Clearing the Cobwebs - Implosion: India's Tryst with Reality - page 60

done. Eventually, the Chandrashekhar government collapsed in June 1991 after just seven
months in office, triggering the election of Rao's administration.
1991: Ten Hours to a New Policy
After Narasimha Rao had told Manmohan Singh to go and assemble reform policies, he
prepared for a television address that he made to the nation at 9.45 the next evening, 22
June. He returned to his cobwebs theme and said there was 'no time to lose' because the
government and the country could 'not keep living beyond their means'. With 'no soft op-
tions left... this government is committed to removing the cobwebs that come in the way of
rapid industrialisation'. 15 Major announcements were planned for Singh's Budget speech
on 21 July, but the schedule was suddenly upset on the morning of 3 July when it be-
came clear that a second devaluation would be needed by the end of that day. Singh rang
Ahluwalia, who was secretary for commerce, to say that he should brief Chidambaram,
the commerce minister, on the need to announce, simultaneously with the devaluation, that
expensive export incentives would be abolished. (Called the cash compensatory scheme,
these incentives, which gave exporters arbitrarily, and potentially corruptly, authorized tax
rebates, would no longer be necessary because the devaluation would give exporters suffi-
cient incentive without compensation.) 16
That phone call triggered one of the most rapid exercises ever seen in policy develop-
ment and implementation, with major policy restructuring being written and approved by
two ministries, as well as the prime minister, in just ten hours. Ahluwalia suggested to
Chidambaram that grumbles from exporters about losing the rebates could be offset if a
new liberalized trade policy, which the ministry was working on, was also announced at the
same time. 17 Chidambaram was new to economic policy making but, as a lawyer and one
of the best brains in government, he quickly bought the idea. 18 He and Ahluwalia said the
policy could be ready in a few hours and suggested to Singh that it should be announced
that evening. Singh agreed, overruling objections from top officials who were against the
reforms.
'We returned to the Commerce Ministry and worked feverishly to outline the proposals,'
says Ahluwalia. Late in the afternoon, the papers were taken to the prime minister, who
signed the file without the customary scrutiny by his office staff. Jairam Ramesh, who was
posted in the PMO and was involved in drafting the policies, was 'asked to ensure it re-
ceived wide publicity'. That evening, Singh announced the second devaluation, and the
new trade policy was launched by Chidambaram, who eulogistically told the media, 'We
have always had wings, but suffered a fear of flying. We should now soar in the high skies
of trade.' He said he wanted to achieve full convertibility of the rupee on the trade account
in three to five years - it was done in two years.