Manmohan Singh launched India’s radical economic transformation in 1991 © Sunil Malhotra/Reuters

“If the reforms succeed, I will claim my share of the credit. If they fail, you will be blamed.”

They could be lines from a political comedy. In fact they are the cautious endorsement given by Indian prime minister Narasimha Rao to his finance minister, Manmohan Singh, when launching the country’s radical economic transformation in 1991.

Given the country’s subsequent economic progress, it is hard to recall the depth of India’s former stagnation. After decades of economic isolation, foreign trade and investment were almost dirty words.

As a correspondent in New Delhi from 1992-95, I was shocked to see how little the trade-driven success of East Asia had shaken up India. In an interview with me, Singh once even shrugged off China’s rise as fake news based on dodgy data.

New Delhi finally acted only when it was forced to seek a rescue from the IMF and fly a chunk of its gold reserves to London as security for loans.

Even then, India’s rulers were unenthusiastic reformers. Politicians of Rao’s Congress (I) party and the rival Hindu nationalist BJP, bureaucrats and business people ferociously defended their interests. The old ways often seemed more comfortable than the rigours of global competition. 

But to its credit, India’s government did enough to wake the country from its slumber. As a top civil servant from 1979 to 2014 (with one short break), Montek Singh Ahluwalia had a grandstand view over this historic modernisation. As he says in his memoir: “Only a handful of developing countries have achieved rapid growth of this order over a prolonged period and none of them were large democracies.”

Backstage, the modest title of Ahluwalia’s book, characteristically underplays his own role. In fact, in 1990, he authored a government reform programme that was leaked to the media and dubbed the “M Document”. While in Delhi, I repeatedly saw how he skilfully nudged ministers and officials to keep the process on track. 

Singh, finance minister from 1991-96 and prime minister from 2004-14, is rightly his hero. This bookish former civil servant was “the true architect of the reforms”, says Ahluwalia, praising Singh for pushing the programme publicly and privately winning over his suspicious party colleagues.

While Ahluwalia is a decade younger than the 87-year-old Singh, the two are kindred spirits, coming from modest Sikh backgrounds and achieving success through academic brilliance that took them to study at Cambridge (Singh) and Oxford (Ahluwalia). Both later polished their skills in international organisations — the UN in Singh’s case, and the World Bank in Ahluwalia’s.

Montek Singh Ahluwalia, right, with Manmohan Singh © Prakash Singh/AFP/Getty

But Ahluwalia does not spare his mentor’s blushes, recounting how economic slowdown, corruption scandals and “a sense of paralysis” overshadowed the end of Singh’s rule.

These problems paved the way for the triumph of BJP prime minister Narendra Modi, now in his seventh year in office. Ahluwalia gives Modi credit for aiming high in trying to galvanise growth but rightly comes down hard on his shortcomings, describing his government’s economic performance as “beginning with a bang and ending with a whimper”. As well as implementing some poor policies, notably demonetisation (a misguided 2016 attempt to cut corruption by cancelling high-value banknotes), Modi has failed to tackle the crippling bad debts of the big public sector banks. 

But Ahluwalia refuses to finish on a pessimistic note. He says that having achieved rapid growth once, India can do it again “provided we are willing to usher in the next generation of reforms.” He proposes more privatisation, boosting small business, and improving ties between Delhi and India’s states.

Looking deeper, Ahluwalia notes that, as elsewhere, too much faith was placed in markets and not enough in creating independent regulators. He writes bluntly: “We did not pay enough attention to the need to build institutions that would promote good governance.”

It is a pity that Ahluwalia does not go further and examine the causes of this failure, which reach into India’s complex social, religious and regional divisions.

Ruling India is frequently seen as a balancing act in which only the brave risk upsetting the status quo. Fortunately, Singh took that chance, ably assisted by Ahluwalia. In the absence of any memoirs from the minister himself, Ahluwalia’s book is the best inside story we have of that momentous economic change.

Stefan Wagstyl is the FT’s wealth editor


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