Manmohan Singh the PM versus Manmohan Singh the FM

The gravest mistake people make while analysing Manmohan Singh’s legacy is dwelling too much on his milestone achievement as an accidental finance minister, instead of his real contributions as an intentional prime minister.

This is the margdarshak who saved India from economic turmoil more than once. Singh, who once described himself as ‘the Fagin of his peers’, in a twist on Oliver Twist, did give India a lot more than just liberalisation.

Sure, the ‘animal spirits’ he unleashed with the 1991 reforms were epochal. By cutting red tape, removing government control on business and simplifying taxes, he created an atmosphere that soon made India the second fastest-growing major economy in the world. Gone was the ‘Hindu rate of growth’ India was often derided with (which never exceeded 3.5 per cent), with the nation notching up GDP growth rates of around 7 per cent in the 1990s and peaking at a scorching 9 per cent in the late 2000s. India and Indians had discovered the good life, the sort they thought existed only in countries across the seas.

India was on a roll under his watch. But there was a deep rumbling from out west. The ominous sort only an economist-prime minister would have been prescient enough to see. An innocuous crash of the housing market in the faraway US was soon to have worldwide ramifications, and when Lehman Brothers, an American financial behemoth which had invested heavily in securities linked to mortgages, collapsed in September 2008, it was official―a global economic meltdown was under way. And India was not immune to it.

“During the global financial crisis of 2008, his astute management helped India weather the storm and remain relatively unscathed,” said Sethurathnam Ravi, economist and former chairman of the Bombay Stock Exchange. “His government implemented measures to stimulate demand, protect vulnerable sections of society, and ensure the stability of the banking sector.”

In the seven months since September 2008, Singh prodded the RBI to ease monetary terms to flush the system with cash―as much as 05.6 lakh crore―to ensure that the economy did not fall into a recession.

The result? India avoided a crisis. The only visible effects were some service export-oriented sectors struggling to get orders and some corporates using the crisis as an excuse to lay off employees.

“Manmohan Singh’s singular contribution as prime minister has been his focus on putting an institutional framework for enabling a sustainable growth and economic climate,” said Vishwanathan Iyer, senior associate professor at Great Lakes Institute of Management, Chennai. “In all fairness, the Narendra Modi government has been putting into practice most of the legislations passed or ideated from the Manmohan Singh era!”

Singh’s decade-long stint saw welfare policies that might have a bigger impact on India’s economy and people’s well-being than his dismantling of the licence raj. While the reforms he initiated as finance minister came from the economist in him, his legacy was better served by the social reformer turban he put on as the head of the UPA government.

Prime among them was MGNREGA, which guaranteed minimum wages to every adult member of a rural household for 100 days a year. Its lofty aim, which seemed impossible initially, is today regarded as a benchmark for social inclusion. “While it is easy to criticise MGNREGA, it is the world’s largest social welfare programme with the provision of social audit embedded within it,” said Iyer. “The fact that the subsequent governments continued to maintain it is testimony to its utility.”

If liberalisation made urban India aspirational, MGNREGA helped transform rural India from a hinterland of destitution and uncertainty into one that is hopeful of a better future. The United Nations’ own figures stand testament: Around 27 crore Indians moved out of poverty during Singh’s stint as prime minister, with the poverty rate halving―from 55 per cent in 2004 to around 28 per cent when he demitted office a decade later.

Many more pathbreaking rights-based rules were passed during his tenure, possibly with more than a little prodding from the likes of Sonia Gandhi and Jean Dreze in the National Advisory Council. Ranging from Right to Information to Aadhaar, they made the government more accountable to citizens.

True to his technocrat persona, he also had a string of reform measures on the economy and business side. Capital market reforms deepened, with the RBI given the autonomy to decide on monetary policy. Foreign investment caps were progressively reduced in sectors ranging from aviation to telecom, while the ceiling for foreign institutional investors was raised.

