The Accidental Prime Minister: The Making and Unmaking of Manmohan Singh (27 page)

I took the clipping to the PM and we had a good laugh.

 

 

Dr Singh did go on to pay attention to education in UPA-2, dubbing the Twelfth Five-Year Plan the ‘national education plan’, ensuring the highest ever financial allocation to this sector, and appointing the high-profile lawyer and Congressman Kapil Sibal as his HRD minister, in place of Arjun Singh, who was finally dropped from the Cabinet. However, in UPA-1, his hopes of breathing fresh air into a ministry made moribund by Murali Manohar Joshi’s whimsical leadership could not be realized, with the equally whimsical Arjun Singh at the helm.

Despite this limitation, the government managed to push some good programmes, including Sarva Shiksha Abhiyan, a universal literacy programme originally launched by the Vajpayee government but for which Dr Singh ensured a tenfold increase in budgetary allocation from around Rs 2000 crore in 2004 to around Rs 20,000 crore by 2012. He insisted on funding several new central universities, IITs, IIMs and institutes of science education and research. My colleague Sanjay Mitra, who dealt with HRD in the PMO, was an enthusiastic promoter of these initiatives. Mitra was from the West Bengal cadre and had worked closely with Jyoti Basu. But, unable to get a firm grip on Arjun Singh’s HRD ministry, he could not ensure the effective follow-up of these projects.

However, the South Asian University (SAU), a project dear to Dr Singh, was poorly conceived and executed and will remain a blot on Dr Singh’s record in the field of education. While preparing for the Dhaka Summit of the South Asian Association for Regional Cooperation (SAARC), Dr Singh came up with the idea of starting a regional university that would enable bright young minds from South Asia to spend their formative student years together. He envisioned SAU as a centre of excellence and the best university in the region. But for that vision to be realized, the university needed to attract a top-notch South Asian faculty. Imagine if the Nobel Prize-winning Amartya Sen or the Abel Prize-winning mathematician Srinivasa Vardhan had been encouraged to be its founding vice chancellor. Imagine that eminent Indian, Pakistani, Bangladeshi, Sri Lankan and other South Asian scholars constituted its founding faculty. That was Dr Singh’s dream, but it was never translated into reality. SAU’s first vice chancellor, G.K. Chaddha, had earned the reputation of being a good administrator as the vice chancellor of JNU but he was not an internationally known scholar. He was just another friend of the PM from Punjab. SAU not only had enormous teething troubles, it also never managed to establish itself as an institution of regional, not to mention international, excellence. A weak start may well have killed a fine idea.

 

 

One initiative in the field of education that Dr Singh felt truly passionate about was his effort to increase and widen scholarships given out by the government. The biggest ever expansion of government- funded scholarships in India has happened during Dr Singh’s tenure.

The government instituted new and better-funded scholarships for students from scheduled caste and scheduled tribe families. There was a threefold increase in scholarships for Muslim students. There was a severalfold increase in scholarships for girls and a new scheme of merit-cum-means scholarships was introduced for post-matric students, with twenty million students benefitting by the end of UPA-1.

It is telling that the only initiative Dr Singh was willing to lend his name to, as prime minister, was a student scholarship instituted at his alma mater St John’s College, Cambridge. The Manmohan Singh Scholarships are awarded for both undergraduate and doctoral studies. Every year, the awardees get to meet the PM and he is always very happy on such occasions.

The PM’s personal passion for scholarships came from the fact that his life, as he once put it, was made by scholarships. Given his modest background, he would never have secured the kind of college and postgraduate education he did without scholarships. It was scholarships that enabled him to study both in India and then at Cambridge and Oxford.

Some of Dr Singh’s warmest smiles have been captured at events where he is handing out a scholarship certificate or an award for excellence in education to bright young students. Nothing made him happier than to see himself in the eager face of a young middle-class student.

 

 

Dr Singh was always conscious of the fact that what enabled UPA-1 to step up spending was the unprecedented growth of economic activity in the period 2003-09. For fifty years before Independence, from 1890 to 1940, the national income of British India grew by just a little over 0 per cent. Between 1950 and 1980, national income grew at 3.5 per cent per year. Between 1980 and 2000 the rate of growth picked up to roughly an average of 5.5 per cent per year. The near 9 per cent rate of growth recorded in 2003-08 was unprecedented. Many explanations have been offered for this sharp improvement in India’s growth performance. Clearly, the global economic and strategic environment was favourable to India. At home, the national savings and investment rates went up sharply and so did agricultural output and income generated by a buoyant services sector. Finally, the stability of UPA-1 and the fact that Dr Singh’s team of economic policymakers, including P. Chidambaram, Montek Singh Ahluwalia and C. Rangarajan, inspired investor confidence at home and abroad combined to generate positive expectations that further fuelled growth.

