 "Manmohan Singh: Portrait of a technocrat as a practitioner of politics")
Manmohan Singh, a pioneering economic administrator, statesman, and India’s third-longest-serving prime minister, passed away at the age of 92. A towering figure in India’s public life, his remarkable journey—from humble beginnings to shaping the nation’s economic and political landscape—will be remembered for generations to come.
Few Indians in the field of public policymaking have achieved what Manmohan Singh did in his long and distinguished career as a technocrat. For a quarter century, from 1971 to 1996, he held virtually all the important positions in the sphere of economic policymaking in the Union government. That was not all. Just eight years later, he became India’s 14th prime minister with an uninterrupted tenure of 10 years, making him the country’s third-longest serving head of the Union government.
Starting off as an economic advisor in the Ministry of Foreign Trade at a time when India was struggling to get out of an inward-looking trade policy, he went on to become the chief economic advisor in the finance ministry, before heading its economic affairs department as secretary. He would also steer the secretariat of the Planning Commission as its member-secretary and later as its deputy chairman, advise the prime minister of India on economic affairs and chair the University Grants Commission (UGC).
And then in 1991, amidst India’s unprecedented economic crisis, he became the country’s 22nd finance minister, and unleashed a series of economic reforms that laid the foundation of India’s future growth and development.
In between were two equally important stints, each for about three years. One was at home as the governor of the Reserve Bank of India (RBI); the other was in Geneva as secretary-general and commissioner of the South Commission, which laid the ground and set the principles for strengthening south-south cooperation.
No less important were his academic credentials as a student and a teacher of economics. A first class in the matriculation examination held by the Panjab University in 1948 was just the beginning. He topped the Panjab University in three successive examinations (Intermediate, BA Economics Honours and MA Economics), followed by a first class honours in Economics Tripos from Cambridge University in 1957.
The man who would one day be the architect of India’s economic reforms, however, spent his student years in economic hardship, going to school, which was several kilometres away, on foot. Scholarships would help him finance much of his education. His academic brilliance helped, but he was always trying to figure out how to reduce the financial burden of his education on his father, who ran a small business.
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In Cambridge, he would lead a spartan life, trying to make ends meet with the little funding that he got. By temperament, he was a bit shy, and avoided socialising with friends as far as possible. And when he did socialise, he would feel a prick of conscience, worrying whether spending an evening out with friends would affect his academic performance. When his examiner, on a rare occasion, made an oblique adverse remark about one of his essays, Singh withdrew from whatever little socialising he engaged in.
A sought-after student
His tutors were impressed with his academic performance and pursuits. One of his teachers at Cambridge, the renowned economist Joan Robinson, wrote about Singh in glowing terms: “Mr Singh of St John’s is an excellent man. I do not think you are likely to find anyone better in this generation of undergraduates. He has a very good head for theory but keeps his feet on the ground and uses analysis as it should be used instead of as an end in itself. He has a dry incisive style and sets out arguments well… Personally he is rather engaging – very quiet and gentle in manner but with great strength of mind underneath and a determined resistance to bunkum of all kinds.”
Singh’s academic excellence also meant that jobs began chasing him as soon as he completed the Economics Tripos at a relatively young age of 25. Nicholas Kaldor, his examiner and a renowned economist, wrote to the Indian finance minister, TT Krishnamachari, that Singh was ideally suited to work for the finance ministry. Around the same time, the United Nations (UN) offered to hire him and the Delhi School of Economics invited him to join its faculty as a lecturer. Singh turned all these offers down since he had to honour a commitment he had made to Panjab University, and joined it as a senior lecturer.
Singh would return to Britain for higher studies in 1960, but this time at Nuffield College, Oxford University, to complete his doctorate in two years. He chose India’s exports trend and prospects for self-sustained growth as the subject of his thesis. While he was still giving finishing touches to his thesis, he got a job offer from IG Patel, who was then the chief economic advisor in the finance ministry. Singh was tempted to join the finance ministry, but once again Panjab University indirectly came in the way.
