Some twenty years ago the foursome of Manmohan Singh (Finance Minister), P Chidambaram (Commerce Minister), C.Rangarajan (Governor, RBI) and Montek Singh Ahluwalia (Finance Secretary), worked together to dismantle the edifice of the socialist economic structure that had strangled India’s economic potential for four decades. They did enough to earn, from investors and other forward looking economic agents, the moniker of “Dream Team.”
That the same team, presumably wisened by the passage of time, is presiding so helplessly over India’s current economic nightmare is a textbook case of irony, or is it? Perhaps, after all, their deeds of the 1990s received more acclaim than they deserved. Perhaps we judge them by too high a standard. Perhaps they were never dreamers or even believers – just in the right place at the right time then, in the wrong place at the wrong time now.
Let’s begin twenty years ago. Reform then was a consequence of a serious economic crisis, forced by circumstances and those who lent India money to tide over the storm. Reform was never born out of any conviction, not least from the dream foursome, all of whom had played their part (in various degrees) in fuelling that crisis in the first place. As officials/members of previous Congress Governments, they played along with the debt fuelled, mostly socialist decade of the 1980s. What were different in 1991 were the crisis, and the supreme leader. It was Narasimha Rao who held deep centre-right convictions. It was he who provided the political backing for reforms. The “Dream Team” was just his foot soldiers. Unfortunately, they never really graduated to becoming leaders. In 2013, they are Sonia Gandhi’s foot soldiers, faithfully executing her populist agenda.
That’s not all. Let’s face it, reform a la 1991 was a lot easier than reform circa 2013. It was (relatively) easy to reduce tariff rates from over 300 percent to under 100 percent. It was easy to permit a little foreign investment, in some sectors, when previously there had been almost none. It was easier to cut expenditure when welfare schemes weren’t as gargantuan as they are today. In 2013, those easy options are no longer available. A second generation of reforms requires heavy digging — in labour markets, in land markets, in public goods like education and health. The “Dream Team” seems too timid to even fuel debate in those spheres.
Age is a factor too. In 1991, Manmohan Singh and C Rangarajan were a ‘youthful’ 59. Chidambaram was 46 and Montek 48. Other things being constant, they were more likely to take risks then, than at the fag ends of their careers now. Chidambaram even resigned twice from Narasimha Rao’s government. In the course of UPA 2, one can’t help get the feeling that the foursome has become time-servers wedded to their positions in Government rather than to any ideas of radical change.
Manmohan Singh is the most obvious example, as he has continued to sit unmoved by all round incompetence and corruption in his Government. Another man, with conviction and honesty, may have resigned. C Rangarajan and Montek Singh Ahluwalia have preferred to remain in the shadows as bureaucratic advisors, but neither has stuck his neck out on crucial policy issues, preferring to ape the safety-first model of their boss. P Chidambaram could have broken the mold. He is a politician and a decisive man by nature. But perhaps his political ambitions in the Congress – if he is loyal enough to the Gandhi’s he may be Prime Ministerial candidate after Manmohan Singh — got the better of his reformist instincts.
The “Dream Team” did fine in UPA 1 because the wind was behind them. The moment the wind changed direction, it was found out. The rust from years of inaction (there was no reform whatsoever in the first 8 years of UPA) has translated into a flat-footedness in crisis.
The country desperately needs a new, younger, set of economic managers to put it back on to the path of prosperity.