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’


‘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’


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.


Cor­po­rate cause Ah­luwalia has been ac­cused of be­ing par­tial to the pri­vate sec­tor


• Growth ad­vo­cates Ah­luwalia’s close­ness to PM Man­mo­han Singh is well known


Man about town At St Stephen’s Col­lege; re­ceiv­ing his bach­e­lor’s de­gree; with wife Isher


Boy to man As a child; with his fam­ily; at Delhi Univer­sity with Jawa­har­lal Nehru

Pol­icy de­fender Ah­luwalia’s com­ments on poverty were crit­i­cised by Jairam Ramesh

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