In 1957, he had given an undertaking to serve the university for at least two years after his return from Cambridge. This time, as its Reader, he was under no such obligation. But the university told Singh that he could accept the government assignment only if he quit his university job with no lien on it. Singh, 30 years old and with a wife and young daughters to support, did not wish to enter a phase that could present existential uncertainties. He stayed on with Panjab University and was soon appointed professor of Economics.
The teacher in him
Singh, however, could not be tied down to Chandigarh for long. Two years later, the UN offered him a job at the United Nations Conference on Trade and Development (UNCTAD) as an economic affairs officer. The offer came from renowned trade economist, Sydney Dell, who had invited him earlier as well to join UNCTAD soon after he had completed the Economics Tripos. That time, Singh had declined the offer. Dell succeeded in his second attempt, and Singh joined UNCTAD in 1966, spending the next three years in New York, and eventually headed the section on trade finance.
Teaching, his primary love, though beckoned him again, and this time the call came from KN Raj, a well-known economist who was then director at the Delhi School of Economics. Those days, D School, as it was known popularly, had a faculty that consisted of some of the finest practitioners of economics: Amartya Sen, Jagdish Bhagwati and Sukhamoy Chakravarty. With PN Dhar as the director of the adjacent Institute of Economic Growth, Singh could count on a long list of distinguished scholars as his colleagues. They included Mrinal Datta Chaudhuri, AM Khusro, CH Hanumantha Rao, Arjun Sengupta and Ashish Bose, to name a few. Singh left Panjab University and joined D School as a professor of international trade.
Singh, by his own admission, felt he had many qualities needed to be a good teacher. His mild-mannered disposition meant he was liked by students who could approach him unhesitatingly to resolve their academic doubts. As Reader in Economics at Panjab University, he would lecture on macroeconomics, public finance and agricultural economics, besides experimenting with innovative teaching. In February 1960, he wrote to Robinson: “It is a matter of some satisfaction for me to find that I have been teaching economics to my students more or less in the way you like it to be taught. Though there is a lot of opposition from the older people in changing the syllabus, yet in a few years’ time I think we will be able to place economic studies in this University on a sound and more rational footing.”
In a short time, his work on international trade had secured him an unrivalled status in that field, which was acknowledged both in the academia and in trade policy circles in the government. In the 1960s, when the Indian Institute of Foreign Trade was set up, Singh would be asked to help it design its courses and serve on many of its committees.
An advisor in tricky times
Yet, his teaching career came to an end in 1971, when the government invited him to join the commerce ministry as its economic advisor. Singh could not refuse this offer, given his pre-eminence as a scholar in the area of international trade, a reputation built on his seminal book on India’s exports, India's Export Trends and the Prospects for Self-sustained Growth. However, his stint at the commerce ministry did not last long, even though he had taken a two-year leave from D School to work for the government.
The commerce minister, LN Mishra, was also the treasurer of the Congress party. One fine morning, Singh threatened to resign – one of the many such threats he would make in his long career in the government. The trigger was Mishra getting angry with him over his refusal to endorse a proposal for the Union Cabinet’s consideration. Singh decided to return to D School, but before he could pack his bags, PN Haksar, secretary in the office of Prime Minister Indira Gandhi, got to know about this disagreement between the economic adviser and the commerce minister. He persuaded Singh to stay back, and offered him the position of chief economic advisor in the finance ministry, which was in effect a promotion.
Singh stayed in that role for about four years during what was a politically turbulent period. He joined the finance ministry in 1972, some three years after Indira Gandhi had removed Morarji Desai as finance minister and nationalised 14 banks to signal a shift in the government’s economic policy. It was a decisive turn towards socialism and state control. Was Singh opposed to the bank nationalisation? Not really. He was instead in favour of it since he “felt that banking was of immense importance, it had huge externalities and if it was left entirely to the private sector, many investments in the social sector would never come on the agenda of bank lending”.
As chief economic advisor, he worked with two finance ministers – YB Chavan and C Subramaniam. He was three years into this role when Indira Gandhi declared Internal Emergency.
