The 1991 budget was presented by then finance minister Manmohan Singh in the Lok Sabha at 5pm on July 24 of that year. Earlier that day, the Narasimha Rao government had unveiled its new industrial policy that hit at the license-permit raj.
In a recorded message played at the event in Hyderabad, Manmohan Singh described Rao as the father of India’s economic reforms, and also as friend, philosopher and guide.
president Sonia Gandhi
and leader Rahul Gandhi also sent messages that were read out. Sonia Gandhi
said that the Congress party takes pride in the many accomplishments and contributions of Narasimha Rao.
“I hope this event will revive the interest among our youth to learn about India’s growth story and the remarkable individuals who made this possible,” stated Rahul Gandhi in his written message that was read out by Telangana state Congress unit chief Uttam Kumar Reddy.
Congress leaders P Chidambaram and Jairam Ramesh recalled the chronology of events that preceded the historic budget of July 24, 1991. Chidambaram was the commerce minister then and piloted the government’s new trade policy.
Addressing the gathering in Hyderabad online, Ramesh said Narasimmha Rao was not altogether convinced about some of the decisions, particularly the devaluation of the rupee, but had immense trust in Manmohan Singh.
On July 15, 1991, BJP’s Atal Bihari Vajpayee, socialist leader Chandra Shekhar and communist leader Somnath Chatterjee attacked Narasimha Rao’s economic policies in the Lok Sabha.
Narasimha Rao dug deep into his knowledge of Sanskrit to persuade the opposition stalwarts. “Sarvanaasho samutpanne ardham tyajati panditah, ardhen kurute kaaryam sarvanaasho na jaayate,” Narasimha Rao told the House.
In English, the shloka means, when faced with destruction, the wise man gives up half so that he judiciously uses the remaining half to complete the work in progress, saves himself from annihilation and recovers lost wealth, Narasimha Rao explained. Ramesh recounted how this floored the opposition leaders.
A few days later, Narasimha Rao was criticised again in the House. He again turned ancient Indian wisdom.
He said the country was embarking on mahaprasthanam, a long journey, likening economic liberalisation and reforms to the Mahaprasthanika Parva, the 17th chapter of epic Mahabharata, which describes the journey and ascent of Draupadi and the Pandavas to the Himalayas, and heaven.
Ramesh said Narasimha Rao used the language and idiom that communicated liberalisation and reforms in a language rooted in Indian culture and civilization, while Manmohan Singh and Chidambaram spoke a more contemporary language.
To explain it to those within the Congress who had misgivings about his economic policies, Narasimha Rao told them that the government’s policy is change with continuity, Ramesh said.
According to Ramesh, Narasimha Rao told Congress leaders that “there are many things in the policy which we are continuing, but there are things that we have to change.”
“Change with continuity became the Rao mantra, the middle path, which he elaborated upon in his speech at Davos in 1992,” Ramesh said. He pointed out that the Narasimha Rao government never abandoned its commitment to the public sector, or its prudent and cautious approach in opening up the financial sector.
Ramesh said Narasimha Rao’s greatest contribution was to select Manmohan Singh as the finance minister, which helped make the reforms acceptable across the widest political spectrum as neither Rao nor Singh had market friendly reputations. They represented the left of centre economics and politics.
Ramesh recounted how one day Narasimha Rao was very downbeat about the criticism the budget and economic reforms.
“I showed him an interview published in Frontline (news magazine) of economist KN Raj,” Ramesh said.
Ramesh reminisced that in that interview, Raj had said he has his problems with the budget, but since Manmohan Singh has tabled the budget, “I take it at face value and I would accept whatever my friend says”.
Ramesh said the Narasimha Rao-Manmohan Singh’s was a jugalbandi, like that of sitar maestro Ravi Shankar and tabla player Allah Rakha. Narasimha Rao took care of the political management of reforms, while Manmohan Singh shaped the technocratic side.
In his recorded message, former president Pranab Mukherjee said he rated Narasimha Rao as only second to Jawaharlal Nehru in embarking on radical reforms. Mukherjee said Narasimha Rao’s other contributions included taking concrete steps to resolve the border dispute with China.
In his recorded message, Manmohan Singh said the 1991 budget changed India in many ways, and was made possible as the prime minister (Narasimha Rao) gave me the freedom to roll out policy decisions after he fully understood what was ailing India’s economy at the time.
Senior Congress leader P Chidambaram recounted how Narasimha Rao tried to convince detractors of economic reforms.
Rao said, “I have not changed, I am standing exactly where I stand, namely committed to the welfare of the people of India. I have not moved this way or that, but the world around me and the ground under me has shifted. People say I have changed, little realising the circumstance and context has changed”.
Chidambaram said Narasimha Rao trusted Manmohan Singh and him. Once when he took a file to him along with Manmohan Singh on a crucial decision, Rao asked them whether the two of them had signed it. They said yes, and Narasimha Rao first signed it and then read the note sheet. It was the absolute confidence he had in people he trusted, Chidambaram said.