 Thank you. Thank you very much, Suresh. Thank you, Shruti, for burdening me with this activity. And thank you all for coming. It's really amazing that so many of you have showed up this morning. And of course, I'm very glad to be back in Washington in general because I started my professional life here at the World Bank in 1976. And been here different times after that as well. So it's basically home for me. So this talk is going to be rather self-indulgent. I hardly ever get a chance to do that, but I'm going to do it today. And that's why the talk is called how the common control national policy of India was dismantled, a personalized narrative from the trenches. So, I see very few Indian faces here. So it's terrific, but then you won't know much about what I'm saying. So for those of us in India, beyond the age of 50, India has been transformed beyond what we might have dreamt of before the 1990s. In real terms, the Indian economy is now about six times the size it was in 1991. However, during the same period, the Chinese economy has grown 15 times over the same period. The image of India and its own self-image has changed from one of our poverty-ridden slow-growing closed economy to that of a fast-growing open dynamic one. And these days, of course, we are very proud to say that we are the fastest growing major economy in the world. And the G20 this year gave us a platform in which to blow our trumpet, which we did, of course. Though much of the policy focus has been on the economy, change has permitted almost all aspects of life in India. We also engage with the world on a different plane, as exemplified what I just mentioned by our demonstrated leadership of the G20 this year. And of course, with the acquisition of nuclear capability in the late 1990s, their approach to defence and security and foreign policy has also undergone great transformation. So in this talk, I focus on how it all started, that is the reforms process, the genesis and implementation of 1991 industrial policy reforms. There was one part of the whole reform process. And that really constituted the transformational break with the long-standing command and control in economic policy stance since independence, which you can sort of encapsulated in a few lines here on the screen. So I had the privilege of share said, of being associated with the overall process of economic reforms, not just in policy reforms from 1988 to 2015, which is when I finally left the government. But most closely of course, with the industrial policy reforms of 1991. Although this was only, as I said, one segment of the reforms that have taken place on a continuous basis in the early 1990s, it was symbolic that who first industrial policy reforms are the mindset change that took place in the country. Now there were many accounts of the 1991 reforms by a number of different people. Many of them have been top-down views, people who were there and not here where I was. So today I'm giving what I think is a workman-like technocratic view of how these reforms were initiated and implemented in 1991. And the question in some first question really is, since these reforms, 1991 initiated reforms, were a clear break from the direction followed in the previous 40 years, since independence, 45 or 44 years. How could such reform take place? That's to my mind the interesting question. And what is also important is that unlike the huge ideological break as exemplified by Margaret Thatcher in the UK and Ronald Reagan here, which led to what some would characterize as market fundamentalism in the world since the 1980s, what the market oriented big bang lurch of hitherto socialist countries in Eastern Europe and Russia after the fall of Soviet 1990. In India, it was the same Congress party in 1990 that had presided over the central planning dominated import substituting license permit Raj earlier, which assure in the new India 1991. Moreover, and this is also very interesting, the progenitors, the key progenitors of 1991 reforms were a trio of self-effacing leaders. Prime Minister Narasimh Rao was always known to be colorless and he always remained colorless, but he provided really savvy political leadership. And Finance Minister Manmohan Singh, why the intellectual and technocratic heft, and, you know, he's also very, very self-effacing. And principle and even the most self-effacing principal secretary of the Prime Minister Amarnath Varma, with indispensable bureaucratic enforcer of the reforms and how the five years, 1991 to 1996, how the reforms took place. And Shruti and Shreyas have put together lots of photographs I've never seen, but they could hardly find any photograph of it, but I think you found what one photograph of the environment is incredible actually. So what happened after the 1980s, the 1980s were characterized by various economic excesses particularly fiscal. Standard what you might call dual balance of payments and fiscal crises, which built up in India for some years before 1991. But towards the late 80s, the political instability was such that no big decisions could take place. In June 1991, the economic situation was dire. Inflation was well into double digits I think from 16.9 I think was the peak, and foreign reserves were at rock bottom not more than two weeks equivalent of imports. The IMF and World Bank pressure was undeniable. And one of the questions is how important with IMF World Bank pressure on the reforms. So, a lot of things that there was IMF World Bank pressure. But, you know, there'd been another IMF program 1982, just after the 1979 oil