My wife Padma and I landed at the Indira Gandhi International Airport in New Delhi late on the night of 7 November. The earlier week was full of news on Delhi’s worst pollution. For someone like us who have lived in Chennai all the years, there was the additional concern over the chill November weather. Surprisingly, we experienced a pleasant weather and much less pollution.
When Prime Minister Narendra Modi appeared on the television on the 8th night, I told Padma that it was unusual for the head of government to address the nation at such short notice and that we may expect some important announcement. Of course, I didn’t know it would be so momentous as demonetisation. For the whole of the following week I was in Delhi, meeting policymakers, old and new, this was the dominant subject.
The purpose of my Delhi visit was to attend the Economic Editors’ conference. Started by Indira Gandhi in 1966-67, the EEC has been an annual event providing a platform for economic editors from different parts of India to interact with policymakers in Delhi. Inaugurated by the finance minister, the Conference is followed by interactions with Union ministers handling economic portfolios. In a few years defence and home ministers were also presented. In the past EEC also provided opportunities to discuss with senior scientists from CSIR, Atomic Energy and experts like Sam Pitroda. The presence of senior civil servants and PSU CEOs at the EEC, the informal receptions and dinners provided opportunities for seeking information and clarifications.
Over 43 years I have had the opportunity to interact with all finance ministers and dozens of other economic ministers. For editors from outside Delhi, especially for small-specialized publications like IE, this has been a welcome opportunity to present the impact of policies on the regions.
There was break of EEC for two years in 2014 and 2015. I have been persisting with requests for resuming this. The present head of PIB, Frank Noronha and his team, provided such an opportunity through regional economic editors’ conferences addressed by a few Union ministers as also reviving the EEC in Delhi. For two days economic journalists numbering around 80 were addressed by leaders handling Finance, Commerce & Industry, I&B, IT, P&NG, Railways, Highways, Ports & Shipping and NITI Aayog. One could thus get an update on the government’s performance and policies in these sectors and a sort of mid-year review.
Demonetisation – lot of hardship for citizens...
I also utilised the visit to renew my contacts with some of the leaders with whom I have interacted in the past. These included Dr Manmohan Singh with whom I have had the privilege of interacting for over 35 years. As Finance Minister he delivered a comprehensive address on structural reforms under the aegis of Industrial Economist on 30 March 1996. Padma and I spent an hour at his residence and enjoyed a privileged conversation.
Dr Singh enquired about the health of Chief Minister Jayalalithaa and the impact of her hospitalisation on the state’s administration. He expressed concern over demonetisation and the difficulties encountered by large sections of the people. He mentioned that he drew five new Rs 2000 notes and jocularly remarked that he didn’t know how to get small change for these!
How does he spend his time? Dr Singh said: “I read a lot.” When I suggested writing his autobiography he pointed out: any truthful account will hurt and that he didn’t want to hurt. I suggested that he should still consider recording more than six decades of his service and perhaps leave it to his progeny to publish it.
Dr Singh is frail and weak but maintains his characteristic geniality and saw us off at the portico of his palatial residence.
Those golden years...
In his tenure as Finance Minister in the NDA I government led by A B Vajpayee, Yashwant Sinha spearheaded several game-changers: like rationalising the sales tax system of states persuading these to go for uniform rates; a massive highway development programme funded by a cess on diesel and petrol resulting in a spectacular transformation of the highway network starting with the golden quadrilateral; disinvestment receiving a big boost. Surging revenues helped in the boom period of the Indian economy through 2004-09 with economic growth shooting up to an average of nine per cent.
His tenure also witnessed a steep fall in interest rates that were judiciously used to lend for housing and other socially ameliorative measures.
I met him at his elegant house at Noida on the 9th morning after the PM’s announcement on demonetisation. Sinha welcomed the moved, pointed to strong follow up measures needed, especially through reform of tax system as also to steer the country through the difficulties caused to the citizens by this drastic decision. He expressed hope that the curbing of black money, funding terrorism and ending fake currencies would be achieved.
Kashmir-China: serious concern
Sinha expressed concern over a couple of other issues: he had just returned after leading a delegation to Jammu & Kashmir. He described the situation there as totally out of control and the alienation of its citizens. He cautioned the danger of attempts to control life through the Army and urged on efforts to bring back normalcy.
Sinha’s another area of concern is our relationships with China. He pointed to the efforts made by China to expand its naval presence by funding port constructions at Myanmar, Sri Lanka, Indian Ocean islands and now Pakistan. This way China has been encircling India and this has serious security concerns, said Sinha.
I also had an interesting discussion with Dr Nasim Zaidi, the Chief Election Commissioner, on the 15th. In the hour-long meeting Dr Zaidi, who took his doctorate in microbiology and is renowned for his rich contribution to reforms of civil aviation, discussed a wide range of issues concerning electoral reforms. There are expectations on demonetisation curbing the use of black money in elections.
I extended my trip Shimla and spent time at the Central Potato Research Institute (CPRI). From the hot climate of Chennai to the biting cold of Shimla, it was a different experience!
I concluded the trip meeting the renowned economist couple - Isher Judge and Montek Singh Ahluwalia - at their residence. Montek is busy writing a book on the course of development, from 1980. For a change he was asking questions on my impressions on the changes during 1980-85!
Ahluwalia pointed to the disruption of economic activity caused by immobilising 85 per cent of money supplied. There is the problem of providing new notes in such large volumes. “It may take a couple of months for supply to resume. Transactions in the formal sector and in rural areas are mostly in cash. There will be loss of income leading to slowing down of economic activity,” he said.
Ahluwalia said that very few would keep large stock of currency. “Again, agriculture is exempted from income tax. Farmers may even have cash of Rs 5 lakh-Rs 10 lakh. It will be difficult to pinpoint the source.” Ahluwalia appreciated the course corrections to mitigate the inconvenience. He stressed on the need for follow up action in the form of tax reforms and transparency.
His equally illustrious spouse and economist, Isher Judge Ahluwalia, suggested electoral reforms and a focus on funding elections.