Montek Singh Ahluwalia
THREE YEARS after Montek Singh Ahluwalia, 69, left New Delhi for a job at the International Monetary Fund ( IMF) in Washington D.C., he received a call from his friend and fellow economist Manmohan Singh. The Congress-led UPA had just won the General Election in the summer of 2004, and Singh had just been appointed prime minister.
“I think Montek was as surprised as the Congress was about the win,” says a friend of Ahluwalia’s, who was a frequent visitor to his home in America and India. “But Manmohan calling Montek to join him in government? That was a surprise for no one.”
Singh asked Ahluwalia to come back as the deputy chairman of the Planning Commission of India. To which, the latter says his only response was, “When?” The decision to return — to use his favourite phrase — was “a no-brainer” for him.
But Ahluwalia’s role is confounded by existential oddities. It is now Ahluwalia’s eighth year as head of the Planning Commission and it is a measure of both the calibre of the man and the power that flows from his friendship with the prime minister that he has turned what was once a low-voltage job into one of the most powerful and contentious positions in the country. As deputy chairman, Ahluwalia is in charge of deciding the course of India’s economy. Should we spend more on health or defence? Why is there still hunger and malnutrition when India runs the world’s largest school-based feeding programme? As the country faces more inequality than ever, how can the widening gap be narrowed? Should big business be subsidised? Should
Corporate apologist. A reformer who’s lost his touch. Heretic. Many in the UPA government and the Congress have come to think of him as a rationalist obstacle, someone who wreaks serious damage with the ammunition of deft numbers. ROHINI MOHAN profiles the man who epitomises India’s biggest economic questions
food for all be deemed a fundamental right? What should the allocation of funds be? What should be India’s poverty line?
In a post-liberalised era, in a country riven by literally millions of contesting realities and aspirations, it is Ahluwalia who leads the search for economic answers to some of our most urgent ethical and governance questions. In doing so, Ahluwalia does not merely preside over some of the thorniest riddles facing the Indian economy; he epitomises them.
Why would one of the principal architects of the 1990s economic reforms even want to head an institution modelled on the Soviet Union’s State-run economy? (The Planning Commission is based on Russia’s Gosplan, which made the very first Five Year Plans.) Is it not odd for a self-confessed torchbearer of the free market economy to lead a body that monitors all Central and state government spending? And what does it mean when a nation struggling to fight chronic poverty is told by one of its chief helmsmen that the solution lies in boosting its GDP? These tightly wound conundrums are the birthplace of Ahluwalia’s admirers and critics. Both of whom are equally ardent. EVERYONE WHO knows Montek Singh Ahluwalia has an impressionistic story about meeting him that they don’t want people to know. Mid-narration, they abruptly stop, stray into vagueness or extract severe promises of privacy. “It’s personal,” they say in an uncanny chorus, whether it is BJP leader Arun Jaitley, economist Abhijit Banerjee, activist Nikhil Dey, bureaucrat Gajendra Haldea or musician Amjad Ali Khan. Trenchant public
figures, otherwise not shy of comment, insist, “Montek will not like it if I talk about that.”
For his close friends and family, it’s a simple reluctance to reveal details that he wouldn’t. But for those who know him as the deputy chairman of the Planning Commission, it’s a palpable nervousness about consequences. Be it industry lobbyists or social activists, colleagues or acquaintances — everyone’s worried if there could be a quiet and undramatic shutdown of access. “If Montek doesn’t even bother to tell someone he’s displeased, it’s usually because he feels they have broken his personal trust,” says a Planning Commission member, who once spent sleepless nights after he let details about an unfinished report slip to a journalist. “His usually prompt emails stopped, phone calls were not returned, and I knew it. I got a second chance only after some serious penance.” It is not an ugly showdown they fear, but his decisive cold shoulder. When Ahluwalia is discussed, it is in hushed whispers, and always after much coaxing.
