Confessions of a Swadeshi
Reformer: My Years as Finance Minister
By Yashwant Sinha,
Penguin, Rs 450

Indian finance ministers do not usually last long. Only four have presented five budgets. The first three were C.D. Deshmukh, Morarji Desai and Manmohan Singh; the last one was Yashwant Sinha. Deshmukh is remembered as a defender of fiscal rectitude, Morarji Desai as the man who steered the economy through the aftermath of the 1962 war with China, and Manmohan Singh as the great reformer.

Yashwant Sinha did not leave as much of an impression as his record justified. This book will go some way to correct this neglect. He was the finance minister who abolished special duty exemptions, under which Sachin was allowed to bring his luxury car duty-free; he set up the state finance ministers’ group to introduce value-added tax; he abolished the Bank Staff Recruitment Board and delegated recruitment powers to banks; he enacted the Fiscal Responsibility and Budget Management Bill; he abolished import licensing; he introduced Kisan Credit cards, which defined a farmer’s credit limit and allowed him to borrow whenever he needed within the limit. These and other reforms, many conceived by him but done by others, are recorded in these memoirs.

Unlike most Indian politicians, Sinha had a career before he became a politician. He was an officer of the Indian Administrative Service. In 1984, he left the service and joined Janata Dal formed by Vishwanath Pratap Singh, who had just rebelled against Rajiv Gandhi’s Congress. Congress lost the general elections in 1989 and V.P. Singh became prime minister. Next year, Lal Kishenchand Advani started off in a bus to campaign for a temple to Rama in Faizabad. V.P. Singh had him arrested. The BJP withdrew support to Singh’s government. Chandra Shekhar left Janata Dal, started a Samajwadi Janata Dal, and formed government with support from Congress in November 1990. Sinha was one of the 64 renegades who left with him; Chandra Shekhar made him finance minister. They lasted 225 days before being pulled down by Congress. Then, in 1993, Yashwant Sinha moved over to the BJP. When in 1998, it came to power, Atal Bihari Vajpayee made Sinha finance minister. In 2002, he was moved to external affairs. The BJP was defeated in 2004, so with it, Sinha moved across to the opposition benches in Lok Sabha.

However, these wanderings do not figure much in this book. As its title suggests, Sinha concentrates on his finance ministership, and argues that he was a reformer, but a swadeshi one. Sinha’s brand of swadeshi is so anodyne that swadeshi diehards — whether the Gandhian kind who were against foreign goods or the Hindutwits who want everyone to sport Big Red Dots and fly around in dhotis — would not recognize it. To him, it means “being pro-India without being anti-foreign”, “calibrating globalization to suit national interest”, “making India strong and self-reliant so that we can compete with the world and win”, or “making India economically secure”. It is just a fancy word for diffuse nationalism that we all feel. It is so unsensational that Sinha’s claims of being a swadeshi fanatic fail to carry conviction.

As I have said at the outset, Sinha did a number of important reforms. But he also feels strongly that he was the original reformer, before Manmohan Singh. As evidence, he presents extracts from the 1991 budget speech he gave without an accompanying budget. In it, he talked of “fiscal discipline”, “rationalizing” subsidies, public sector disinvestment, and getting small savings out of government budgets and into a small savings bank.

Sinha is right but the story is a bit longer and more interesting. As the balance of payments worsened in 1990, Madhu Dandavate and then Sinha had to go to the International Monetary Fund and the World Bank and ask for more and more assistance. At each stage, the Washington Sisters set stricter conditions; when Manmohan Singh took over, there was an entire reform programme originating from the Fund and the Bank that Sinha and his bureaucrats had been negotiating but could not implement because they did not have the support of the Congress. The originator of the great reforms of 1991 was neither Sinha nor Singh; it was the Washington Sisters. Once Manmohan Singh took over, he and his assistants in the finance ministry built upon, amended, elaborated, indigenized and expanded the Fund-Bank programme. But if the Fund and the Bank had not been around, there would have been no reforms; India would have continued to stumble from crisis to crisis. Some of the reforms would not have happened if Sinha had been finance minister, for there was a lot of nitpicking from his time on the files which we swept away on taking over.

In any case, the two major reforms of 1991-92 were not done by Manmohan Singh. It was P. Chidambaram who removed import licensing on inputs and capital goods, and Ajit Singh who substantially removed industrial licensing. Manmohan Singh was actually quite conservative; he made only incremental changes in those areas that were his bailiwick, and he stopped doing reforms almost as soon as the crisis of 1991-93 was over. But he was hailed as the great reformer because his budget speeches were a compendium of the reforms that other ministers did or proposed to do.

It is ironic that Ajit Singh never mentions the reforms he did and Sinha does the reforms he could not do. What might have been illuminating is Sinha’s critical review of the reforms that were done; it would have established his swadeshi brand. But he is too polite to comment on others’ performance.

Sinha is generous towards all; he even quotes me favourably, although I was one of his most cavilling critics. He is extremely economical with criticism, which is a pity, for it prevents a clear picture of what he stands for and what he does not from emerging. He describes his unhappy experience with Mohan Guruswamy, whom he had summarily to dismiss from the finance ministry, but is very reticent about what acts of Guruswamy led him to take such unprecedented action. He mentions a number of party colleagues who tried to make him do improprieties, but leaves us to guess their names.

So the somewhat bloodless nature of these memoirs will leave some dissatisfied. But they tell much about the man — a mild-mannered, moderate man, an unlikely politician. Perhaps he would have achieved more if he had shown more grit and fighting spirit. But then, perhaps, he would not have become finance minister or lasted as long as he did. He came from the outside, played the political game by the rules given to him, and got something done out of what he started to do. He came with some principles, and did not compromise them to become a favourite of his party’s Big Two. He demonstrates the utility of low-key loyalty to the BJP as Manmohan Singh does to Congress. Both got somewhere with that loyalty; both thereby achieved some things they might be proud of, together with some they must be ashamed of. That is the best one can expect of a public life.