And when Singh dug his heel in and managed to get the nuclear deal with the US passed in Parliament, it was not just about getting sanctions lifted or getting fuel for India’s reactors―it was a pivotal shift in India’s foreign policy towards aligning with the US and the west, redrawing destiny and fortune with one singular stamp.

“His focus on infrastructure development, investment in education and health care, and emphasis on inclusive growth contributed to lifting millions out of poverty and narrowing socioeconomic disparities. He also took significant steps to promote the IT sector and make it globally competitive,” said Ravi. “However, it is important to acknowledge that his government could have done more to tackle corruption and push for more extensive reforms. A stage came during the last leg of his tenure where policy push was getting hampered and decision-making was impaired.”

The liquidity infusion during the global financial crisis eventually came back to bite him in myriad ways―from price rise to shady businesses borrowing the easy cash on offer with no intention of paying back. “His growth strategy scarred the economy by inflicting very high inflation and thus a pretty high current account deficit,” said V.P. Singh, director, PGDM (managerial economics & statistics), at Great Lakes Gurugram. “The flow of money in the economy got blocked and stalled a large number of projects. The corporate sector got laden with debt while banks piled up non-performing assets. The economy seemed to be stuck with this twin balance sheet impact and policy paralysis.”

A well-orchestrated opposition campaign was already under way by then, projecting Gujarat chief minister Narendra Modi as the next prime minister. Savvy, articulate and aggressive, Modi was a stark contrast to Manmohan who was billed by detractors as Man‘maun’ (silent), and a lame duck prime minister who was a puppet of 10, Janpath. The final nail in the coffin was his government’s absolute misreading of popular sentiment when it tried to treat the India Against Corruption movement of Anna Hazare, as well as the seething public angst at the Delhi gangrape case, as mere law and order incidents.

His second tenure might have cost Singh his legacy. But even this tumultuous period saw him pushing through progressive reforms like the Food Securities Act and Direct Benefit Transfer that launched direct cash transfer schemes to reduce leakage in welfare schemes. (It was his successor, Modi, who fully realised it with his Jan Dhan-Aadhaar-mobile trinity). Also, the Companies Act enacted in 2013 significantly improved corporate governance norms and FDI limits were increased in areas like retail, broadcasting and insurance.

A few years ago, Manmohan Singh recounted his thought process while being called to launch the bold reforms we today fete as liberalisation. “If I fail, that is of no great consequence,” he said. “And who fails if India wins?” In hindsight, it is amply clear that Manmohan Singh did not fail, and India is the winner for that.

TEA AND BISCUITS

A vegetarian by choice, Singh was especially fond of tea and simple Marie biscuits. During his 2011 trip to Bangladesh, the first by an Indian prime minister since 1999, he said in a lighter vein: “I am willing to break my vegetarian vow because I have heard about the delicious dish of hilsa fish.”

SECRET MISSION

In 1998, the Congress, under its new leader Sonia Gandhi, was desperately seeking an alliance with the Bahujan Samaj Party. After much effort, they found a bureaucrat close to Kanshi Ram. The official arranged a secret meeting.

Sonia chose Manmohan Singh and Arjun Singh for the mission. The former arrived quietly and waited. The latter came in a Maruti, his head covered with a yellow towel. The two waited nearly an hour before Kanshi Ram arrived. The BSP leader ignored the veteran negotiator Arjun Singh; he was more accommodating towards the otherwise reticent Manmohan. In the end, the deal was cracked and the Congress ended up winning the Madhya Pradesh, Rajasthan and Delhi assembly elections with the BSP’s support.

LOST BRIEFCASE

In 1979, Singh headed the Indian delegation at the Aid India Consortium meeting in Paris. He had prepared a draft of his presentation, but said he would be improving on it during his travel through London and Bonn. He arrived in Paris on June 5 and was checking into the hotel when he realised he had lost his briefcase containing the final speech and his personal effects.

A police complaint was filed, but he did not pin much hope on it. Singh and his team sat through the day and night to prepare the final presentation. The following morning, just before they were to depart for the meeting, there was a call informing them that the briefcase had been found in a trash bin.