In his public life, however, Ahluwalia is rarely spared. In just the past year, his stand on food security, inflation, public-private partnerships, the 2G scam and poverty have been viciously attacked. He has been variously called a World Bank stooge, a reformer who’s lost his touch, a corporate apologist, a populist economist. He has become a man many people want out of public life, out of his job, out of the most complex debates of our nation. In response, Ahluwalia says, “This duelling is good... It’s almost fun.” During a followup phone call a month after I meet him, he enquires with unhidden glee if I have yet written the “damaging profile”. He’s not nervous about a hatchet job. He’s almost anticipating it.
Ahluwalia had first agreed to meet me in his sprawling office in Yojana Bhavan some weeks earlier. He was in the middle of overseeing the creation of his second, and the country’s soonto-be-released, 12th Five Year Plan. It is a Saturday, the corridors are empty, and the security guards look surprised at the arrival of anyone other than Ahluwalia’s staff. I ask his personal secretary MD Narula how long I might have with Ahluwalia. “As long as you can keep the deputy chairman interested,” he says. A popular news broadcaster tells me later that talking to Ahluwalia is nerve-wracking because he often sounds like he’s on the verge of drooping with boredom at your silly questions.
In 10 minutes, Ahluwalia pokes his head out of his door and nods me in. As I sit down inside, he pops a lozenge for his cough, and disarms me with a question less innocent than it looks. “So,” he asks, “Why me?” It’s impossible he doesn’t know the answer. The story of him is the story of a complex, vehemently divided Indian economy. It’s also the story of simmering tensions between an elected political class and powerful technocrats like him and the PM.
Since 2004, signalled by Congress party chief Sonia Gandhi, social welfare has been the UPA’S key mandate. Farm loan waivers, guaranteed rural employment, education for all, and food security are its flagship schemes. Ahluwalia is the man who must allot funds to the ministries and states concerned. But he is a known dissenter and openly admits these schemes will do no good as they are. So, every time he argues against them or sides with energy companies against the environment ministry’s ban on forest use for coal mining, it looks like an insider gone rogue. Many in government and the Congress have come to think of Ahluwalia as a rationalist obstacle, a man who wreaks serious damage with the ammunition of deft numbers.
Some like Congress leader Mani Shankar Aiyar have called him a ‘scrooge’. Urban Development Minister Kamal Nath openly called him an “armchair adviser”, poor of field experience. Chief ministers he deals with find his approach too top-down, and one annoyed state head admitted Ahluwalia “reeked of arrogance”. Most social activists loathe him, peer economists hold his technocratic brilliance in awe, and bureaucrats deeply resent his power and connections.
Ahluwalia is fully aware of his detractors but shrugs that politicians must do what they must. “I will criticise what I think is short-termism, and yes, politicians will say I’m being
Ahluwalia has seen the peril of excessive State spending. He abhors the inefficiency of a farm loan waiver or the untraceable workflow of a ration shop
unrealistic,” he says.
But every one of his friends and critics inevitably invokes a niggling sense of discomfort around Montek’s position as head of the Planning Commission. It smacks of the uneasy gait of feet in wrong shoes. Struggling to unravel what his embattled role means both for him personally and for India, a renowned policy analyst says sharply: “Sometimes, I wonder if Montek Singh Ahluwalia is the right man in the wrong job.”
Another economist, staunchly opposed to Ahluwalia, says, “It’s pointless to talk about the individual. His impact on the Indian economy are not accidents of temperament or particular beliefs. He has been placed there by powerful vested interests. If it was not him, someone exactly similar would have been put in his place.”
ODDLY ENOUGH, such doubts are rooted in Ahluwalia’s greatest achievement in public office, one that won him a lasting place in Indian history. Before he went to the IMF, Ahluwalia had worked for about three decades in the Indian government and in the World Bank before that. Twenty-two years ago, India was facing the worst financial crisis since Independence — the fiscal deficit was through the roof because government expenditure was more than its revenue, and foreign exchange reserves had tanked. Working in the prime minister’s office, he authored a confidential report in June 1990 titled staidly ‘Towards Restructuring Industrial, Trade and Fiscal Policies’. It suggested breakthrough economic liberalisation.
“He prepared the report secretly for Rajiv Gandhi but the press got hold of it, so we now know for sure Montek played a big role,” says economist Bibek Debroy. Ahluwalia made an eloquent case for deregulating the industrial sector, getting rid of the Licence Raj and opting for market-friendly policies.
