by John Keay
With such concerns in mind, US condemnation of the Indian and Pakistani tests soon gave way to engagement. The priority was to get the nuclear newcomers to sign up to President Clinton’s Comprehensive Test Ban Treaty (CTBT) and submit to its regime of self-denial, international monitoring and regional peace-building. Neither New Delhi nor Islamabad was enthusiastic. Both played for time, and demanded the prior lifting of sanctions. In the case of New Delhi, crucial support came from the diaspora in the US. In the previous twenty years the number of Indians resident in North America had soared to over 1.2 million. Most were highly qualified, and many ‘had formed professional associations and political organisations that wielded impressive clout’. During the 1990s the Indian community’s financial contributions to US Congressional candidates had doubled to the point where ‘more than a quarter of the entire House of Representatives’ belonged to a pro-India caucus.26 Thanks in large part to this constituency, in the end it was the US Congress that failed to approve Clinton’s Test Ban Treaty, so letting India off the hook.
Perhaps a greater surprise was the willingness of the BJP-led government to accommodate American concerns. Instead of pitching India into another military confrontation with its neighbour, as was generally feared, Prime Minister Vajpayee responded to US promptings for a normalisation of Indo–Pak relations with a veritable charm offensive. Specifically, he made the first symbolic overture in over a decade to mend – or in this case, open – fences with Pakistan.
The gesture took the form of a coach ride. Following amicable encounters with Nawaz Sharif in Colombo and New York, in February 1999 Vajpayee boarded the inaugural run of a cross-border bus service, the first in the living memory of most South Asians. In Lahore, Sharif was on hand to greet and host the visit. It included an improbable excursion to the Eiffel-esque Pakistan Tower. There, at the spot on which Jinnah had first voiced the demand for a Muslim homeland, respects were paid by the champion of a Hindu homeland. Fifty years after Partition, an Indian Prime Minister was endorsing the ‘two-nation’ theory. Memoranda were signed about closer consultation over nuclear security, communications and other ‘confidence-building’ matters. And both leaders pledged to increase their efforts to resolve outstanding differences, ‘including the issue of Jammu and Kashmir’. Optimists might reasonably have concluded that where all else had failed, the bomb was succeeding.
The euphoria lasted barely two months. In early May 1999, reports reached New Delhi from Kashmir of an infiltration from the Pakistan side of the Line of Control (formerly the Ceasefire Line). Numerous Indian positions in the mountains overlooking Kargil, which had been vacated for the Himalayan winter, had been captured. A pit-stop town of diesel spillages and tyre vulcanising, Kargil straddled the vital Srinagar–Leh highway to Ladakh. The highway itself was coming under attack; the ‘Kargil War’ had begun.
Pakistan claimed that the infiltrators were Kashmiri ‘freedom fighters’, though it later conceded that regular troops and artillery were also involved. To dislodge them, India sent in the air force and ordered up reinforcements. As per Bhutto’s war of 1965, an Indian diversionary advance looked likely, either elsewhere across the Line of Control or across the Indo–Pak frontier in the Punjab. In preparation for just such a development, Pakistan was reported to be deploying missiles with nuclear warheads. By June, an obscure cross-border incursion was being portrayed as the greatest current threat to world peace.
Yet by mid-July the crisis was over. Indian forces had retaken their lost eyries. Meanwhile Washington, in no doubt as to Pakistani responsibility, had been pressing Nawaz Sharif to withdraw and Vajpayee to withstand demands for escalation. Each leader also faced domestic criticism. There had been failures of intelligence on both sides, and around a thousand lives had been lost with little to show for them. Benazir Bhutto called the whole affair ‘the worst blunder in Pakistan’s history’. For Vajpayee there was at least the consolation of having restored the status quo. Less plausibly, Sharif claimed ignorance. When the pretence that the infiltrators were Kashmiri dissidents fell through, he accused his new Chief of Staff, Pervez Musharraf, of authorising the infiltration without consulting him. Musharraf denied this, and it was this blame game that led to Sharif’s cack-handed attempt to replace his Chief of Staff, followed by the retaliatory military coup that brought Musharraf to power for the next eight years (1999–2007).
