The Rise of Goliath

by AK Bhattacharya

  Turning Points

  What were the key turning points in the run-up to the Indian economy’s fiscal and balance-of-payments crisis of 1991 and the reform policies introduced in its wake? The bribery controversy over the purchase of the Bofors guns by the Rajiv Gandhi government was certainly one of them. The allegations of bribery against a prime minister, who till then was considered Mr Clean, stalled Gandhi’s own efforts at reforming the economy and cleansing his own political party and the political processes. The government had signed an agreement in March 1986 to purchase 400 155 mm Howitzer guns from AB Bofors, a Swedish arms manufacturer, at a total price of Rs 1700 crore. About a year later in April 1987, the Swedish Radio had broadcast a report claiming that Bofors had paid bribes to top Indian politicians and defence personnel to secure the deal in its favour. It was a controversy that diverted Gandhi’s attention away from governance so much that for the remaining period of his tenure, his primary concern was to defend his reputation as an honest prime minister of a clean government. Gandhi spent more time and energy on defending himself against those bribery charges and his focus on reforms was considerably diluted. Instead, he decided to follow a safe and well-trodden path of reviving growth through investments, even though that meant increased borrowing, adversely affecting the fiscal health of his government. But with no reforms preceding those investments, the Indian economy began hurtling towards a crisis that erupted finally in 1991.

  At the same time, the Bofors controversy strengthened the opposition political forces, which were galvanized by none else than Gandhi’s former finance minister, V.P. Singh. Gandhi had secured a landslide win for the Congress in the 1984 general elections, with 404 seats out of the 514 Lok Sabha seats for which the polls were held, and a vote share of 49 per cent. Five years later, Gandhi could win only 197 seats (out of 529), with a vote share that shrank to 39.5 per cent. He decided not to stake claim to form a government, even though his was the single-largest party. This paved the way for the formation of an unstable minority government, led by V.P. Singh, whose Janata Dal had won only 143 seats, but had the support of forty-five Left members of the Lok Sabha and the support of eighty-five members of the Bharatiya Janata Party from outside. If the Bofors controversy had not rocked Gandhi and his government about two years after he was sworn in with a record majority, it is possible that Gandhi would have embarked on a different path and the Indian economy and its polity would have taken a different direction.

  The second turning point in this phase was the assassination of Rajiv Gandhi on 21 May 1991, while he was campaigning for his party at Sriperumbudur, near Chennai, during the ongoing general elections. Gandhi’s death at this point led to a series of developments leading to the formation of a minority government headed by Congress leader P.V. Narasimha Rao. The first phase of the general elections had been completed when Gandhi was killed. As the election results were declared in June 1991, it became clear that the Congress performance was boosted significantly by the assassination. If Gandhi had not been killed, the Congress would have won over forty seats fewer than their actual tally of 232 Lok Sabha seats.4 That performance would have been worse than the 197 seats it had won in 1989. Without Gandhi’s death, therefore, a Congress government was unlikely in 1991. Instead, there could have been another coalition government, which could well have been as unstable and short-lived as the previous ones led by V.P. Singh and Chandra Shekhar. Serious questions would have also arisen over whether the coalition government would have been able to introduce the much-needed economic reforms and tough steps to bail the Indian economy out of that serious crisis.

  On the other hand, the death of Gandhi created a sympathy wave in favour of the Congress, which emerged as the single-largest party in the Lok Sabha. Even though it was a minority government, the economic crisis became an opportunity for the Congress leadership to introduce economic reforms by liberalizing the economy. As prime minister of a minority government, Narasimha Rao understood that he had a short window of opportunity to rush through the necessary policy changes. All the major policy relaxations were introduced within the first 100 days, when the political opposition to those changes were relatively muted. No opposition political party wanted to pull down another government, having already experienced the uncertainty and plight arising out of two successive short-lived unstable governments between 1989 and 1991. Indeed, even as the Rao government acquired the necessary strength in the Lok Sabha to cement its majority, the pace of economic reforms too slowed considerably. Political developments also were responsible from 1992 onwards for slowing down the pace of economic reforms in the remaining period of the Rao government, which completed its full term of five years.