Ahluwalia’s secret paper eventually became the basis for reform in 1991, spearheaded by a core team including Manmohan Singh as finance minister and Narasimha Rao as PM. The economy was thrown open over the next decade and India was saved from plummeting into a financial abyss. “When the reforms were carried out,” says Ahluwalia, “even the rich folk were not in favour. Not because they didn’t believe in growth, but because they didn’t believe the reform path would generate growth. We had a lot of arguing to do. That argument is now over.”
Ahluwalia has reason to feel vindicated. Per capita income has grown at a compound rate of close to five percent per year from 1990 to 2009. GDP growth touched 8 and 9 percent so often in the recent years that former Reserve Bank of India governor Bimal Jalan remarked, “We get impatient at less than 8.” Despite the relative slowdown today, India has seen dazzling growth, the second highest in the world after China.
Free market reforms put India on the global map, of course, but it linked Ahluwalia indelibly with the image of “reform architect”. Combined with his seven-year stint in the World Bank, this lends itself to a word that gets Ahluwalia’s goat. ‘Growthwala’, he is called disparagingly by Left-leaning activists, vote-
conscious politicians and in whispers within the Congress — a man whose enthusiasm about the private sector and 9 percent GDP growth overtakes what many consider the greater challenge: inclusion.
(In 2006, before the approach paper to the 11th Five Year Plan was launched, ministers Mani Shankar Aiyar and the late Arjun Singh accused Ahluwalia of extensively rewriting the original draft to introduce an ideological thrust favouring neo-liberal policies. “He was supposed to tighten and edit,” says Aiyar, “but he rewrote it. After it was approved by the committee.”)
Few know, however, that Ahluwalia’s earliest work as a young economist in the World Bank was on poverty. In the mid-1970s, he wrote the book Redistribution with Growth. Boston-based development economist Abhijit Banerjee says it was the first proper international data set that empirically studied relations between growth and inequality in developing countries.
Ahluwalia’s Leftist leanings as an Oxford University student once had him agreeing with Leftist economists Prabhat Patnaik and Deepak Nayyar who were also at the university at the time. As Oxford Union president, Ahluwalia was famous for his blazing opposition to the Vietnam War and colonialism. He laughs when asked about this. “I like being reminded of my Left-leaning days,” he says, but shrugs it away as “the predominant wave of the 1960s and ’70s.”
When Ahluwalia joined the World Bank, the institution was headed by Robert Mcnamara, who had helped lead the US into the Vietnam War and was wrestling with its moral consequences. Under him, the bank itself was going through a radical transformation. If it once loaned funds to countries for financeable infrastructural and industrial projects, it now decided to fund government-led welfare projects in developing countries. It was in this storm of change that Ahluwalia wrote his book on redistribution of wealth.
“Any economist with an interest in social justice would have wanted to roll up their sleeves and get to work on getting India better educated and fed,” says political economist Pranab Bardhan, who wrote a paper for Ahluwalia on poverty and redistribution at the time. “You want to take it on because it’s exciting and challenging. But also because you know what it’s like at home. The command-and-control economy was unravelling and the number of our poor was growing. Montek was one of the many economists trying to understand how to divide the pie. Many like him later wound up deciding that first one must increase the size of the pie.”
In a sense, this lies at the heart of the Indian economy debate: should the pie be divided or enlarged first. After a 15-year-long roller-coaster ride through various economic ideas, the tradition Ahluwalia says he feels most comfortable about now is the Keynesian one — “including the many growth-oriented post-keynesian versions”.
It’s a position Ahluwalia has been called to defend time and again. Around the time the prime minister appointed him to the Planning Commission, Sonia Gandhi founded and chaired the National Advisory Council ( NAC), a body of former bureaucrats, activists and social experts mandated to design social welfare schemes for the UPA regimes.
These two bodies, with similar mandates but opposing meth- ods and ideologies, have locked horns fiercely many times over the past eight years. “Montek would come to Planning Commission meetings insisting that biscuits or ready-to-eat packaged foods were better as mid-day meals than hot cooked meals,” fumes NAC member NC Saxena, also a former Planning Commission member.