Another military, and possibly nuclear, confrontation loomed following the 2001 attack on the Indian Parliament. Occurring within weeks of America’s 9/11, it brought an Indian endorsement of the ‘war on terror’, calls for instant retaliation and a massive build-up of troops along the Line of Control and the Indo–Pak frontier. The danger of an international conflagration was likened by US analysts to that over Cuba in 1962. In Nepal, a country that was itself reeling from the mass assassination of its royal family, all South Asia was described as ‘poised on the cusp of war’.27
Happily, the BJP-led government in Delhi did nothing rash. State elections due in Kashmir in 2002 went ahead as planned, and saw a gratifying turnout. There the tit-for-tat of outrage and retaliation continued, as did governmental threats and counter-threats. But the security forces in Kashmir showed a little more restraint, tourists trickled back to the Valley, and in Pakistan the now President Musharraf responded to international pressure; Lashkar-e-Taiba and Jaish-e-Mohamed were banned (albeit temporarily), and Pakistani backing for Islamist fighters in Kashmir was curtailed. When in 2003 Musharraf survived a couple of assassination attempts, he was reportedly ‘appalled to discover that some of those responsible belonged to Pakistan-based Kashmiri militant organisations’.28 The Kashmiris themselves also seemed to have had enough of the Islamist militants. Twelve years of brutal strife had brought a solution no nearer, and the attractions of joining Pakistan had waned. A glance at the economic indicators left no doubt that Kashmir was potentially far better off under India than under Pakistan.
With these considerations in mind, dialogue between Islamabad and New Delhi resumed. The cross-border bus and train links were reinstated. Indeed, in 2005 another was added – a carefully monitored bus shuttle across the Line of Control between Srinagar in Indian Kashmir and Muzaffarabad in Azad Kashmir. Trade links, an important consideration for both governments, followed. At the Wagah checkpoint on the Punjab border, queues of ‘Jai Hind’-emblazoned carriers from Haryana jousted with garishly painted hauliers from the Mecca of ‘truck art’ in Peshawar. By 2006 this bilateral trade was valued at $1 billion a year.
Meanwhile Musharraf had announced a unilateral ceasefire along the Line of Control, which Vajpayee had reciprocated. In 2004 the two leaders met once again in Islamabad. An agreement on further ‘confidence-building measures’ was signed; and though Vajpayee’s National Democratic Alliance was promptly defeated at the polls, its successor, a Congress-led United Progressive Alliance led by Manmohan Singh, continued the so-called ‘composite dialogue’. Musharraf now seemed willing to go the distance in seeking a Kashmir solution. Kashmiri training camps in Pakistan were being turned into resettlement camps; instead of being armed and funded to fight, the militants received cash payments not to fight: ‘they got $800 for stopping their fight and another $800 for settling into civilian life by getting married’.29
A long-term settlement of the Kashmir dispute was still long-term. But by 2007 Musharraf was airing the possibility that Pakistan might abandon its preference for UN involvement, along with its concomitant insistence on a plebiscite. Instead, a bilateral programme of demilitarisation, abolition of the Line of Control, joint administration in some areas, and greater autonomy overall was discussed. This looked promising. Reconciling public opinion to it, however, did not. The UPA government in Delhi seemed to get cold feet, and in 2008 Musharraf himself was forced into exile following elections marred by the assassination of Benazir Bhutto. In Pakistan no government, least of all a PPP one led by Benazir’s husband, could afford to be seen abandoning a sixty-year claim to a state without which, in Bhutto
senior’s words, Pakistan remained ‘head-less’.
Even if Benazir, and then her husband Asif Ali Zardari, personally favoured pursuing the negotiations, neither could count on the support of the military or the ISI, let alone the Islamists, any or all of whom would construe such a move as justifying extra-constitutional intervention. In Pakistan, as in India, movement on Kashmir remained hostage to the dictates of electocratic politics and the irredentism of the bureaucratic-military establishments.
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As well as some progress on Kashmir, in 2003 Vajpayee made a week-long visit to China. It was the first by an Indian Prime Minister in a decade. Contentious issues, like the still disputed boundaries in Ladakh and the north-east, were left open; but bilateral trade was promoted, and Indian recognition of Chinese sovereignty in Tibet was reaffirmed in return for de facto Chinese recognition of Indian sovereignty in Sikkim. The veneer of accord between the world’s two most populous nations was reassuring.