  The third and final turning point was Rao’s surprising choice of a technocrat as the finance minister of his government in 1991. Traditionally, finance ministers of any government have always been a political heavyweight. Rao, too, must have been under pressure to appoint a political person as the finance minister. But he decided to break away from tradition and chose Manmohan Singh, an economist who had spent almost his entire career in the government system occupying virtually all the top jobs in economic administration. Singh took to his new job as the finance minister like a duck takes to water. Of course, Rao gave him full political support so that Singh could initiate the steps needed for the Indian economy. But Singh not only used his vast experience of having worked in different departments of the government to ensure effective policy implementation, but also built a strong team of bureaucrats and technocrats around him to steer the Indian economy out of that crisis. In retrospect, it is difficult to imagine the reforms of 1991 without Rao’s masterstroke in identifying Singh to be the finance minister and Singh’s astute shepherding of the Indian economy from his corner office in North Block, the headquarters of the finance ministry in New Delhi.

  Section 9

  Reservation and Mandir

  CHAPTER 16

  THE GAME OF LIFE AND DEATH

  As his wife and the baby boy, who was born a few days ago, were being discharged from the nursing home in a West Delhi locality, Ranjit Sarkar was both excited and a little tense. Excited, because his life had taken a significant turn with the arrival of a new member in his family. And a little tense, because he knew he was responsible for ushering someone into a world that was getting more complicated as a result of divisive politics not just at home, but also in the entire world.

  When he broke the news of the birth of his first child, a son, to his colleagues, one of them had joked and suggested that he should name his baby Saddam. Ranjit did not take too long to understand why that odd suggestion was made to him. Just about a month and a half before his child was born, Saddam Hussein, the dictator ruling Iraq, had stormed Kuwait on 2 August 1990, ignoring global advice that he should restrain himself.1 Saddam Hussein had soon become an icon of defiance and rebellion—he could take on the might of the United States, the global cop and a super power at that time which had gained in power immensely as the world was turning unipolar with the disintegration of the Soviet Union.

  Saddam’s invasion of Kuwait had raised the international price of crude oil and its impact on India was severe. With growing concerns over depleting foreign-exchange reserves not being adequate for imports of oil, whose price had skyrocketed, the government had imposed a surcharge of 25 per cent on the prices of petrol and diesel. It had also imposed rationing of sorts by placing curbs on the quantity of sale of petrol or diesel to each vehicle at retail outlets. In addition, orders were issued to all dealers of petroleum products asking them to cut short the number of hours for which they could keep their retail outlets open for the sale of products. Long queues of vehicles outside petrol pumps became a regular spectacle and Ranjit, who had just acquired a car, was wondering if he should go back to using public transport for travel.

  But that day when he reached the nursing home with his car to pick up his wife and son, he was a little worried not because of the fuel shortage. He was worrie
d about being able to drive on Delhi’s roads without any interruptions to reach about 30-odd kilometres to drop his wife and the newborn baby at his in-laws’ home. Streets in Delhi had turned into an open field for staging demonstrations in protest against the then government’s decision to extend the scope of reservations in jobs and educational institutions to cover backward classes as well, in addition to members belonging to scheduled castes and scheduled tribes. While the move was justified by the then prime minister V.P. Singh as his attempt at ensuring social reform and justice for the backward classes, large sections of middle-class India were apprehensive that their scope for getting admissions in educational institutions and securing government jobs was increasingly getting narrower. Students of many colleges affiliated to Delhi University came out on the streets of the Capital and indulged in a novel kind of protest. They would build a human wall on busy cross-sections of major roads and block the passage of vehicles. The most remarkable aspect of such protests was that they enjoyed tacit support from even travellers in their personal vehicles or public transport as the larger message of the protests struck a sympathetic chord in many of them.

