To the Brink and Back: India’s 1991 Story by Jairam Ramesh Read Free Book Online Page A

worried.’ The prime minister was not amused. Therefore, on a more serious note, I reminded him that his finance minister had been crying himself hoarse that India would not default and there should be no ambiguity on this matter.
    I had never known the finance minister to be aggressive. His style was measured and calibrated. But on this subject, I found him unusually strident—and rightly so. There were far too many voices raising the issue of debt rescheduling. On 23 June, just a day after assuming office in the North Block, the finance minister, while speaking to the United News of India, had categorically stated that there would be no default on repayment. He had said that India had a reputation for ‘financially sound behaviour’ and went on to add that ‘we will build on that and do whatever is necessary to maintain the country’s credit-worthiness and honour all our commitments’.
    The matter got raised in the Rajya Sabha again during question hour on 16 July1991, as the following exchange will reveal:
    Shri Sukomal Sen (West Bengal; CPM): […] Sir, the question is, India is heavily indebted, true. Not only India but many other third world countries are also heavily indebted to the IMF or other commercial banks and they have the same problem. Now, if the Government of India wants to review the situation in a broader perspective, I would like to know from the hon. Minister whether instead of sending out gold immediately and going to the IMF, the Government unitedly with other third world countries would demand a moratorium on all foreign debts for the next few years so that India and other third world countries can tide over this crisis.
    Dr. Manmohan Singh: Mr Chairman, Sir, that is a different question. I have stated categorically.
    Mr. Chairman: He wants to know whether India will try for a moratorium in cooperation with other countries in a similar situation.
    Dr. Manmohan Singh: The Prime Minister has stated it categorically and I have stated it categorically that we are honour-bound and duty-bound to honour all our commitments. About what happens in collective forums of the third world, I think, we will consult all other countries. We have been doing so before and we will continue to do so hereafter. But let nobody get any impression that this country is out to renege on its international obligations. That will be a sad day for India and we will avoid it under all conditions.

    I thought the idea of debt rescheduling had died in the prime minister’s mind because of the tough stand taken by the finance minister. But I was to discover later that it may have still lingered there. On 20 September 1992, I attended a lecture by DrI.G. Patel in memory ofGovind Ballabh Pant in New Delhi titled ‘Freedom from Foreign Debt’. The prime minister must have received a garbled version from some of those present, for the next morning I received a call from him. He asked, ‘Jairam, has IG [as Patel was often referred to] called for debt rescheduling?’ Fortunately, I had the circulated text of the lecture handy and read out the paragraph that had set the prime minister thinking. Patel had said:
    On a more general plane, there is no reason why we should seek a reduction in our official debt by negotiation. If debts to much richer countries like Poland and Egypt could be written off, there is no reason why we should be singled out for martyrdom simply because we have honoured all our obligations so far.
    I encouraged the prime minister to read the full lecture, and sent it across to him. That was the last I heard of it.

    43 The Aid-India Consortium, led by the World Bank, was organized in 1958 as an international network to support the economic development of India.

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Statements: Right and Left
    n 1 July 1991, four of the country’s most distinguished economists-cum-economic administrators issued a joint statement supporting what Manmohan Singh had set out to do. The finance minister himself gently nudged P.N.