Domestically too, the BJP-led government picked its way with caution. To scholarly disapproval, India’s schoolroom histories were radically rewritten to reflect Hindu nationalist contentions. On the other hand, the Sangh Parivar’s temple-building expectations at Ayodhya and elsewhere were judged too provocative to be championed. Besides triggering further communal unrest, they would alienate the BJP’s partners in government, many of whom had local caste or ethnic affiliations that conflicted with the Sangh’s prioritising of an all-embracing Hindu-ness. The moderating influence exercised by these lesser parties and their so-called ‘identity agendas’ would prove as inimical to ideological rigidity as to dictatorial leadership. Coalition politics in India, far from ‘ushering in an era of instability’, could be seen as evidence of a new maturity.
This did not, though, make for electoral certainty. With no party likely to command an overall majority, and in the absence of an incumbent scion of the Nehru–Gandhi dynasty, the composition of upcoming governments could be hard to predict. The Congress-led UPA government, which won India’s 2004 elections and then repeated the feat in 2009, was a case in point. A victory for the BJP had been confidently predicted in 2004. Instead, Congress surprised itself and was able to form a ruling coalition with help from caste-based parties in UP and Bihar, and leftist parties elsewhere. No less surprisingly, the new government was for the first time headed by a technocrat. Sonia Gandhi, Rajiv’s Italian-born widow, had again declined the post, only to award it to someone who was almost as much an outsider as she.
Though already in his seventies, Dr Manmohan Singh was seen as a political neophyte. He had been plucked from the upper house of the Indian Parliament, and had never contested an election; indeed, after a distinguished career as an academic and bureaucrat, he had entered the political fray at an age when his contemporaries were retiring. He had no obvious base of support within the party and little experience of the horse-trading necessary to acquire one. He was also a Sikh, a stranger to charisma, soft-spoken, self-effacing and apparently incorruptible. Indian politics had rarely seen his like.
His one claim to fame and preferment rested on a stint as Finance Minister in the Narasimha Rao government of the early 1990s. When invited to join that ministry, he had been as surprised as anyone. ‘I didn’t take it seriously,’ he told the BBC’s Mark Tully. Rao, however, had persisted, and Singh had eventually obliged. He donned a high-collared suit, wrapped on his turban, and ‘that’s how I got started in politics’.30
The summer of 1991 had not been a good moment to be taking charge of the nation’s finances. Iraq’s invasion of Kuwait had again inflated the price of oil, leaving India’s national debt at an unprecedented $70 billion. The fiscal deficit stood at 8 per cent of GDP and revenue from direct taxes contributed only a pitiful 19 per cent. Foreign currency reserves had dwindled till they sufficed for just two weeks’ imports. An IMF loan was unavoidable, for which part of the nation’s gold reserves would have to be pledged as collateral.
None of this was popular. The crisis might well have brought down the government before it had even started. But Narasimha Rao admired Singh’s writings on the drawbacks of statist regulation, and shared his faith in the power of the markets. Where Thatcher, Reagan and the ‘tiger economies’ of South-East and East Asia had led, India would follow. Four decades of centralised economic management would be reversed in twenty-four months. It had been a case of back to square one for the Indian economy, then forward into the global unknown.
The rupee had promptly been devalued by 20 per cent, so encouraging exports and negating the need for export subsidies. Import quotas and licences were likewise eased, customs duties reduced, and foreign direct investment welcomed. Instead of erecting a protectionist wall designed to support indigenous production and repel the hostile forces of capitalist imperialism, India’s doors had suddenly opened for business. Internally, the ‘permit raj’ and the state purchasing agencies were steadily dismantled. Markets in almost everything from cars to cough mixture were thrown open to all. Privately owned industries could expand without restriction, while state-owned industries, though not privatised, had their spending curbed. Competition in the service and construction industries followed, with easier entry into banking, insurance, aviation, roadbuilding and telecommunications.
