and Jairam Ramesh, first in the prime minister’s office, and subsequently, in the planning commission, provided backup support in defining India’s economic turnaround.

While Venkitaramanan is now a distant memory, along with many others, including Rajah Chelliah and Shankar Acharya, the core team has very much prevailed through all these years of coalition politics and regime change even during much of non-Congress-led governments, first under the United Front and then the National Democratic Alliance.

Now with Singh preparing to demit office this summer, almost all of them neither have the age nor the platform to stand the test of time. They have all been intrinsic to the Congress dispensation that no longer seems to carry weight with voters this season.

And five years hence, it could well be another story. By then, the old guard could be forced to make way for the younger lot if the Congress party were to rejuvenate under its nextgen leaders.

Rangarajan and Ahluwalia are set to step out of PMEAC and planning commission as their jobs are co-terminus with the prime minister’s.

Finance minister Chidambaram, a seven-time member of Parliament from Sivaganga constituency in Tamil Nadu, is not contesting this Lok Sabha election. Having launched the trade reforms in PV Narasimha Rao’s cabinet, he subsequently presented his own Dream Budget in HD Deve Gowda’s United Front coalition, bringing in far-reaching tax reforms. PC has little chance of surviving as an economic administrator, unless the UPA miraculously returns for a third shy at the helm.

That just about leaves Jairam Ramesh, who at 60, still has age on his side and can wait to fight another day before clawing his way back to power.

Incumbent RBI governor Raghuram Rajan, at 51, though a recent entrant in the reforms story, may still be around at his job for some time to come, as the Reserve Bank is an autonomous body. Also, there is no precedent of a new government replacing the head of the country’s central bank midway through his tenure. Rajan’s intellectual integrity should continue to be in demand to steer future monetary policies as well as to tame rising inflation.

His long-time predecessor Venkitaramanan, along with Singh as finance minister, was instrumental in negotiating a $2.2 billion structural adjustment loan from the International Monetary Fund to bail out the economy from the BoP crisis on condition that India carried out reforms modelled by the World Bank and IMF. That set the template for future policy objectives.

The economic reforms ensured that India not only brought back its pledged gold from abroad, but also never took recourse to an IMF loan again. Against barely $2.5 billion in 1990-91, that were only enough to finance a fortnight’s imports, its foreign exchange reserves now stand at $300 billion.

So busy was the RBI governor in fixing the BoP crisis that Singh had to defend Venkitaramanan in Parliament when the Harshad Mehta stock market scam unfolded in 1992. The scam led to the birth of India’s market watchdog Sebi under G V Ramakrishna, till then a secretary in the government.

Singh, as finance minister, left his mark on history with a liberalised industrial policy, freeing the economy from the clutches of inspector raj. He also reduced import duties drastically, particularly on gold, virtually eliminating the lucrative trade in smuggled bullion. Along with Rangarajan, who replaced Venkitaramanan as central bank governor, Singh overhauled the banking sector, placing the entire financial system on a sound footing. By the mid-1990s, India repaid the structural adjustment loan to IMF.

Atal Bihari Vajpayee’s NDA government retained members of Singh’s Dream Team, drawing on their experience and expertise in steering the economy that helped script its India Shining slogan. Both Ahluwalia and Rangarajan continued to be closely linked to reforms in the Gowda and Vajpayee dispensations. Now, that is likely to change.

As economic affairs secretary, first under Singh and then under Chidambaram in the UF regime, Ahluwalia steered the government’s disinvestment programme as well as financial sector reforms, including insurance and pension policies. He went on to survive as planning commission members under Vajpayee.

The NDA regime also witnessed the Unit Trust India fiasco, which was deftly handled to bail out 20 million investors in its flagship scheme US-64 plan.

M Damodaran, who was made UTI chairman and subsequently Sebi chairman, dealt with it in a manner that neither investors nor the government lost much money over a medium-term timespan.

India’s original reforms crusader Sam Pitroda, ushered in the telecom revolution as part of Rajiv Gandhi’s Dream Team, and is now associated with knowledge mission and several other reform initiatives, including e-governance. He went back to the United States following Gandhi’s assassination only to return when the Congress led UPA returned to power in 2004.

Others who formed the Dream Team were Singh’s one-time chief economic adviser Shankar Acharya, besides his close associates Rajah Chelliah and Vijay Kelkar. Bureaucrats AN Verma, KP Geethakrishnan, AV Ganesan, MR Sivaraman, and Rakesh Mohan too helped script the India Story. All of them rest in the pages of history as the men who made it happen.

Ganesan and Sivaraman opened up civil aviation to private investment; Chelliah laid the foundation for tax reforms to be subsequently revised by Kelkar, as adviser to finance ministers Yashwant Sinha and Jaswant Singh. His work eventually led to the framework for VAT, DTC and GST by Parthasarathy Shome under Chidambaram.

Ramesh will certainly remain an important player in the Congress. As officer on special duty to Rao, he drafted the initial chapter on reforms that was eventually given shape to by Singh.

This summer, the reforms story will continue to unfold, perhaps with much more vigour than it has ever done in the past 10 years. But an entirely new team will script that story.

Good luck to that.


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