Singh’s views on the Emergency revealed a lot about him as a technocrat. This is how he outlined the impact of the Emergency on the country: “I think there was a lot more emphasis on punctuality, on discipline. Some good things happened. But I think the atmosphere in the whole country was one of fear. There were arbitrary arrests and detentions. There was a lot of unrest in the country, particularly due to the way the family planning programme – the sterilisation programme – was implemented in some of the northern states and in Delhi. Sanjay Gandhi was the most important extra-constitutional authority. He had a lot of influence. A lot of people who dealt with things that were of direct interest to him said they felt the pressure.”
Singh enjoyed a healthy equation with Indira Gandhi, who appeared to take his advice on economic matters seriously. In one meeting during the Emergency, Singh pointed to the dangers of rising inflation and a deteriorating external account, stressing the urgent need for government action. Indira Gandhi was quick to react. She set up an inter-ministerial committee to prepare a package of measures to be implemented by the finance ministry. As economic affairs secretary, too, Singh was quite firm in asserting who the final authority in the government’s relations with the Reserve Bank of India was. He would insist on a well-defined protocol on how the RBI should proceed on the conduct of monetary policy, making it obvious that the idea of the central bank’s autonomy was eventually defined by the government.
The Emergency was lifted in March 1977 after the Congress, under Indira Gandhi, was routed in the general elections. The Janata Party, led by Morarji Desai, formed the next government. But Singh survived the regime change, even though he was seen to be close to Indira Gandhi. Indeed, it was during the Emergency that Singh was promoted to head the economic affairs department in the finance ministry as secretary. From November 1976 to April 1980, he was also a member of both the Atomic Energy Commission and the Space Commission.
Singh had survived largely because he had a great friend in HM Patel, the finance minister in the Janata Party government. The two had got to know each other in the late 1950s and shared a mutual respect. In 1957, when Nicholas Kaldor had recommended that Krishnamachari hire Singh, HM Patel was a secretary in the finance ministry. Singh believed that HM Patel had been wronged by his minister in the infamous Mundhra scandal, the first major stock market scam India had suffered after Independence. However, Morarji Desai, the prime minister, was initially rude to Singh. But over time, he became fond of the technocrat. Singh, too, got along well with Desai, who, according to him, was “fairly balanced” and “amenable to persuasion”.
It was perhaps Singh’s reputation of incorruptibility that earned him the trust and respect of Charan Singh, who headed the finance ministry for a few months before succeeding Desai briefly as prime minister. Singh had expressed concern over the way permission had been granted to London-based Bank of Credit and Commerce International (BCCI) to open a full-fledged branch in India by upgrading its existing representative office. When both he and RBI Governor IG Patel opposed the idea, the prime minister told his secretary that he should disregard the permission that had been granted by the junior finance minister.
Charan Singh came to the rescue of his economic affairs secretary in another tricky case over the award of an oil exploration contract to a French company during the Emergency years. Manmohan Singh had been interrogated by the Central Bureau of Investigation and the then petroleum secretary had even been taken into custody for a few days on charges of corruption. When Singh approached Charan Singh on this matter, the latter told him that he had full faith in him and gave him a clean chit. He even got the petroleum secretary reinstated.
Win some, lose some
When Indira Gandhi returned as prime minister after the 1980 general elections, Singh had completed close to eight years in the finance ministry – four as chief economic advisor and three-and-a-half as economic affairs secretary. This was probably the longest stint in the finance ministry for any technocrat until then. By this time he had worked closely with as many as four finance ministers: YB Chavan, C Subramaniam, HM Patel and Charan Singh. Manmohan Singh found Subramaniam to be the brightest among them for his innovative ideas, particularly in the field of agriculture. While he enjoyed a great relationship of trust and respect with HM Patel, Chavan, he sensed, was a little subdued and in awe of Indira Gandhi.
Indira Gandhi, at the start of her new tenure, was looking for an able and competent technocrat to take on the challenge of expeditiously implementing the Sixth Five-Year Plan. Manmohan Singh was her choice, and she proposed that he become a member of the Planning Commission. There was a slight hitch, though, in the form of Singh’s existential concern about his future. He had not yet turned 48. Once he became a member of the Planning Commission, he would lose all possible pensionary and financial benefits that he would be entitled to if he stayed on as secretary or in some such position. Singh met Indira Gandhi and shared with her his concerns. The prime minister made an exception, and Singh joined the Planning Commission as member-secretary, retaining the service benefits that would accrue to any government servant.
