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How PV’s middle way sought to strike a balance

Sanjaya Baru

Published: Nov. 01, 2016
Updated: Nov. 30, 2016

A few years before P.V. Narasimha Rao passed away a former official of the finance ministry asked him how much credit he would like to take for the reforms of 1991-92, and how much credit would he give to Manmohan Singh. PV praised Singh and acknowledged his loyalty and his contribution to reforms. Then, in his characteristic deadpan manner, he said to his interlocutor, “a finance minister is like the numeral zero. Its power depends on the number you place in front of it. The success of a finance minister depends on the support of the Prime Minister.” 

By taking charge of policy in the summer of 1991, PV made history. But, he made sure he took no individual credit for it, claiming that what he did is what Rajiv Gandhi would have wanted to do. He told the Tirupati session of the All India Congress Committee (AICC), in April 1992, “In the past ten months, our Government has initiated far-reaching fiscal and financial reforms. This was done in conformity with our Election Manifesto of 1991 which gives the main features of the reforms.” 


Suggesting that there was no deviation in his policies from Nehru’s vision of a ‘socialist India’, PV projected his initiatives as ensuring ‘continuity with change’. A country of India’s size “has to be self-reliant”, PV told the AICC, but self-reliance did not mean the pursuit of import substitution as a dogma. “The very level of development we have reached has made us independent of the world economy in some respects, but more dependent on it in others.”

Self-reliance in 1991, PV believed, could be defined as being “indebted only to the extent we have the capacity to pay". Reducing foreign debt, being able to avoid default, promoting exports and liberalising the economy so as to ...

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