NK Singh is the chairman of the Fifteenth Finance Commission. But even this key position does not sufficiently capture the breadth of his experience, the duration of his engagement, and the importance of his interventions in India’s public life and policymaking – as an Indian Administrative Service (IAS) officer who served in key positions at the Centre and in Bihar; a core member of Manmohan Singh’s economic policy team which ushered in the 1991 reforms; secretary to Prime Minister Atal Bihari Vajpayee; a member of Planning Commission; a member of Parliament in the Rajya Sabha from Bihar; as the head of a committee that determined the contours of India’s fiscal framework; and as an elder statesman in Indian public policy world with friends across India’s political, corporate, cultural, and intellectual spectrum.
Portraits of Power: Half a Century of Being at Ringside, Singh’s autobiography to be released on Monday, captures this remarkable life. In an interview with HT, Singh examines his early socialisation in Bihar, the economic doctrines that governed India in the 1960s and 1970s and its subsequent evolution, the current political moment, and the structural challenges faced by India. Excerpts:
Q You come from a landed family in Bihar, which was also interested in educational excellence. Your father was a top bureaucrat. You married into a former royal family. How did this confluence of factors – of wealth, intellectual engagement, and public service – shape you?
The principal challenge for any civil servant is how you reconcile adherence to rules, responsibilities, processes and systems often with the inevitable expectations of popularly elected governments which may have different priorities. It is about reconciling contradictions. My life, too, has been about these reconciliations. My paternal grandfather came from a poor, rural background. He was among the earliest to receive a degree from Presidency College in Calcutta, and under a system prevalent then, could directly become a deputy collector. Instead, he chose to become a teacher and then headmaster. He was an austere man who deeply believed in the necessity of formal education. My father went to the same school. On the other hand, my maternal grandfather was among the richest zamindars of north Bihar. Fable has it that the seeds of Bihar’s land reforms were maybe embedded in the fact that he had sometimes driven Jawaharlal Nehru in his Pontiac car for long hours, and wherever they went, Nehru was startled to discover that the land belonged to my maternal grandfather. As far as I was concerned, the affluence and comforts of spending time with my maternal grandfather were vastly more enjoyable than my paternal grandfather would have liked. So, how was one to reconcile this contradiction during my initial years of schooling? This carried forward in multiple ways even in my civil service career – how could one combine the virtues of rectitude with compliance with the rules and regulations in a democratic, popular framework. Undoubtedly, this was a challenge. I experienced this even in higher echelons of responsibilities. My years in Parliament enabled me to see a fuller interplay of combining the virtues of sensible economics with sensible politics. The reconciliation of what was rational with what was popular was inevitable in India’s economic strategy — a strategy, thus, of balance and reconciliation.
Q You have worked with political dispensations across the spectrum, and have been, in some ways, the eternal survivor in India’s power corridors. How did you reconcile these conflicting political strands?
I may not have been the only one. There were others who would have achieved this objective even more successfully. I am not saying that they are role models but, for example, Dr Manmohan Singh has been a part of a multiplicity of regimes of different hues. He remains the quintessential survivor. His self-effacing manner, his rectitude, and his sincerity have been his forte.
As far as I am concerned, the important thing is to understand the dominant psyche of the time. For instance, when I was working during the period of Professor DP Chattopadhyay (commerce minister under Indira Gandhi), India had embraced a trade policy regime where tariffs were high, quantitative restrictions were debilitating, foreign exchange paucity severe and we had barter trade agreements with many countries. In such an atmosphere, it would hardly have served any purpose in preaching the virtues of free trade or cautioning against the adverse consequences of barter trade agreements. You need to see what can be done within the limitations of a dominant psychology and that framework. Or take another example. There was no point, while negotiating the quarterly performance criteria or structural benchmarks during Dr Singh’s time as FM, in preaching the virtues of sovereign decision-making or importance of taking Parliament in confidence when the compulsions were to seek access to resources to obviate debt default. As civil servants, one must recognise that ultimately, the basis of governance is embedded in a social contract, the core of which is that those who govern do so based on the consent of the governed. Therefore, it is important that one must understand that framework and seek flexibility within the limits and carve out advice which would be relevant to minimise damage, achieve practical outcomes, and in an overriding way, be driven by forces of morality.
Q A fascinating chapter in your book is on the Prime Minister’s Office (PMO), and you trace its increasing power to Lal Bahadur Shastri appointing LK Jha as his secretary. Could you tell us about the evolution of PMO and its implications, and what you make of the current moment – when Narendra Modi’s PMO is seen as all-powerful?
I have mentioned that in a letter written by Lord Wavell, he said that he had deliberately ensured that the secretary to the cabinet is also the principal private secretary to the Prime Minister. Wavell writes that this was to ensure that Jawaharlal did not go “astray” and to preserve the sanctity of the cabinet office. That was the position till it was changed by Lal Bahadur Shastri, the diminutive but purposeful man who took an audacious step, and appointed Laxmi Kant (LK) Jha, who was a batchmate of my father, as the first secretary to the PM. My father had then asked me to accompany him to congratulate Jha, and he told Jha that I felicitate you for two reasons – one for reaching an elevated office, and two, for destroying a certain edifice of governance. LK asked him how. They were friends and this was a frank conversation in Maithili. My father then told LK that till the previous day, the last note the PM would have read was that of the cabinet secretary, but from now, that last note would be yours. This changes the balance of equations. This turned out to be prescient.
