A fresh perspective on reform

An Economist at Home and Abroad – A Personal Journey

Author: Shankar Acharya

Publisher: HarperCollins

Pages: 300+XIV

Price: Rs 599

There is a key difference between Manmohan Singh as the finance minister (1991-1996) and as the prime minister (2004-2014). While he was at North Block, Dr Singh had the luxury of an excellent team under his command. But the team assisting him during his longer stint at South Block was not even half as good.

That was a big difference. Four top-notch officers (excluding Ashok Desai who was Chief Consultant in the initial days of reforms) worked as part of a well-oiled team in the finance ministry during the early 1990s. Two were technocrats (Montek Singh Ahluwalia as the finance secretary and Shankar Acharya as chief economic advisor, who resumed his stint with the finance ministry in April 1993) and the other two belonged to the Indian Administrative Services (Y V Reddy and N K Singh).

In the last four years, all four of them have brought out their memoirs to recount, among other things, the days that they spent in North Block to usher in those reforms. What stands out from their memoirs is the collegial way this team functioned as also during its deliberations with other stakeholders such as the Reserve Bank of India. There was debate, discussion and some disappointment, but what distinguished that environment was the presence of a cooperative spirit and, often, a convergence of views.

Of the four memoirs, the last to appear in print is by Dr Acharya. Undeniably, An Economist at Home and Abroad could have suffered from an inherent disadvantage in that the previous three memoirs had dwelt at length on how the finance ministry in the 1990s spearheaded India’s reforms. The novelty factor was almost gone.

Yet, Dr Acharya has kept the reader’s interest alive all through while presenting a fresh perspective on how the dramatis personae in the story of economic reforms played their different roles. That difficult task he has achieved with commendable clarity and rare candour. You cannot disagree with his assessment of how Manmohan Singh functioned as finance minister: “Generally, he was reserved and slightly formal as a personality. That made the flashes of informality and wit even more charming.”

Even more telling is his description of how Manmohan Singh and Montek Ahluwalia complemented each other. He even suggests that without the latter’s skills some of the reform successes of the 1990s may not have happened. His reforms story is also leavened with fresh insights, noting, for instance, how and why India prematurely terminated its arrangement with the International Monetary Fund in 1993.

Dr Acharya’s memoirs, however, are not just about his days in the finance ministry during the 1990s. The story of his work in the finance ministry begins much earlier in 1985, when chance and circumstance played a key role in his entry into North Block. The memoirs will also remind you how the author became the only senior advisor in the finance ministry, who was there before the crisis of 1990 and was back in North Block from 1993 to 2000 (And if he had agreed, he could well have been part of the economic policy advisory team under the Modi government in 2014!).

Apart from Manmohan Singh, the author also worked with two other finance ministers. V P Singh, under whom he helped produce the Long-Term Fiscal Policy (LTFP), was “an excellent tax-reforming FM, but part of his strategy of reduced income tax rates was stricter compliance requirements and expectations.” His assessment of P Chidambaram and Yashwant Sinha was equally notable. He found them talented but did not mince words while describing Mr Chidambaram (“a clever and articulate lawyer, often charming and sometimes arrogant”). Interestingly, the author gives short shrift to the “so-called ‘dream budget’ of 1997”, which according to him became popular with the media and the affluent because of the reduction in income-tax rates but had regrettably contributed to “a stalling in fiscal consolidation.”

In contrast, the finance minister whom the author likes the most after Manmohan Singh, is Yashwant Sinha. Indeed, he rates Atal Bihari Vajpayee’s government, in which Yashwant Sinha was finance minister for several years, slightly higher than Narasimha Rao’s because the former had to deal with a “more unwieldy political coalition and without the benefit of the urgency … imparted by a grave economic crisis like that of 1991”.

What may hold less interest for some readers are large sections of the book devoted to his 23-year stay abroad in England and the US. His assessment of global developments that he watched unfold while he was away, however, are interesting – such as the birth of Bangladesh and the Vietnam war. Interspersed with these assessments are the author’s delightful interactions with friends and teachers including Aung San Suu Kyi, Montek Ahluwalia, Amartya Sen and Subramanian Swamy.

The last two chapters are not strictly part of his memoirs. They provide a medium-term assessment of the Indian economy in the context of the challenges that have arisen from Covid-19 and what could go right or wrong for the India. They carry many sombre warnings about the future and since the author’s recent forecasts on the likely growth rate for the Indian economy have been mostly on target, those chapters are a grim reminder to policy makers that they must grapple with those challenges sooner than later.

Those looking for anecdotes will not be disappointed. Thrown in different chapters are delectable titbits arising out of the author’s various interactions – ranging from his “injudicious” decision to buy a used Premier Padmini car from Manmohan Singh in 1982 to CEA Bimal Jalan privately asking him to drop the term Modvat from the LTFP document and to his realisation at the dinner table in Lucknow that his Hindi was worse than the English of then chief minister of Uttar Pradesh, Mulayam Singh Yadav.

All in all, the book is an enjoyable read. The author has perfected the delicate art of combining storytelling and autobiography with the larger canvas of policy-making. Dr Acharya has achieved that difficult fusion with the skills of an accomplished writer.