  For an economy that was not doing well and with oil prices as well as inflation on the rise, the attempt to reserve more seats in educational institutions and jobs in government departments came as yet another blow to the aspirations of all those who did not belong to either scheduled castes and tribes or to the backward classes. And the appeal had made an impact on the upper castes, irrespective of their economic status. The poor Brahmin, for instance, joined hands with the middle-class Brahmin or Kshatriya (another category of upper caste in India) in lodging their protests against the V.P. Singh government’s proposal on reservations.

  The movement reached a crescendo after a twenty-year-old student of Deshbandhu College, affiliated to Delhi University, Rajeev Goswami, tried to immolate himself on a busy cross-section outside New Delhi’s premier state-owned hospital All India Institute of Medical Sciences (AIIMS) on 19 September.2 Goswami did not succeed in immolating himself, but sustained almost 85 per cent burn injuries and after hospitalization survived to live for another thirteen years before succumbing to a liver-related disease in a missionary hospital. But the immolation attempt in 1990 had not only made Goswami a national celebrity but also raised the movement to a pitch where the government faced difficulty in restoring law and order.

  In September 1990, Ranjit Sarkar was worrying about whether he would be able to drive his wife and his newborn baby to R.K. Puram, a sprawling residential colony of government flats in south Delhi, without any traffic disruptions and delays. Ranjit was stressed throughout his journey. He was worried that a mob would intercept his car.

  The Mandal Commission and its recommendations for extending the scope of reservations to backward classes, and which the V.P. Singh government had agreed to implement, had made their impact on Ranjit Sarkar in a way that he would never forget.

  The Mandir and the Mosque

  6 December 1992 was a Sunday. Even senior government officials spend their Sundays in a relaxed way. Most of them spend Sundays at home. But for Ram Mohan Rao, the principal information officer for the Indian government, this was an unusual Sunday. A huge congregation of Kar Sevaks (an army of people wearing saffron bandanas on their head and claiming to be followers of the Vishwa Hindu Parishad or the Bharatiya Janata Party) at the site of the disputed Babri Masjid in Ayodhya had made the P.V. Narasimha Rao government a little tense and restive.

  The Supreme Court had ordered that even if Hindu devotees committed to the idea of building a Ram temple there were allowed to congregate at the site, the state government of Uttar Pradesh would have to tender an undertaking that the law and order would be its topmost priority.3 UP was ruled by the BJP then and Chief Minister Kalyan Singh gave an undertaking as required by the country’s apex court. BJP’s central leaders like Lal Krishna Advani were present at Ayodhya. From initial reports trickling in from UP, it seemed that the security forces deployed there were not enough to manage the huge crowd that had gathered near the mosque. Ram Mohan Rao could not take that Sunday lightly and from fairly early during the day was monitoring the situation in Ayodhya.

  By early afternoon on Sunday, Rao had received information that not all was well. The Kar Sevaks had outnumbered the police forces by a huge margin. The top leaders of the BJP were present at the site and their exhortation to a mob of Hindu zealots that the Supreme Court’s order must be respected fell on deaf ears. By 4.30 p.m. there was confirmation that the mosque had been pulled down and the demolition was complete. The whole nation learnt in utter shock and disbelief that the sixteenth-century mosque that the first Muslim ruler of India had built in this country had been destroyed by a mob of about 2 lakh people, many of whom claimed to owe allegiance to VHP and the BJP. Advani expressed his disappointment that a kar seva had turned into an exercise to demolish a mosque. Kalyan Singh had promised to the Supreme Court as also to the National Integration Council that he would not let the mosque be damaged or destroyed. Seeing that the mosque had been demolished, Singh lost no time in tendering his resignation.4

  There was complete silence from the office of Prime Minister P.V. Narasimha Rao. One of his Cabinet colleagues would complain that while the Kar Sevaks were on a rampage in Ayodhya, his frantic calls to the prime minister and senior intelligence as well as police officials, went unanswered. On the other hand, Principal Information Officer Rao held an informal briefing with the assembled media representatives. An eerie silence pervaded the air. Breaking his silence, Ram Mohan Rao said: ‘Now the only course available to the government is to see how the mosque can be rebuilt.’5 It looked like a statement that held out a reassuring promise from a government that was trying to do some damage control. Rao also argued that maintenance of law and order was the responsibility of the state government and the Centre could not have been expected to intervene in Ayodhya when there was a popularly elected government in Lucknow, the state capital.

