1991: A Year That Defined India’s Future

The year 1991 was the year Manmohan Singh, then India’s Finance Minister, turned around a flailing economy. Singh’s new economic policy opened the door to liberalisation, it would power up industrial growth, and deliver India from the balance of payments crisis that had crippled the economy.

Manmohan Singh was the poster boy of change, of deliverance, even. However, Sanjaya Baru in his book, 1991: How P V Narasimha Mao Made History (2016), draws attention to Singh’s ‘enabler’, Prime Minister P V Narasimha Rao.

In his book, Baru reminds us that Rao was the author of this radical shift in India’s economic policy and that it was he who dismantled the ‘Licence Raj’ that had all but killed private enterprise in India.

This powerful economic turn took place amid tectonic shifts in the global balance of power. One of these events was Operation Desert Storm, when Rao’s predecessor Chandra Shekhar was Prime Minister. In an excerpt from Baru’s book, we return to the early hours of 9th January 1991, when a US Air Force transport plane landed at the Mumbai international airport. Read on...

In the early hours of 9 January 1991, a giant United States Air Force’s transport aircraft, the C-141 Starlifter, lowered its body onto the tarmac of Bombay’s Sahar International Airport (now called Chhatrapati Shivaji International Airport). While on a flight from a US airbase in the Philippines to a base in the Gulf, the aircraft decided to refuel in Bombay. Operation Desert Storm, the US attack on Iraq, aimed at liberating Kuwait from Saddam Hussein’s occupation army, was about to be launched.

The US armed forces were gathering men and material in countries surrounding Iraq in preparation for an attack. Information of the aircraft’s arrival and departure was conveyed by the Intelligence Bureau to the then Cabinet secretary, Naresh Chandra. Chandra decided that the prime minister should be briefed immediately.

Prime Minister Chandra Shekhar, an ex-Congressman and a quintessential Congress socialist, was angry. Why would the United States want to implicate India in its campaign against Iraq’s strongman, Saddam Hussein? Saddam had been friendly towards India, the only Arab leader to support India against Pakistan on the Kashmir issue.

But then Chandra reminded the prime minister that Saddam had now become a terrible dictator, ready to destroy any opposition. He had become unpopular among the Arabs and was engaged in a territorial dispute with Iran. Moreover, India needed US support in securing assistance from the IMF. It was time for India to rethink its approach.

Chandra Shekhar had attained political fame as a Congress radical—a leader of the ‘young Turks’ as they came to be known, for rebelling against the political conservatism of the party’s old guard after Jawaharlal Nehru passed away. He quit the Congress Party in protest against Indira Gandhi’s decision to perpetuate herself in office by imposing the Emergency and suspending the normal functioning of a democratic Constitution.

In 1977, he joined forces with such known critics of Nehru and Indira as Jayaprakash Narayan and Morarji Desai to form the Janata Party. When the Janata Party came to power in 1977, he chose to be party president rather than become a minister in Morarji’s Cabinet. He may well have viewed Morarji, already eighty-one, as a transitional figure. Still only fifty and now party president, he thought he would achieve greater political success if he were thought of as a successor to the octogenarian prime minister.

Spartan in lifestyle, Chandra Shekhar had learnt how power worked in Lutyens Delhi. By 1990, he had come to be viewed as a pragmatic nationalist. The foreign office was, however, divided on Iraq. Some felt Saddam was still a useful friend of India and so the government should deny refuelling facilities to US military aircraft henceforth.

Others felt that Saddam’s actions had already imposed a heavy burden on India not only by pushing oil prices up but also by creating uncertainty for thousands of Indians living in Kuwait. Moreover, there was no evidence that the aircraft that had already refuelled and left was carrying any military hardware. It and those to follow may have had only non-combat material.

Even though India was a non-aligned nation during the Cold War, it had reached out to the US for military assistance when attacked by China in 1962, and to the Soviet Union in 1971, in preparation for the liberation of Bangladesh (when the US and China had ganged up on Pakistan’s side). It was now India’s turn to respond to a US request for help.

Chandra Shekhar’s major concern at the time, apart from ensuring the political survival of his minority government, was to get the IMF to extend balance of payments support to India. India’s foreign exchange reserves were rapidly dwindling, and it had thus approached the IMF, the lender of last resort, in December 1990. The United States was the largest shareholder on the IMF board, and in that capacity had virtual veto power when it came to the authorization of loans. The US could hurt India by not supporting its loan application.

Back in 1981, the US had threatened to do just that when Indira Gandhi’s government approached the IMF for a US$5 billion extended fund facility. At that time, the US wanted more forthright criticism of the Soviet invasion of Afghanistan than what Indira Gandhi had been willing to make. Not that Indira was not critical of the Soviets. When the Russian supremo, Leonid Brezhnev, asked Indira, ‘I want to get out of Afghanistan. Please show me the way,’ she is reported to have said, in a tone that implied disapproval, ‘The way out is the same as the way in.’

Excerpted with permission from Aleph Book Company. Buy the book here.