Singh’s tenure at the Planning Commission, though, was short. He managed the launch of the Sixth Five-Year Plan in record time, starting 1980. Around the same time, at Bombay’s Mint Road, RBI Governor IG Patel was due to complete his five-year tenure at the end of November 1982. Indira Gandhi had to look for Patel’s successor. She had already found in Pranab Mukherjee a replacement for R Venkataraman as the new finance minister in 1982. For Patel’s successor at the RBI, she chose her Planning Commission member-secretary – Manmohan Singh. Once again, Singh would plead with Gandhi for a softer assignment. Gandhi asked Singh how old he was. On learning that he had just turned 50, Gandhi told him that his age was not meant for a soft job. Singh moved to Bombay for a two-year stint that would be marked by two major controversies.
The first was about the government’s directive on relaxing norms for investment in Indian equities by non-resident Indians. The RBI under Singh believed that the power to decide the norms for foreign investment was vested in the central bank and the government had overstepped its brief. The RBI moved court to challenge the government’s decision. The matter went right up to the Supreme Court, which acknowledged Singh’s integrity and his arguments, but ruled in favour of the government. Singh lost that battle.
But he won the second one. This time the controversy was over the government yet again planning to allow the BCCI to open a branch in India. Under Charan Singh as finance minister, Singh had already nixed the move to permit the tainted foreign bank into India. Now, another finance minister, Pranab Mukherjee, was keen on giving BCCI the permission to open a branch in India, overlooking the objections raised by Singh. Left with no choice, Singh fired a letter to the prime minister, outlining his objection to the move and seeking a meeting with her. At that meeting, he offered to resign on the issue. Indira Gandhi gave Singh a patient hearing and intervened. The proposal to allow the BCCI to open a branch in India was rejected, again. Singh withdrew his resignation.
That day in 1984, Singh as RBI governor had taken on his finance minister, Pranab Mukherjee. Little did he know that their reporting equation would change 25 years later. In 2009, the same Mukherjee would be serving as finance minister under Prime Minister Manmohan Singh.
After Indira Gandhi’s assassination in October 1984 and the record victory of the Congress in the general elections that year under the leadership of Rajiv Gandhi, Singh was shifted back to the Planning Commission in New Delhi, this time as its deputy chairman. This tenure, media reports suggest, was not too pleasant for Singh. Rajiv Gandhi was reported to be so dismissive of the Planning Commission that he once described it as a bunch of jokers. Singh believed Rajiv Gandhi made this remark much after he had left the Planning Commission.
Fortunately for Singh, in the middle of 1987 an opportunity came his way to lead the secretariat of the South Commission, an offer he grabbed with both hands. It was a three-year stint in Geneva, at the end of which he submitted a report that, among other things, recommended an international organisation to strengthen cooperation among countries of the south – it was a precursor to the Global South movement that would take shape three decades later.
The game changer
The political situation in India in the late 1980s was fluid and unstable. The National Front government under VP Singh had evinced interest in having Singh back as an economic advisor in the Prime Minister’s Office. But by the time the proposal could be finalised, the National Front government fell, and Chandra Shekhar came to power, leading a minority government with the outside support of Rajiv Gandhi’s Congress. Singh returned as an economic advisor in the PMO, although he had job offers from academia – with both the University of Delhi and the Panjab University trying to woo him. Singh did not last long as economic advisor at the PMO. As the Chandra Shekhar government was doddering, Singh was given a safe position as chairman of the University Grants Commission in 1991.
The general elections of 1991 were held amidst political instability and a steady deterioration of the Indian economy. Rajiv Gandhi’s assassination in May that year, after the first phase of the poll, had resulted in a slight deferment of the final phases of the election. Meanwhile, the Indian economy dipped further.