price shock. And that had not resulted in any similar well organized reform program so in that sense yes of course it was pressure. But I think that it succeeded in the 1990s, because there was emerging technocratic consensus in India on the direction reforms over the previous decade or so 1980s. And a great deal of work had been done towards liberalization within different arms of the economic policy establishment in the 1980s. So in some sense the country was ready. And the good part of the reform program was indeed homegrown. And how focused on industrial, so I'll not focus on industrial policy from 1991 as an illustration of the domestic generation of the world economic process. These reforms somewhat different from the other reforms, because they were carried out in one shot on July 24 1991, less than five weeks of the new government came into power with Narsimhar Rao as the Prime Minister. Most other reforms or big reforms over time, fiscal, trade, monetary, financial sector, policy reforms and infrastructure and so on, were carried out bit by bit over the next few couple of decades. So let me now be a bit self indulgent. And a little bit about my personal journey of course I said I started my professional life after a PhD at Princeton here at the World Bank. And I was so I was like this blinkers. I was only interested in urban economics urban development. And I want to go in a long story but I went back to India 1980. After having spent half my life abroad that is 16 years at that time to work on urban development in the Indian Planning Commission. I was exclusively on housing and urban development for three years before returning to World Bank after my leave finished my main work at that time involved running for task forces and planning, financing and management of urban development, and then housing and shelter for the urban poor. These reports did arouse a lot of interest among the congenitiy of urban development, but did not catch the attention of anyone else, especially mainstream policy makers. So I returned to the World Bank after these three years. I also concluded for myself that the time was not right for policy work in urban development in India. It's not clear but still right for that that's what he has returned. And those of you who have been to India will know what our cities look like so, especially the media, smaller cities are even worse than big cities you would visit. So it's still not clear the time is right. Basically what I felt was that there were too many moving parts in the system between the central state and city governments, and basically too few policy instruments at the central level to be effective and this is a big problem that in every country, the central government or the union government, federal government doesn't have that many levers to do something about the cities so it has to be centralized. Therefore it is that much more difficult. So anyway, I therefore decided to ditch urban development, which had worked on for 14 years and then nothing else. And retrain myself and mainstream policy areas such as industrial trade and macro policy. At the World Bank, when I returned I worked in the Philippines during the transition from President Marcos to President Aquino, now of course a Marcos is back. Almost 40 years later as the president. When the IMF in the World Bank designed macro stabilization and industrial and structural adjustment programs, and among their activities I led a team to design industrial policy reforms in Philippines. This gave me some idea of the policy process involved in designing countrywide macroeconomic strategy including tax reforms, but particularly focused on industrial policy. For me this is important because I've really done urban development earlier. Actually I had when I got to the World Bank I tried to, I was then seeing the change taking place in Southeast Asia and I really wanted to become the country senior economist for the career degree. Because that's what I was obviously the most fascinating. But I got picked to the post by someone else less deserving. He wouldn't agree of course a good friend. So I got the Philippines, which was not exactly the shining star of economic development policy, etc. But then what happened is later in 1986 on Deputy Chairman, Dr. Manmohan Singh, Deputy Chairman Planning Commission, Dr. Manmohan Singh's invitation, I returned to the Planning Commission as economic advisor. He had created a new development policy division, and which he'd got three of us to join as economic advisor. But unfortunately that never really took off because partly because Dr. Manmohan Singh himself left in I think mid-87 or I think mid-87, our father was no longer there. And so bureaucracy never likes new people coming in. So we were kind of left to fend for ourselves. However, with those of you, well some of these names won't make much sense to you, but I'll name them anyway, it'll take too long to say who they were. But there were members like Abid Hussain who was had been long term civil servant. Abid Hussain had been interned, he had had a lot of trade policy, but he had become a member of the Planning Commission. The Planning Commission had a Deputy Chairman who lived with the head, the chairman has always been the Prime Minister. The Deputy Chairman was the head, and then you had half a dozen member in charge of different sectors. Another member was Yuginda Alag, who was in charge of agriculture and also prospective planning. And Rajat Chalaya, who had headed the National Institute of Public Finance and Policy, a real