Montek, says an exasperated development economist Reetika Khera, does not understand what being poor means. Delhibased Khera is a campaigner for the Right to Food. Along with economist Jean Dreze, Khera has had an open, newspaper editorial-dominated war of words over Ahluwalia’s reluctance to allot funds for the scheme. “Poverty means limits,” says Khera. “So many limits that you are hemmed in with no choices.”
But Ahluwalia insistently approaches poverty as a lack of opportunity. “The government’s job is not to employ all the poor but to ensure an investment environment that will create jobs, create income, create opportunity. The onus is on the person, poor or not, to take advantage of the opportunity.” He is worried about converting India into a society psychologically dependent on dole and a Food Security Bill that implies increased dependency on a corrupt Public Distribution System.
But despite such bitter disagreements, Ahluwalia’s — and Manmohan Singh’s — continuance in office seems proof both of Sonia Gandhi’s implicit faith in them and her canny understanding of political expediencies. Given the contending nature of India’s economy and aspirations, she has given both impulses powerful voice. The two technocrats stand for growth while she and the NAC push for inclusion.
IN AN autobiographical essay, economist Bardhan writes that an economist might learn all his equations through textbooks, but
Ahluwalia once had unabashed political ambitions. He is said to have had a serious interest in the finance minister’s post when the UPA came to power in 2004
he only becomes political when he looks back to where he came from.
Intelligent but politically guileless, exceedingly polite but aloof, Ahluwalia might have the air of a blue-blooded aristocrat but he grew up as the eldest of three siblings in a middle-class family, whose sole earning member was the father, a clerk in the Defence Accounts department. Ahluwalia’s earliest recollections are going to pre-school in Ambala, Punjab, and living “in what was perhaps government quarters”. Soon, when his father was transferred to Secunderabad, the children studied in missionary-run schools. “We thought only about school and getting good ranks in class,” he says. In 1957, Montek’s father was given a choice between a promotion to the Indian Defence Accounts Services or a promotion-less transfer to New Delhi. “He chose the less lucrative offer so I could go to a better high school,” says Ahluwalia.
Isher Judge Ahluwalia, his wife and a well-known economist herself, says that Montek never allowed himself to forget his “very ordinary background” in which values, government service and education were given topmost priority. “Academics is everything for both of us,” adds Isher, who herself went to a Hindi medium school in Kolkata and then to Presidency College on a scholarship from the West Bengal Board of Education. Montek went to Delhi Public School and St Stephen’s College on scholarship, then won the Rhodes scholarship to Oxford University to major in economics. “If he hadn’t done well in his academics, he could not have gone to the next stage, forget all these institutions of excellence,” she adds.
When Montek admits he has not been to Ambala, his first home, since he moved out as a child, I ask if this is not at odds with his insistence on middle-class values. “India’s middle class is massive but they have one thing in common — to move ahead, up, onward. Why look at the past?” he shrugs.
When the Ahluwalias had their first son, Pavan, they were working in the US. “We knew we wanted to raise our child in India,” says Isher. In less than two years, they returned to Delhi. Pavan’s own homecoming as an adult was less easy. In 2002, he worked for Pricewaterhouse Coopers from London, and when the company won a contract to privatise the Delhi Jal Board, Pavan was appointed the consultant. Although Ahluwalia did not work in the government at the time (he was serving as the director of the IMF’S independent evaluation office in Washington D.C.), Delhi-based NGOS such as Parivartan, led by Arvind Kejriwal, alleged a conflict of interest. “It was the Department of Economic Affairs, Ministry of Finance, that initiated this as a World Bank-aided project in early 1998,” says Kejriwal. “Montek was the secretary of the Ministry of Finance when this decision was made.” Already mired in several other controversies of non-transparency, the project was eventually stayed, but Pavan has decided to stay away from government projects since then and runs his own investment banking firm. “People will not let go of dynastic assumptions,” he says.
