A Humble Victory In Davos
Yet, in reality, Davos and Deve Gowda got along very well. This came as a pleasant surprise not only to the prime ministers advisors, but also to a large number of Indian industrialists, who had thronged Davos for the annual jamboree. What is more, Deve Gowda managed to send out a positive message to the world business leaders a signal that spoke of a confident India keen to take on the world on its own turf.
It was not an easy task. For, Deve Gowda had to first contend with the impressions that the previous governments had succeeded in creating in the minds of foreign investors. Consider what happened in 1990, when V P Singh was the prime minister heading the National Front government. Ajit Singh as the then industry minister was nominated to lead the Indian delegation to Davos. A N Varma, then industry secretary, and Montek Singh Ahluwalia, then additional secretary in the PMO, drafted a policy paper on dismantling the industrial licensing regime. This paper was to be the Indian governments message to the foreign investing community, assembled at Davos. And the person to be entrusted with the responsibility of wooing investors was Ajit Singh.
But Ajit Singh had better things to do. The assembly elections in Uttar Pradesh were being held around the same time. He had set his eyes on the chief ministership of Indias largest state. So, Davos could go to hell. Ajit Singh decided to back out of the meeting at the eleventh hour. Who replaced him? Arif Mohammad Khan, energy minister in the National Front government. Khan was a total misfit for the occasion. The message that went out was that India was still not ready to welcome foreign investment. More importantly, it was not still free from his preoccupation with politics.
The next foray into Davos was made in 1992, when the then prime minister, PV Narasimha Rao, decided to be there for one day-and-a-half. Raos performance was a little better than that of Arif Mohammad Khan. Those were the early days of economic reforms in India. India had not got out of the woods till then. There was a tremendous lack of faith in the irreversibility of reforms. Indias presence was nevertheless noted by the world business leaders. Indias good old friend, Percy Barnevik, chief of ABB, convened an impromptu meeting between Rao and top Swiss industrialists at Davos. Rao failed to take full advantage of the opportunity he concluded the meeting almost half-way as he felt he had nothing more to add.
In 1993, Rao learnt the lessons of his previous visit. He was more prepared. Nevertheless, he managed to send out confusing signals to foreign investors. It was here that he propounded his now-famous theory of the middle path, which many of his detractors described as the muddled path. He rejected demands for introducing the exit policy. He kept his finance minister, Manmohan Singh, busy in Geneva, while taking the help of Pranab Mukherjee to propound the tenets of his economic reforms programme. As subsequent events showed, Rao did not take any major step forward as far as reforms were concerned after this meeting in Davos. And the international business community has been acutely conscious of this. In the words of WEF managing director, Claude Smadja, a paralysis had set in during the last two years of the Rao government.
Thus the news of Deve Gowda leading the Indian delegation as the leader of a 13-party coalition government did not kindle any big hope among those foreign investors who have been keenly watching developments in India. In fact, they were preparing for the worst, expecting Deve Gowda to send out more confusing signals. After all, Deve Gowdas government was even more weak than those of Rao and VP Singh. Thus, how could Deve Gowda be more firm in his resolve to carry on with reforms? But the Indian prime minister and his finance minister, P Chidambaram, did leave them virtually speechless.
One of the reasons for the impact they made on foreign investors was that Deve Gowda and Chidambaram did not appear apologetic about the pace of economic reforms in India. We must move ahead at a pace that is comfortable with our political system, said Chidambaram without any hesitation. Deve Gowda, on the other hand, welcomed foreign investors and told them that they should not have any suspicion or doubts about investing in India. Together, the duo sent out a strong signal to foreign investors: Yes, please do invest in India, but do not hurry us up on reforms; we will move at our own sure, but steady pace so that they do not have any adverse fall-out on our political or social system.
There is of course the China factor that worked in favour of Deve Gowda. Foreign investors have, of late, been disenchanted with China. In comparison, India has certainly become a more attractive proposition for them. But aiding this was the fact that Deve Gowda and Chidambaram came across as refreshingly frank leaders who knew their governments limitations. At the same time, they appeared firm in their resolve to move at their own pace. There were no false hopes and no false promises. This is the lesson Davos has for India. Foreign investors love transparency and candour. Deve Gowda displayed both and became an instant hit.