When the Congress won the election and PV Narasimha Rao became prime minister, nobody imagined that the new finance minister would be a technocrat. Even Singh didn’t take the offer to be the next finance minister seriously. The following day, June 21, when ministers in the Rao government were to take oath at the Rashtrapati Bhavan, he dutifully went to his office at the UGC. The penny dropped when the prime minister called him to ask if he had been informed about joining the swearing-in ceremony for ministers that evening. Singh rushed home and got ready to reach the Rashtrapati Bhavan. That was the beginning of history being scripted.
Singh’s five-year tenure as finance minister was remarkable for the path-breaking initiatives he took. Of course, he rescued the Indian economy from the perils of fiscal indiscipline and an unprecedented balance of payments crisis with a flurry of major decisions – such as devaluing the Indian currency against the US dollar by 18 per cent in two instalments; liberalising the industrial licensing policy by freeing most industries from licensing controls; removing the restrictions on the growth and diversification of large industrial houses by amending the Monopolies and Restrictive Trade Practices Act; and doing away with the public sector’s monopoly in a large number of areas.
Over the next five years, Singh would lay the foundation for a new taxation regime. For income-tax on individuals, he raised the exemption limit even while reducing the number of tax slabs from four to three and cutting the maximum marginal rate of personal income tax from 56 per cent (including surcharge) to 40 per cent. By way of innovation, Singh introduced a lump-sum presumptive tax system for small traders, retailers and small road transport operators.
For India Inc, he slashed the corporation tax from 57.5 per cent (for closely held companies) and 51.75 per cent (for widely held companies) to 46 per cent, including surcharge. While the threshold for levying wealth tax was raised, the long-term capital gains tax was reduced from 40 per cent to 30 per cent. On indirect taxes, too, the five years under Singh saw a steep cut in customs duty, from over 300 per cent to 50 per cent in phases. Excise duty saw a switch-over from a system of specific rates to ad valorem, or based on the price of the product. Importantly, Singh introduced the idea of a service tax at a low rate of 5 per cent. However, his performance on the sale of government equity in state-owned enterprises was poor.
On the reforms front, he took decisions that would liberalise the banking sector and the insurance industry by easing the flow of foreign capital as also the entry of the private sector. Equally important, he paved the way for abolishing ad hoc treasury bills and ensured that the government could no longer monetise its deficits by accessing RBI’s resources. Instead, the government had to borrow from the market to meet the gap between its revenue and expenditure. He had already introduced the concept of fiscal deficit in Budget-making, and the abolition of ad hoc treasury bills fortified that system.
However, the securities scam and the political instability after the demolition of the Babri mosque in 1992 impacted the pace of reforms. The securities scam took a toll on Singh’s reputation. As the Joint Parliamentary Committee constituted to look into the stock market scandal submitted its report, commenting that the finance minister should have been a little more alert to the sharp movements in stock prices, Singh felt it was his moral duty to offer his resignation. He did resign, but his prime minister persuaded him to withdraw his resignation. Something similar had happened after his first Budget, when, under political pressure, he had to roll back the steep increase in fertiliser prices effected by him. Singh offered to resign, but Rao persuaded him otherwise. Looking back, Singh had the tendency to offer his resignation, but on every such occasion, his bosses managed to dissuade him from quitting.
His five-year stint as finance minister also saw a sartorial change. The technocrat finance minister had gradually evolved into a politician finance minister. He gave up his trademark white bush shirt and trousers, and adopted a white kurta and churidar pyjamas. It was no surprise that even after the defeat of the Congress government in the 1996 general elections, Singh did not return to teaching, and instead chose to stay on in politics, becoming an active member of the Congress party. He had been elected to the Rajya Sabha in September 1991 for a term that would have ended in June 1995. But he was elected again, this time with a full six-year term, followed by two more six-year terms. He became an active parliamentarian, initially chairing the Parliamentary Standing Committee on Commerce from 1996 to 1997, and later as leader of the Opposition in the Rajya Sabha from March 1998 to May 2004.