This acceleration of economic growth generated the revenues required to finance the government’s social development programmes, including Bharat Nirman, NREGA and spending on health and education. Without the 8 to 9 per cent growth during this period the government could not have sustained its spending programmes. It is this fiscal foundation that sustained the strategy of ‘inclusive growth’ in UPA-1. What if the rate of economic growth were to slow down? What if the fiscal situation got out of hand? This always worried the PM. But as long as the going was good, and in UPA-1 it was, no one really worried about the return of the fiscal constraint on growth. Thanks to high growth, UPA-1 managed to adhere to the timetable of deficit reduction imposed by the Fiscal Responsibility and Budget Management Act until 2009. Some of the PM’s advisers, like Rangarajan, worried that this period of rising income growth was not being used to improve government finances on a more sustainable basis and feared the consequences of such ‘fiscal irresponsibility’, but in UPA-1 there were few takers for such caution.

When I left the PMO in August 2008, the performance of the economy was not a matter of any great worry, with five years of unprecedented high growth behind us, though a high fiscal deficit and inflation rate remained important concerns. The big picture gave confidence. India’s national income, Chidambaram proudly claimed, had crossed the one-trillion-dollar mark in 2008.With high investment rates India was seen as catching up with the Asian ‘Tigers’ and on its way to match China’s impressive performance.

International conferences in New Delhi and Mumbai would discuss India’s emergence as a global power, and Dr Singh could get away with sermonizing to business billionaires about the need for a social conscience. At the annual meeting of the Confederation of Indian Industry in May 2007 he made bold to suggest a ten-point ‘Social Charter’ for business, including affirmative action in employment, attention to workers’ health and shunning of conspicuous consumption and excessively high remuneration for top management. While the business media chided Dr Singh for this socialist advice, business leaders took it sportingly since their overall mood, driven by healthy corporate bottom lines, was still positive.

Against this background, when the Lehmann Brothers crisis hit Wall Street in mid-September 2008 and the transatlantic economies went into panic mode, the Indian government acted fast to boost investor confidence. Despite setbacks like the terror attack on 26 November 2008 in Mumbai, in which 160-plus people were killed at hotels, restaurants and the railway station, the government was able to boost confidence in India’s relative insularity from the global financial crisis. The PMO’s quick response to the Satyam scandal, in which a major software services company admitted to cooking its books, enabled India to protect the company from collapse and boosted investor confidence in government policy. Even though Chidambaram had moved from finance to home in the aftermath of the terror attack in Mumbai, which led to the departure of the much-criticized incumbent, Shivraj Patil, the finance ministry was still alert to international developments and responded calmly. A new governor at the Reserve Bank of India was still cutting his teeth but was able to work closely with Delhi and manage the fallout.

India’s capable handling of the global crisis was positively commented upon around the world and Dr Singh’s interventions at the meeting of the newly constituted Group of 20 (G-20) heads of government in Washington DC in November 2008 were much appreciated. These developments raised India’s global profile and also the PM’s. The UPA, therefore, ended its term with a satisfactory record of performance on the economic front. If there was one area of concern, it was fiscal. The government’s many welfare and development programmes, the various subsidy schemes and the farm loan waiver imposed a huge financial burden on the government that would increase with time. For someone whose favourite aphorism was ‘money does not grow on trees’, Dr Singh presided over a government that had begun to spend money as if it was growing on trees.

This became the Achilles’ heel of economic management in UPA-1 that came to haunt the government in UPA-2. For all his talk about fiscal rectitude, and despite his record as finance minister in 1991-93 when he did manage to sharply bring the deficit down, as PM, he presided over a regime of fiscal irresponsibility, given the pressure on the government to spend on a variety of programmes.

This despite the fact that he not only shared a good working equation with Finance Minister Chidambaram in UPA-1, compared to the very formal relationship he had with Pranab Mukherjee in UPA-2, but also took much keener interest in budget-making. He would insist Chidambaram sit with him and finalize the finance minister’s annual budget speech. Pranab, on the other hand, would not even show him the draft of the speech till he had finished writing it.

While Chidambaram and he shared a common worldview on economic policy, the two did have their differences and some were important ones. At a meeting convened to discuss a reduction in energy subsidies in 2007 the PM assumed he would have the finance minister on his side. While he had no problem getting Petroleum and Natural Gas Minister Murli Deora on to his side (a sharp contrast to the argumentative Mani Shankar Aiyar who preceded Deora in that ministry), he was surprised to hear a lecture from Chidambaram on middle-class sensitivity to the price of cooking gas.

The fiscal irresponsibility of UPA-1 was to eventually hit investor sentiment. It also contributed to inflation during the UPA’s second term. Clearly, in UPA-1, while Dr Singh had delivered on his promise of boosting growth and making it more inclusive, he failed to deliver on ensuring the fiscal sustainability of growth. It is this fiscal overreach that came to haunt UPA-2 as growth slowed down. It was a slowdown that nobody anticipated.