Montek’s younger son Aman, now a lawyer working with former Solicitor- General Gopal Subramaniam, calls himself “the only non-economist in the family”. It is Aman’s two children who create the refuge of what Ahluwalia calls his “100 percent switch-off mode”. They are the reason he even thinks of going home for lunch sometimes. Aman says his father would be unrecognisable to some people if they saw him around his grandchildren, “He drops everything and just lavishes them with attention,” he says. In his own childhood, though, Aman remembers dining table conversations almost always being about economics. “But I never felt any pressure to follow the same path. The only thing my father insisted on was that we do our undergraduation in India,” he says. “He believes the education he received here is what roots him to India.”
Education is indeed Ahluwalia’s most passionate subject. When he speaks of it, his characteristic drawl acquires a speed and vigour. “Without question, we must spend more on education, to create a thinking, employable youth,” he says, beginning
what turns into a breathless lecture on the subject. “We must have a lot of public schools, because everywhere in the world, education is done by the State. But you can’t have a plan without ensuring accountability.”
That, in a nutshell, is Ahluwalia’s single biggest concern about government schemes for food security, literacy, jobs: accountability. Through the 30 years he has spent in government — in the finance ministry, PMO and Planning Commission — he has endured the slow levers of bureaucracy. Arun Maira, former India chairman of Boston Consulting Group and Ahluwalia’s senior in St Stephen’s College, describes in a 2011 interview to Business Today magazine how Ahluwalia took him around the Yojana Bhavan office, pointing to room after room of filing cabinets filled with reports on every conceivable subject. Only a member of the commission at the time, not its head, he told Maira how frustrated he was by the body’s ineffectiveness. It had the best know-how and still “could not make things happen”.
Ahluwalia has also seen at close quarters the peril of excessive State expenditure. He abhors the inefficiency of a farm loan waiver or the untraceable workflow of a ration shop. “Montek believes, like many policy economists of the reform days, that if you want efficiency, you have got to get the government out of there and bring in the private guys,” says agricultural economist Ashok Gulati, not entirely disagreeing.
Unsurprisingly, Ahluwalia has been a sworn proponent of public-private partnerships ( PPP), which the 12th Plan eagerly recommends, especially for infrastructure. “Because government money is limited, wherever PPP can be used, it must be used,” says Ahluwalia. “We need to purge inefficiency from our system.”
Ahluwalia objects to the Food Security Bill primarily because he finds it too cumbersome, costly, and prone to corruption. However, universal food security — the relatively corruption-free solution offered by 45 economists in a letter addressed to Sonia Gandhi — is unacceptable to him, even though it would remove the incentives for leakages. Bardhan, one of the signatories of the ‘universalisation’ letter, explains that every time you choose who is eligible for a BPL or APL card, you risk missing them, or allotting it to an undeserving person. “Instead, if you gave universal access to food,” he says, “those who need it will buy subsidised grain, and those who prefer better and more expensive foodgrain can buy it from the market if they can afford it.”
“It is common for liberals across the world to consider big government schemes in horror,” says NC Saxena. “But why doesn’t Montek look at the places where universal food security has worked?” He cites the example of Tamil Nadu, which has shown a high rate of growth even while managing an almost error-free food distribution system.
Although criticism of his personal lack of empathy for the poor might be exaggerated, Ahluwalia does remain disturbingly vague about why he is unconvinced by the case for universal food security. In his office, when I ask him why he is wary of almost-universal food security (all except the top 10-20 percent of the population), Ahluwalia looks annoyed. “The government
Ahluwalia has reason to feel vindicated. India’s per capita income has grown at a compound rate of close to five percent per year from 1990 to 2009
wanted to include only 30 percent in the priority category; the Planning Commission is still better — we suggested 41 percent. If people want more poor to be covered, they should complain to the government, not me.”
When the issue was at white heat, Ahluwalia had widely cited the Rangarajan Committee report, which had concluded that the extra subsidy of 60,000 crore needed for universalisation was just not available with the government. “When you meet him, ask Montek how India has money to give tax breaks for the rich and subsidies for industries but no spare change for the poor,” suggests activist Nikhil Dey. Volley that to Ahluwalia and he leans back in his chair and holds his head. “Oh, that same old criticism,” he says. “But when I talk about cash transfers for the poor, that’s not good enough either. See, I might be an opinionated fellow, a pain, but I give mere advice and try to persuade. I don’t make the law.”