Enter the Prime Minister
In May 2004, the Congress victory in the general elections offered him the most coveted job any politician can dream of. Congress president Sonia Gandhi was expected to lead the government, but her “inner voice” dictated otherwise, and she decided to nominate Singh to lead the Congress-led United Progressive Alliance (UPA) government. Singh became India’s 14th prime minister.
He held that position for 10 years, during which his prime ministership came under close scrutiny. With Congress head Sonia Gandhi leading the UPA and Manmohan Singh steering the Union government, there were questions about who actually took the decisions in that regime. The governance model that was adopted under the UPA regime, therefore, raised doubts about how independent and how effective Singh was as prime minister. In Singh’s mind, however, there were no such doubts. He was reportedly of the view that no governance structure could have two power centres.
There were also reports of how Singh as prime minister had initially wanted to keep the finance ministry under his charge, but later decided to bring in Palaniappan Chidambaram to hold a job he had steered with unparalleled success for five years at a time India faced its worst economic crisis.
As prime minister, Singh endorsed the rights-based policies that the UPA rolled out with legislative sanction. These included the right to employment, the right to information and the right to education. Coalition politics slowed the pace of reforms even as the Indian economy kept reaping the dividends of reforms initiated over the past two decades in the form of a healthy growth rate during the early years of his first term as prime minister. The global economic meltdown posed a major challenge to the economy, and Singh announced a massive bailout for farmers, waiving their outstanding loan of over Rs 60,000 crore – a move that economists, many of whom were his former colleagues in the finance ministry, seriously questioned.
The highlight of his first term as prime minister was the Indo-US civil nuclear cooperation agreement, which ended India’s exclusion from the nuclear club. It was an initiative that presented Singh as a man of conviction and a leader who could take political risks, even if those risks meant potentially jeopardising the survival of his government. Eventually, he succeeded in forging the civil nuclear cooperation and charting a new strategic relationship with the US.
When terrorists struck Mumbai in November 2008, he shifted Chidambaram to the home ministry and himself took temporary charge of the finance ministry, unveiling a package of stimulus measures to revive the Indian economy whose growth momentum was slowing. When the Satyam scandal broke, Singh swung into action again, setting up an experts committee to oversee its revival instead of planning a government bailout. He would have continued to hold charge of the finance ministry had it not been for his health demanding attention.
At 77, Singh had to undergo a coronary bypass surgery in the last week of January 2009, and an interim Budget had to be presented in February ahead of the general elections. This time, he chose Pranab Mukherjee to take charge of the finance ministry – a post Mukherjee would continue to hold when the UPA returned to power. Singh would continue to lead the government as prime minister.
A chequered second term
Early in his second term, Singh paid the price of allowing his finance minister to go ahead with the infamous retrospective tax on transactions between overseas companies in shares with underlying assets located in Indian tax jurisdictions. It was also known as the Vodafone tax. His government came under attack from both the industry and the foreign investing community. The issue would become political and would go against Singh.
In general, Singh’s second term was marred by controversies, with accusations that the government suffered from policy paralysis. There were charges of corruption in the way the telecommunication spectrum and coal blocks were allocated. These allegations gave steam to the opposition parties’ campaign against the UPA. However, in the end, none of those charges implied any personal involvement by Singh in any of the alleged irregularities. Even so, there is no denying that these adversely affected his overall track record as prime minister.
The UPA lost the Lok Sabha election in 2014. Singh ended his 10-year-long tenure as prime minister with quite a few achievements and some controversies. What stood out in his 15-year journey as a member of the political executive at the Centre, though, was his glowing record as India’s most successful and effective finance minister. Both as prime minister and finance minister, Singh understood the importance of gradualism, except when the economy or the polity was in a crisis. He would often quote the 19th century German statesman, Otto von Bismarck, saying: “Politics is the art of the possible.” Singh believed that designing reforms might be a science, but executing them was an art.
Singh strove for pragmatism in policymaking. In doing so, he showed a deep understanding of India’s political economy.
Endnote
Many of the views attributed to Manmohan Singh have been sourced from Daman Singh’s book, Strictly Personal: Manmohan and Gursharan, published by HarperCollins in 2014