Tax rates came down in expectation of overall receipts rising, which they did. Within two years the fiscal deficit had fallen substantially, and the foreign exchange reserve had ‘shot up to $20 billion from $1 billion in 1991’.31 Inflation had halved, foreign investment was doubling every year and the economy began growing by 6–8 per cent. Rao’s gamble and Dr Singh’s arithmetic had paid off. Indians would toast the new millennium as the new ‘billennium’. In 2000 the country’s population passed the billion mark just as the number of rupee billionaires passed the hundred mark. With occasional setbacks and a lot of grousing over the protection extended to still reserved sectors of the economy, the growth continued. It peaked in 2010 at around 10 per cent, by when the billionaires numbered in their thousands.
Manmohan Singh deserved much of the credit for all this, and would eventually receive it. But in the early 1990s his bombshell had barely registered outside financial circles. Even there it encountered opposition. A group of major industrialists formed a ‘Bombay Club’ to plead for caution in exposing them to global competition. ‘Thankfully the government of the day did not respond to all that high-powered and slightly hysterical lobbying.’32
The reforms had not been entirely new, either. In the 1980s, while fighting shy of opening domestic markets to competition – let alone to foreign competition – both Indira Gandhi and Rajiv Gandhi had made it slightly easier for existing businesses to expand. Dhirubhai Ambani, founder of Reliance Industries, had progressed from trading in synthetic fabrics to producing the polymers for them in the 1980s. Come the 1990s, Reliance turned to petrochemicals and by 2010 was one of the largest conglomerates in India, with over 2.5 million satisfied shareholders. Other companies were less successful. Vayudoot, the first low-cost domestic airline, had taken to the skies in 1981. It was to serve routes that its state-owned parent companies regarded as hazardous or commercially unattractive. So they proved: Vayudoot had lost both money and friends before civil aviation was deregulated and a host of brightly coloured competitors made off with its passengers.
Rajiv had overseen other changes. The success of domestically produced pharmaceuticals had been acknowledged and encouraged in the 1980s. Also in that decade, every roadside village had acquired, among the mud huts and the haystacks, a bright-yellow booth advertising STD, ISO and fax services. Thanks to new switch-gear, fibre-optic cables, meterised handsets and a pioneering entrepreneur called Sam Pitroda, India was suddenly swamped with telephones that actually worked. But Rajiv’s greatest contribution had probably been his advocacy of digital technology. From 135 per cent, import duties on computer hardware had been reduced to 60 per cent. Then in 1987 a Texas Instruments experiment in outsourcing chip design to Bangalore had led to
the first direct satellite link with the US. This ‘changed the rules of the game’.33 Instead of migrating to Silicon Valley, computer-savvy Indians found opportunities at home. Companies like Infosys thrived as much because of the revolution in globalised IT as because of the 1990s’ economic liberalisation. ‘Started with a capital of $600 [in 1981] …, Infosys was worth $15 billion by February 2000.’34
Yet, overshadowed by Ayodhya and its aftermath, the reforms introduced by Narasimha Rao and Finance Minister Manmohan Singh in the early 1990s had not proved sufficiently popular to ensure re-election. Defeated in 1996, Rao’s government had made way for the BJP-led National Democratic Alliance in 1998. Prime Minister Atul Behari Vajpayee had then conducted Pokharan II and made his bid for ‘great power’ status. To the confidence and excitement generated by the bomb was added that of the take-off in the economy. Sacrificing such tangible gains for confessional extravaganzas was not in the interests of the BJP and its business supporters. The Mandir would have to wait, and the Ram bricks take their chance in the Indian climate. The BJP and its National Democratic Alliance stuck with liberalisation.
In fact it was Vajpayee who highlighted the crying need for better infrastructure if Indian production was to compete internationally. Specifically, he focused on the atrocious state of India’s road network, by launching in 1999 construction of a 6,000-kilometre ‘Golden Quadrilateral’. A multi-lane highway, the Quadrilateral linked Delhi, Calcutta (Kolkata), Madras (Chennai) and Bombay (Mumbai), plus numerous cities in between (e.g. Bangalore, Pune). Completed on time and under budget in 2012–13, the network was a revelation. Freight logjams were eased, and Indians explored the culture, if not the driving conventions, of life in the fast lane. No one wanted to be reminded that the $12 billion spent over eight years on the Quadrilateral was in China being spent on new roads every year.