  Questions were being raised about whether Narasimha Rao should have reacted well in time, after seeing the huge mass mobilization at Ayodhya, and dismissed the UP government. There were counter-questions as well. Narasimha Rao was still running a minority government at the Centre and upsetting the BJP by dismissing its state government in Uttar Pradesh could have been politically risky for the survival of his government.

  By 6.30 p.m. that Sunday, the Union government convened a meeting of its Cabinet. It was a meeting that saw some exchange of cold stares among senior ministers and the prime minister. The meeting almost bordered on mutual recrimination, with each holding the other responsible for inaction against a politically motivated mob with religious zeal, destroying a mosque of historical importance. The Cabinet decided to recommend to the President the dismissal of the Uttar Pradesh government and the dissolution of the Assembly. But by that time, the Kalyan Singh government had tendered its resignation and President’s rule was imposed immediately and the UP Assembly was dissolved. It seemed that Kalyan Singh and the BJP leaders had acted swiftly by offering the resignation perhaps in a bid to salvage their reputation and establish that they took the moral responsibility for not having honoured their word to the Supreme Court that the mosque would not be allowed to be demolished.

  The demolition of the disputed Babri mosque in Ayodhya was also a cause for concern on the economic front. After being rescued from the brink of an economic disaster, the Indian economy had just begun to stabilize, with inflation coming under control. Early signs of green shoots of recovery were becoming visible, the foreign-exchange reserves were showing a healthy pace of increase and international financial institutions were beginning to repose their faith in the Indian economy once again. But the demolition of an ancient mosque and the consequent political turmoil could have seriously dampened the prospects of revival of the Indian economy that has just come back from the brink of a collapse about two years ago. Worse, there were now fears of retaliation from the minority Muslim
community. As it turned out, within months of the demolition of the mosque, Mumbai saw bomb blasts in busy localities killing innocent people. The blasts were followed by violent riots in which Muslims and Hindus clashed, leading to many deaths and destruction of properties.

  If Ram Mohan Rao that Sunday talked about the need for rebuilding the Babri mosque as the only option before the government, he had good reasons to make such a statement. It was clear that he did not make that statement unprompted. Perhaps he understood that after the demolition of the mosque, applying balm on the hurt sentiments of the Muslim community was of utmost importance to avoid communal tension from flaring up.

  Rao’s suggestion or the thinking of a section of the government on the need to shift the agenda from building a temple for Ram to rebuilding the mosque was discarded soon after the initial shock of that event. This was a reflection of how India’s political debates and politics were taking different directions. Ram Mohan Rao may well have expressed a view that was shared by very few in a government that recognized the rise of Hindu mobilization as an inevitable process. Perhaps the government felt that the need to pander to demands of the majority was more optimum, even though that meant further marginalization of the minority Muslim community. That process, unfortunately, would speed up in the coming decades.

  Rao’s suggestion on that fateful Sunday indeed appeared to be the expression of a lonely voice.

  Mandal as the Trigger for the Mandir

  The two events—expanding the coverage of reservation of government jobs and seats in government-run educational institutions to include backward classes and the movement for building a Ram temple in Ayodhya in place of the Babri mosque—took place under two different governments, separated by more than two years. The decision on accepting the Mandal Commission’s recommendation to extend reservations for backward classes was taken in August 1990 by the V.P. Singh government. And the Babri mosque was demolished in December 1992 when P.V. Narasimha Rao was ruling at the Centre, albeit at the head of a minority government. The composition of the Lok Sabha then was such that it would not have posed a real threat to the survival of the Rao government. Against the 232 members of the Congress, the BJP had 120 members, followed by Janata Dal with fifty-nine and the two Left parties with forty-nine members. It was unlikely that the different groups of opposition parties would ever get together to pull down the Rao government. But the Congress leadership realized that a comfortable relationship with the BJP in such a situation was a safety net for the government and a politically useful instrument for keeping other opposition political parties at bay.