IF YOU are Montek Singh Ahluwalia, even “mere advice” can provoke some of the country’s most vociferous policy debates. In September 2011, while the food security debate was at a fever
pitch, in an affidavit to the Supreme Court, the Planning Commission submitted that its expert committee, headed by Suresh Tendulkar, had defined a person above poverty line as anyone consuming more than 32 a day in an urban area. Shocked by this definition, activists challenged Ahluwalia to prove he could live on 32 a day, failing which he should resign.
Ahluwalia was abroad when the controversy took wild turns with new participants entering the arena every day. Rural Development Minister Jairam Ramesh wrote him a stern letter saying the formula for the poverty line was flawed. Planning Commission member Abhijit Sen also wrote him a more lighthearted email whose subject was ‘Successor to Anna’, referring to the media frenzy Ahluwalia had provoked. Congress scion Rahul Gandhi asked Ahluwalia to do “a rethink” on the com- mission’s definition of poverty.
As soon as he returned to India, a harried Ahluwalia rushed to meet Manmohan Singh and then Jairam Ramesh. He held a press conference soon after, trying to explain himself and promising that the 32 poverty line would not be a determinant for the food policy.
However, in March 2012, he again said the number of poor in India had reduced. This was almost political suicide but Montek doggedly stuck to his line on almost every television channel, stating the unsayable. “People don’t like to hear that poverty has fallen even though Amartya Sen has said it has,” says Ahluwalia. “Many who are ideologically opposed to our economic policies are obviously unwilling to accept that the growth produced by these policies is also inclusive. They could say it is not inclusive enough and I’d agree. We should certainly do better. Some people feel the Tendulkar Poverty Line was too low. We are appointing a new committee to go into the issue, but no matter where you draw the line, it is absurd to deny the fall in poverty.”
(Ironically, endorsing Ahluwalia’s position, even a develop- ment economist opposed to him admits that gross poverty figures have been going down in India, but he refused to be quoted as he said this was a historic inevitability and did not take away from his opposition to Ahluwalia and Manmohan Singh’s policies.)
After a long pause, Ahluwalia says, “Maybe we didn’t explain our position as well as we should have.”
He didn’t. In fact, all of Ahluwalia’s friends wince when the 32 debate is brought up. “I felt so bad, seeing him flounder for words for perhaps the first time in his life,” says Rajiv Kumar, director of FICCI and a close friend. “Why didn’t he defend himself better?” asks economist Bibek Debroy. It was a PR disaster, an embarrassment for the government. It came as a shock to those who believed — and for good reason — that Ahluwalia was unflappable.
AHLUWALIA HAS recently lost aficionados in industry circles too. Corporate leaders feel he is losing the battle to populism and want more from him. “He’s still regarded very highly because of his genius, but in recent years, I believe he’s lost the sheen,” says FICCI’S Kumar. When Ahluwalia took up cudgels on behalf of the energy sector in late 2010, questioning the concept of “go, no-go” areas for coal mining devised by Jairam Ramesh, the then environment minister, the energy industry was agog with the stunning return of Montek as they knew him.
But that single-minded assertion — so applauded by corporates — was short-lived. The contrapuntal forces tugging at India’s economy began their tug again and Ahluwalia was forced to buckle down some. “Many of us have no strong emotions about Montek’s stint,” says Rajeev Chandrasekhar, industrialist and Rajya Sabha member. “No anger or disgust. Just an overwhelming disappointment in him.”
Chandrasekhar wrote newspaper editorials and a letter to the prime minister calling Ahluwalia’s defence of the government in the 2G spectrum scam “smooth talking and articulate spin”. Chandrasekhar says he expected to see refreshing ideas, transparency and a radical change in the way business is done when Montek was appointed. “Not more of the same legacy governance. He may have taken a lot of correct positions before, but when his character was tested in the past eight years, he took all the wrong positions. Everything remains undone. There is not one radical innovation.”
