An 'original' reformer's angst

Yashwant Sinha could not present a full Budget in February 1991, even though he was ready to unveil a package of bold reforms to bail the economy out of an unprecedented fiscal and balance of payments crisis. The Rajiv Gandhi-led Congress, without whose support the Chandra Shekhar government could not have been formed, had made an outlandish demand that Sinha should be stopped from presenting a full Budget.

Sinha was upset and argued at a cabinet meeting that succumbing to such Congress pressures was not a correct strategy and it was better for the government to quit on that issue. He was over-ruled and soon thereafter he sent in his resignation letter. But Chandra Shekhar called Sinha to his office, tore the resignation letter and asked him to resume work. Sinha had no choice and presented only an interim Budget on March 4 that year. About a week later, the Chandra Shekhar government also fell, plunging the nation into a political and economic crisis.

Seven years later, destiny brought Sinha back to North Block as finance minister under a different government (he had switched to the BJP because of a chance encounter with Lalu Prasad in an Indian Airlines plane, where the latter refused to even acknowledge his presence). This time, under Atal Bihari Vajpayee as prime minister, Sinha presented five Budgets in a row, in addition to an interim one.

When he became finance minister under a BJP-led government, there were fears that Swadeshi economics and protectionist policies would roll back the reforms process initiated by his two immediate predecessors""Manmohan Singh and Palaniappan Chidambaram. But Sinha's five Budgets dispelled all such fears by deepening the process of economic reforms in different sectors.

Yet, Sinha nurses a deep angst about how circumstances denied him an opportunity to present a path-breaking Budget in February 1991""something that in his view would not only have bailed the economy out of that economic crisis but also proclaimed him as the original reformer, a title that he lost to Manmohan Singh. Sinha also makes no effort to conceal his bitterness about the manner in which his prime ministers dealt with him and the media scoffed at some of his economic policy initiatives during those years""he was dubbed Roll Back Sinha because several of his key Budget proposals had to be either reversed or were not implemented at all.

Consequently, his autobiographical account of his years as finance minister (the first by any finance minister in the post-reform era) promises a lot, but fails to deliver even half of that. Thus, out of the 260-odd pages in the book, only sixteen pages are devoted to the crisis-filled days between November 1990 and June 1991. Those were the days the Indian economy came close to defaulting on meeting its international payments obligations, with its foreign exchange reserves not enough to meet more than a month's imports. Sinha and his team of officers had a harrowing time trying to stitch together a package of measures to avert a crisis till a new government was formed. Several steps including the mortgage of 20 tonnes of confiscated gold were taken. Sinha was the key player then. Yet the account of such decision making processes is very sketchy.

Instead, Sinha dwells more on how he was reduced to being Vajpayee's second choice as the finance minister in 1998 or how he was asked in 1999 to be in charge of a truncated finance ministry. Sinha rejected the proposal outright and later the entire finance ministry was allocated to him. Even in 1998, a proposal to give independent charge to one of ministers of state in the finance ministry was mooted, Sinha reveals. This too was rejected. What this brings out in sharp focus are the compulsions of coalition politics that the Vajpayee government came under and how Sinha narrowly escaped from being their victim.

Sinha's bitterness only increased when he came under attack from his own party colleagues for his economic policies. He had written out his resignation letter, but was later persuaded by L K Advani to withdraw it. But when the RSS leadership launched a virulent attack against Sinha's policies on lower interest rates, Vajpayee accepted Sinha's suggestion to shift him to the external affairs ministry. Sinha of course himself attributes his departure from North Block to his decision to impose the dividend tax, which hurt all promoter-shareholders of large Indian companies and the ceiling on investments in tax-free bonds from the Reserve Bank of India.

It is a pity that a finance minister who was responsible for initiating steady reforms in taxation, the insurance sector and several other areas had turned so bitter about the way he was treated within the system. Don't forget his many moves""from advancing the time of Budget presentation to 11 a.m. from 5 p.m. to the introduction of the concept of fiscal deficits in Budget documents and to the presentation of an action taken report on previous Budget promises. Yet the same person wryly notes that in India a dream Budget is one that provides tax reliefs to the privileged sections of people!

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Confessions of a Swadeshi Reformer
My years as Finance Minister

Yashwant Sinha
Penguin/Viking
Price: Rs 450; Pages: 262