But there are two broader points here. Dr Singh once mentioned to me that compared to the powerful PMO of Vajpayee, where Brajesh Mishra and I worked, his PMO was a more modest one. This partly reflected his modest and self-effacing nature. The well-known proverb that all PMOs only bask in the reflected glory of the PM comes to mind. It has no innate glory of its own. I also argue in the book that the Westminster model of democracy is being replaced permanently by a de-facto Prime Ministerial model; if not in form then in practice. What ultimately matters is the preferences expressed by the electorate. Elections are fought and votes are garnered in the name of the PM, not necessarily his likely council of ministers. Of course, in a way, this dramatically enhances the accountability of the central leadership. Going forward, one must ask, in the realm of political science, whether the Westminster system is losing its contemporary relevance.
Q You were closely involved with the 1991 reforms, leading the negotiations with the International Monetary Fund (IMF) and World Bank. One, were these reforms Indian reforms or externally imposed reforms? And, two, were India’s reforms transparent or done in stealth?
First, it would be naïve to believe that borrowers are fundamentally free to choose any course of action other than those encouraged and acceptable to lenders. Even more so, if borrowers were in distress. Our lenders were multilateral agencies. They were not making a new policy for India. There was a normal practice that all borrowers had to accept dual conditionalities – on the macroeconomic framework by the IMF and on structural reforms by the World Bank. There were usually two letters of intent addressed to the IMF and the Bank. These letters were written on our own volition and signed by the authorities, often by the finance minister. In that sense, they are not externally imposed. But the content of the letters, however, are carefully deliberated and negotiated and the contours of measures imposed in the letters of intent, so to say, voluntarily are the outcome of these negotiations. In practice, it was, thus, a mix of our volition and practices and processes determined by the conditionalities inherent in such borrowing arrangements.
To your second question, reforms were both by stealth and design. Stealth because of certain procedures of, let us say, not having open debates in Parliament, and yet laying documents in the library of the Parliament, being considered a form of compliance. Or often, some of these measures being contained in some government document like a Five Year Plan or in the contents of speeches made on several occasions lend credence that these were not externally imposed. The adequacy of compliance must be viewed in the context of extraordinary times. They were extraordinary times needing innovations in practice and procedures.
Q You talk about the pandemic in your last chapter. Let me focus on two themes. How do we recover from the economic consequences of the pandemic? And how do we reconcile the quest for Aatmanirbhar Bharat with India’s globalist outlook and export-orientation, which has served the country well? I ask because you do warn against the perils of excessive protectionism.
The way forward is deepening and diversifying the reform momentum initiated during the pandemic. Very far-reaching reforms, which have major consequences and a multiplier effect on growth, have taken place, whether in power or on taxes or agriculture or health systems. These reforms, once implemented, will greatly push the G-curve in the northward direction. This will help not only in accelerating the recovery process, but also improve macroeconomic management in terms of debt and fiscal deficit profile, necessary for long-term macroeconomic stability.
On protectionism, Aatmanirbhar Bharat is not an isolationist Bharat. The philosophy of Aatmanirbharta (self reliance) is about improving domestic production, domestic capabilities, and domestic employment. Protectionism implies that not only are we making imported goods very expensive but we are making no other efforts. The path forward is to seek synergy between Aatmanirbharta and a competitive trade regime enabling us to take advantage of trade as an engine of growth. Countries that grow at 8% plus – and India must grow at 8% plus – have to use trade as an engine of growth. We have traversed a long way from the era of quantitative restrictions to a more competitive landscape and we cannot lose this competitive advantage, and lose the benefits of trade as an engine of growth.
Q. Your current role as Finance Commission chair involves close consultations with both the Centre and states. Do you think India’s federal compact is more robust today than the past, or is it fraying, and there are concerning signs, as we have seen this in the recent controversy on the Goods and Services Tax (GST)?
The Indian federal structure is robust and well-functioning. Nothing demonstrates this better than the way the pandemic has been addressed. In the initial period, central leadership was inevitable, but thereafter it was followed by the PM’s successive meetings with chief ministers. The states were expected to take decisions autonomously on their implementation and measures to address the pandemic. It was a federal compact which combined both the importance of a central focus and decentralised decision making. This was also an example of the philosophy of federalism going beyond mere fiduciary obligations on either side.
Q. I want to return to Bihar at the end. A telling anecdote in your book is how you drafted Nitish Kumar’s note splitting from the National Democratic Alliance (NDA) in 2013 – but you joined the Bharatiya Janata Party (BJP) soon after yourself. Was that personally a difficult decision? And what is your dream for Bihar?
My last book, which was edited by both Lord Nicholas Stern and myself, was an ensemble of essays on Bihar. It brought out the interplay between identity politics and development politics in the evolution of Bihar’s economic and social policies. Nitish Kumar in the Janata Dal (United) was pursuing the development matrix with great sincerity. He was doing so in partnership with the BJP. The decision thereafter to break the alliance with the BJP in 2013 marked a break from the focus on development politics to vote bank politics in a somewhat narrow sense of the term. It was around this period and under the circumstances which I have describe in the book, that I decided to leave the JD(U) and join the BJP. It was a difficult decision because, as I have explained in the book, it was Nitish Kumar who brought me into politics and I am grateful for the unique opportunity he gave me. It is somewhat ironic that having broken away from the NDA, he again became an integral part of the NDA in 2017. It was a full circle. This was more or less the circle of my own political engagement of being part of the JD(U) when it was part of the BJP and thereafter moving to the BJP. Political choices invariably combine expediency and moral compulsions as inescapable hybrids.