Rediff Logo Business ESS - MakESS ERP solution Find/Feedback/Site Index
February 22, 1999


The Rediff Business Special/ Mohan Guruswamy

'I opposed the crony capitalism, that was sought to be passed off by the PMO as liberalisation'

send this business special feature to a friend

Mohan Guruswamy was sacked as the finance minister's adviser early this month. In this first person article, he reveals the shocking drama behind his abrupt dismissal.

Many reasons are being ascribed to what was perceived as my somewhat sudden departure from the finance ministry. The official reason given out by the finance minister is that I had "exceeded my brief". The reality was that the exit was in the making for sometime. The reality is also that it would not have happened for the duration of this government but for myself. All I had to do was to lie low and duck the crossfire. This is what most people in government do, which is why so little gets done.

For instance, if one were to act to protect the steel industry from the ill winds of dumping, steel users get hurt. In other words if TISCO benefits TELCO hurts. Since both producers and users have powerful connections an appreciation of the common good is often postponed and the situation is allowed to degenerate till there is a severe crisis that forces a decision.

Life in government really is about living through these cross currents of conflicting economic interests and political ambitions. Since life is short and the expected life of the BJP-led government was going to be even much shorter, I felt that the government must leave its mark by not ducking the cross fire but by taking on problems head-on and sorting them out. This was not to be.

As if this was not bad enough there were other factors too making life more interesting. First and probably most important of all was the now in the open jousting between the prime minister and the home minister. Next was the tussle between the Prime Minister's Office and the finance minister. Third was the unconcealed mutual antipathy that existed between certain unofficial and official members of the prime minister's innermost circle -- the prime minister's house for shorthand -- and myself. Then there were several ongoing and well- known corporate wars. Added to this was the campaign by the RSS's Swadeshi Jagran Manch against the economic policies of the government.

My alignments on the first three were quite obvious. I had no preferences in the corporate wars except for what was required by the BJP's election manifesto and the National agenda for Governance. Somewhat contradictorily to my first two unconcealed preferences my alignment in the SJM versus the Vajpayee government tussle was by and large with the government. First of all, loyalty demanded it, and so did economic logic and good-sense. SJM economics I often said was Neanderthal economics.

On the other hand I opposed the Suhartoism, which is what I call a relative oriented crony capitalism, that was sought to be passed off by the PMO and PMH as liberalisation. In the end it was this that did me in. Poor Yashwant Sinha had little to do with my problems. He became one for me only after I left and when he was directed by his new found friends in the PMO to do the dirty work. Whether he relished it only he can tell.

The Vajpayee-Advani conflict has been for many months the most poorly kept secret in New Delhi. This is not the place to elaborate on it. Yashwant Sinha was the prime minister's third choice for finance minister. First was Jaswant Singh. Then it was Vajpayee himself. Last and most reluctantly was Yashwant Sinha, then seen as the RSS's and Advani's man.

Vajpayee never missed a chance to remind him of that and the finance minister further obliged him by constantly reminding all those who worked with him, particularly me, of this. He lived in complete thrall of the PM and the PMO. His insecurity was compounded by each new story planted by his nemesis in the PMO predicting his demise from the MOF. This was hardly conducive for good decision making and this showed in the resultant economic management.

Like Sinha, I too was not among the PM's favourite people. I was seen as too close to Advani. Yashwant Sinha reminded me from time to time that the PM and his circle saw me as the "foremost example of Advanism", whatever that meant! The antagonism between the PM's principal secretary and his in-house son-in-law on one side and myself was not much of a secret.

The PM had already turned down a recommendation from L K Advani and Sushma Swaraj to have me as the CEO of Prasar Bharati. The PM quite accurately guessed that I would begin to assert myself once in office and so could not be trusted. His choice was for Ashok Tandon or someone else with a similar pedigree. When an appointment for me in the MOF to strengthen the already beleaguered Yashwant Sinha was first mooted, the PM's coterie made it known that it will not be allowed by the PMO.

Yashwant Sinha outfoxed them by appointing me as a "consultant" in the MOF with the rank and status of secretary to the Government of India, on a salary of Rs 1 a month. The file did not have to go to the PMO for clearance. This was probably the first and only time I have known when he asserted himself. The principal secretary and the all-important son-in-law then were said to have remarked that they would see to it that I did not last too long.

Soon after I entered the MOF, N K Singh, not a friend of Yashwant Sinha,was sent out of it. He surfaced in the PMO, courtesy of Jaswant Singh, as the PM's principal economic policy adviser. In fairness to him it must be said that he is the only truly competent senior advisor the PM has. One could argue that his competence is by far outweighed by his failings and weaknesses. But since he cannot be anything but himself and the tension between the PMO and MOF intensified.

The first thing that N K Singh orchestrated were a number of committees headed by marquee names of Indian business to recommend public policy to the PM. Yashwant Sinha learnt of these committees from the morning papers. This was the beginning of a series of similar humiliations by the PMO. We quite accurately sneered at the committees saying that it only consisted of sons of rich fathers and economists from the Congress durbar.

The PMO and a few ministries such as finance, home, external affairs and HRD occupy the high ground of policy making in government. Thus there is a natural tension between the ministries and the PMO. In the case of the home ministry it has been made fairly toothless over the years with personnel, the CBI and IB reporting directly to the PM. A typical home minister in the previous decade and a half was only responsible for the administration of the Central Police Organisations like the BSF, ITBP, CRPF and CISF. If the home minister was a heavyweight he created more space for himself as L K Advani has done at the cost of the PMO.

The natural rivalry between Vajpayee and Advani accentuated this tension even further. So taut is the tension that the PM did not take the HM into confidence on the May 11 nuclear tests till an hour before it happened, for reasons of "security". The defence and finance ministers, Jaswant Singh, Pramod Mahajan, and a few others in the PM's inner coterie we privy to this for days if not weeks, but the country's home minister was kept out of it for security considerations!

The home minister, however, was successful in recovering de facto control over the agencies and departments the ministry had lost control off. Even if he was not formally assigned control over the CBI, it is well known that he actually ran it. Ditto for Personnel and the IB. So clear was the control of the HM over the CBI that even after its director received a call from the PM, the CBI went ahead with the raid on Dhirubhai Ambani's home.

The Ambanis naturally inferred that their business rivals like Nusli Wadia and Shashi Ruia perceived to be close to Advani had instigated the raid. By comparison the finance minister seemed to have lost to the PMO as much as what the HM wrested back from it. Soon the PM was making announcement after announcement, often without consulting the FM. The quality of these announcements was often very dubious leaving one to wonder if the PM knew what he was ever so often declaring.

Compounding his well-known lack of attention to detail was his not very known attention deficit problem. One fine day the PM announced a grand plan for a 7,000 km long six lane highway system from the Jammu in the North to the Kanyakumari in the South and from Somnath in the West to Silchar in the East. He estimated the NSEW highway project cost to be Rs 28000 crores @ Rs 4 crores a kilometre when it should be about Rs 12 crores a kilometer.

Highways are supposed to carry goods and people. Which means they join markets and population centers. Here the PM was proposing highways from nowhere to nowhere and at a cost that was understated by at least a factor of three! That is, he was stating that he would be building for Rs 28,000 crores what should cost Rs 84,000 crores. Neither the administrative ministry nor the finance ministry were consulted and after the announcement was made few had the courage to tell the Emperor that he was not wearing any clothes! The highway project has now been given a quiet burial.

'Yashwant Sinha was upset. He discussed resignation with me'


Business News

Tell us what you think of this feature