THE REPUBLICThe verdict of the electorate had not been clearcut. Once more a
minority government had to be installed, but this time it was again a
Congress government. Rajiv Gandhi’s assassination may have provided a
sympathy bonus to his party. But it was an open question who should be
its new leader. In keeping with the entrenched idea of dynastic charisma,
Rajiv’s widow Sonia was considered to be a potential candidate. As an
Italian Catholic who had only recently become an Indian citizen she was
an unlikely choice and she was wise enough to opt out of this game.
Instead a senior politician, P.V.Narasimha Rao, who was ill at that time
and was looking forward to retirement, was reactivated and rose to the
occasion. He had once been chief minister of Andhra Pradesh before he
served under Indira and Rajiv Gandhi as a cabinet minister handling
various portfolios for more than a decade. He was the first South Indian
to become prime minister. In view of the pressing economic problems
which he faced when taking office, he appointed Dr Manmohan Singh as
his finance minister. Whereas all previous finance ministers had been
prominent politicians, Manmohan Singh was a technocrat without any
political base except for the prime minister’s trust in him. As a noted
economist he had served the World Bank for many years and was
perhaps the only person who could guarantee to the World Bank and the
International Monetary Fund that India would restore its
creditworthiness by accepting the usual conditions like devaluation and
reduction of the fiscal deficit. In this case these conditions were not even
mentioned by the authorities concerned so as not to hurt India’s feelings.
The confidence inspired by Manmohan Singh was of crucial importance
in this respect.
In fact, as soon as India presented itself under new management, the
atmosphere changed immediately and the non-resident Indians sent their
money back. A devaluation by about 18 per cent encouraged exports and
made foreign investment more attractive. Unfortunately there was little
foreign direct investment and more institutional investment which gave a
boost to the stock market without entering into the primary market.
Speculation increased and attracted a trickster who made use of the
imperfections of India’s financial markets so as to earn a profit by using
other people’s money. This scam led to a collapse of the stock market in
- The same year was marred by another disastrous event, the
destruction of the Babri Masjid of Ayodhya on 6 December 1992—a tragic
day in India’s history.
The BJP had resumed its campaign after being stymied by Advani’s
arrest in October 1990. This time it was in a much better position, because
the state government of Uttar Pradesh, in which Ayodhya is located, was
formed by the BJP in 1991. Thus a large crowd could converge on
Ayodhya in December 1992. The BJP probably did not intend to raze the
mosque to the ground, the more so as it deprived itself of a convenient