A major energy company honcho — one of the few who agreed to be interviewed, but only after issuing a preamble of confidentiality (“If you mention my name, I will deny everything,” he said) — says emphatically that Ahluwalia must be disheartened, collecting the medals of his imminent defeats. “There is too much politics that fuels government decisions, too much voter-appeasement an economist like him must hate,” he says.
But contrary to what most people know about him, Ahluwalia once had unabashed political ambitions. He is said to have had a serious interest in the finance minister’s post when the UPA came to power in 2004. Rumours of this were confirmed when
‘He prepared the 1990 report (on economic liberalisation) secretly for Rajiv Gandhi but the press got hold of it, so we now know for sure that Montek played a big role’
BIBEK DEBROY, ECONOMIST
‘Academics is everything for both of us. If he didn’t do well in his academics, he could not have gone to the next stage, forget all these institutions of excellence’
ISHER AHLUWALIA, WIFE
former bureaucrat NK Singh was heard telling lobbyist Niira Radia in a tapped phone line that Ahluwalia “tried much earlier, you know, during the transition... and didn’t cut ice. And this time pitted against Pranab (Mukherjee), there was no chance.”
MINISTERIAL BERTH or not, Ahluwalia remains deeply clued into the government’s internal workings through the prime minister, his mentor and frequent visitor to the Ahluwalias’ Panchsheel Park home. Within the Congress party, this friendship has fuelled apocryphal stories of the economist duo taking and reversing decisions over the dinner table, and announcing it to Standing Committees the next morning. “He has the prime minister’s ear,” said every single source, without exception. Many of them added, “It makes him untouchable.”
Assiduously private, Ahluwalia is loath to discuss this friendship. When I first requested an interview, he said, “Are you going to ask me about how I know the prime minister?” All he is willing to say is that he met Singh for the first time when the latter visited young Indian economists working at the World Bank in the 1980s, but friends suggest the duo have been in touch since Ahluwalia graduated from Oxford. Their wives are said to be very close, they perform Gurudwara service together and, despite being a decade younger, Montek is one of very few who call the prime minister by his first name.
In a sense, this sort of shield is a survival kit in a political environment where Ahluwalia is constantly fighting internal battles. Agricultural economist Gulati narrates an incident that illustrates how bullish Ahluwalia can be when he believes in something. As one of the economic advisers during the BJP- led NDA government, Ahluwalia urged prime minister Atal Bihari Vajpayee to disinvest government stake from the automobile sector. “Why is the government manufacturing scooters and cars?” he said. “Why are we making dams and airports?” He explained how disinvestment would allay the fiscal deficit problem and also root out corruption, recounts Gulati, as Vajpayee looked on flummoxed. The next day, he wrote Vajpayee a long letter explaining his position again and followed this up with phone calls. After the weekend, the Vajpayee announced the divestment.
Oddly enough, Ahluwalia has had fewer wins with the Congress. Even though he was handpicked by the prime minister and is known to be strongly loyal to the party’s secular nationalist ideology, Ahluwalia comes off repeatedly as the heretic. A senior party leader from a southern state admits there was always speculation about Sonia Gandhi’s intolerance for Ahluwalia and his “ungrounded politics”, but party members understood that she was balancing her — and Rahul’s — overtly populist agenda with the growth agenda. “We kept our silence,” he says. Of course, the stark differences between the Planning Commission and the NAC — in effect between Sonia Gandhi and Ahluwalia — have swum repeatedly to the surface over the past eight years. Harsh Mander, an NAC member, says the government and Planning Commission would never have allowed any welfare schemes. “The reason we are heard is because Mrs Gandhi supports our proposals,” he says.
But while these policy makers have debated — and floated in stalemates — the politicians have fast been making up their mind. The southern Congress member says, “The old Lefty partymen (sic) are more empowered now because the reformist agenda is not reaping electoral dividends. The abysmal performance of the Congress in the Uttar Pradesh elections and the recent scams are blamed on the prime minister’s ineffectiveness,” he says. “And when the PM is in danger, the more aggressive Montek is no doubt in danger too.”
These fissures in the party had been carpeted over until the United States Embassy cable leak in mid-2011. The cable mentioned that party members have advised Sonia Gandhi to “jettison” the prime minister and put a more saleable political face at the head of the government. It also talked of the ‘reform cadre’ of Manmohan Singh, Ahluwalia and P Chidambaram being threatened by the more socialist party old guard.
As the Congress party caves in, with chaotic ideologies, electoral debacles, and declining leadership, a change of guard does seem eternally imminent. Ahluwalia says he understands that politics is the art of the possible. “But ultimately, good politics has to be rooted in good economics, which will strengthen us in the long term,” he says. “My politician friends tell me it’s not that we don’t know what to do. It’s that we don’t know how to get re-elected if we do it!”
These conundrums for Ahluwalia are, in a sense, conundrums for India as well. In his office, Ahluwalia defines what he sees as his own failure. “When I came to the Planning Commission,
‘He believes, like many policy economists of the reform days, that if you want efficiency, you have got to get the government out of there and bring in the private guys’ ASHOK GULATI, AGRICULTURAL ECONOMIST
I was horrified at how little it had managed to do despite having all the expertise,” he says. “I wanted to restructure it.”
As an administrator, Ahluwalia was expected to spearhead the long overdue structural overhaul of the Planning Commission. “It is a moribund, dead organisation,” says NC Saxena, who was a member in the 1990s. “It is filled with IAS officers not selected for their merit or interest in planning work. To them, it is a parking lot, a place to wait till a more important secretary post opens up.”
The Planning Commission’s mandate since the 1970s has been to chiefly decide spending on Central government undertakings and public sector companies. Today, therefore, the proportion of staff that has an expertise in the social sector — in education, poverty — is limited. Ahluwalia, himself a successful example of lateral entry into government service, argued for more flexibility in staffing expert committees, and suggested bringing intellect from outside the IAS pool. This, however, was seen by members of the Civil Services as an attempt to “outsource state work” and met with a roar of disapproval. The
‘He’s still regarded very highly because of his genius, but in the recent years, I believe he’s lost the sheen’ RAJIV KUMAR, FICCI DIRECTOR
restructuring did not take off as planned. In his eighth year as Planning Commission head, this is probably the harshest failure to stomach.
Ahluwalia’s passion for economics melds easily into an undying belief in the role of precise thinking in social and political issues. So, why isn’t he trying harder, ask those who cannot fathom why a streamlining enthusiast with the political backing of the PM would not use the opportunity to cleanse the system. The only grudging concession he is allowed is that Ahluwalia’s political elbow room is dependent on Manmohan Singh’s own latitude within the Congress.
The restructuring may not be his job at all, falling in the realm of the need for Civil Services reform, but Ahluwalia was expected to do it. The Planning Commission need not have stirred up a hornet’s nest explaining the poverty line in its affidavit to the Supreme Court, but Ahluwalia insisted on it. It is not his mandate to predict the rate of inflation or growth in the press and dodge bullets when he got it wrong, but the eternal economist places his head on the line. Time and again, Ahluwalia’s trysts with the political system have led him through battles that were never meant to be waged. But he persists — perhaps as an extension of the inclusiveness agenda he is spearheading in the 12th Five Year Plan, or simply as an intelligent dissident unconcerned with political exigencies. The rage he ignites, the doubts he stirs, and the beliefs he espouses, fuel debates no Planning Commission deputy chairman has ever triggered before. Inadvertently, he has exposed the dilemmas of a monochromatic vision, of trying to let economics solve issues of politics.
Ensconced in Ahluwalia and the charge he helms are India’s most bewildering contradictions. He may insist his comments are just margin notes in a large government memo. But as the crisis he presides over becomes more urgent, and the irreconcilable paradoxes in India’s vision take a greater toll, Ahluwalia becomes more beleaguered. More entangled in argument.
Boy to man As a child; with his family; at Delhi University with Jawaharlal Nehru
Man about town
At St Stephen’s College; receiving his bachelor’s degree;
with wife Isher
• Growth advocates Ahluwalia’s closeness to PM Manmohan Singh is well known
Corporate cause Ahluwalia has been accused of being partial to the private sector
Policy defender Ahluwalia’s comments on poverty were criticised by Jairam Ramesh