tax expert. So these are all people who have been in India for a long, long time and basically homegrown, although they are also perhaps studied abroad. Also advisors like what you might call now, he would hate me to say this old-timer and it didn't decide, we just turned 80 last year. And newly minted economic advisors, Arvind Birvani, myself and Srinivas Madhur, and Jairam Ramesh, who's been later on joint politics and became a minister. So it was a fantastic, I've just given a few names, it was an incredibly interesting place to be in, even though I didn't have much to do. In the sense that Banbun Singh had taken off. So I was then keen to get out of there to be doing something useful. But Mr. Abhidhu Seyan, who was really one of the early liberalizers, constantly pushed the policy envelope in different areas. He had chaired as a private commission member, committed in capital markets. This was new because the funding commission had never been interested in capital markets. And this of course, the origin of some of the capital market reforms implemented much later. Among other activities, he appointed me as what's called a member secretary, that is the guy who does all the work on a high level committee on restructuring textile industry. And later in a similar capacity in a high level committee on industrial exports. Again, the planning commission has never been interested in exports. So these are new things that are happening in the late 80s before the actual reforms took place. That's what I mean by homegrown and technocratic concepts taking place at that time. So from my personal point of view, both these roles put me into direct touch with industrial policy, and also familiarize me with the powerful vested interests exemplified by trade unions, incumbent industrialists, and the interest bureaucracy. And this work also brought home to me how irrational and dysfunctional our industrial control system was in particular the textile industry from which we are suffering till today. So when you go, you know, I was when I was here teaching at Yale for a number of years, I used to go to Walmart and other department stores not to buy anything they don't need anything to buy. But as a tourist, I went around the store looking where things made. And I never found anything made in India. Okay, it was China, Malaysia, Korea, Ethiopia, Mexico, etc, etc. Only thing that made India with iPhone was towels somehow. But the point is that in the 19th century, and even perhaps the first half of the 20th century, India was a major textile producer. And it was because of its functional control system that we killed our textile industry. So till today we haven't recovered from that. Then, because I was itching to get out of the planning commission. I've got a providential opportunity to become economic advisor to the Ministry of Industry which was shares had mentioned. And initially, the head of the bureaucracy, Mrs. Otomar Bordier, that is the secretary of the Ministry of Industry, even though she had hired me, didn't really seem to want me to do very much. And partly because the economic resolution had been vacant for the previous three years, there was an acting person. And so, in some of the work had got diluted. And what happens in bureaucracy is it never likes a vacuum someone else, which is in. So, this what I did was, I actually had a good time doing some research. And so, as I was getting a little more fed up and not doing anything policy wise, I said to her one day, there was some policy thing, some policy went through. And I said, look, this didn't come through me, you know, how come? She said, economic advice is nothing to do with policy. They compile the industrial policy index of national production, the wholesale price index and things like that. So then I said to them, why don't you find another economic advisor. Thank you very much. Then actually, she started using much more and then of course we became very close and the best of friends, but she was older than I am. And so, that's how I entered the industry, the Ministry of Industry. So what I did through the research. The result of my research was a comprehensive paper co-authored with my colleague Vandana Agarwal, who was then a young senior research officer from Indian Economic Service. She has recently retired as an economic advisor in the Ministry of Civil Aviation. But that paper provided a comprehensive understanding of the origin of the Indian economic control system, which I'll say a little more. The papers called Commands and Controls, Planning for Industrial Development, 1951 to 1990, and came out of the Journal of Comparative Economics. So let me give a brief overview of how the system operated by the late 1980s. So we, many of you won't be familiar with the term license permit Raj, that is, you couldn't do anything without a license or a permit. And Raj of course, come from the British colonial system called the Raj British Raj. So this was some of the system of licenses and permits which governed everything. So the prior to the sweeping industrial policy of 1991, the establishment and operation of individual industrial enterprise in India, required approval from the central government at almost every step. So this illustrates what you had to do. I'll quickly, I won't repeat stuff, but to get an idea. So if you wanted to set up an industry, you first went to the Ministry of Industry and got a in principle, so called letter of intent, L-O-I, which usually required that you can do this if you also set up what to call phase manufacturing program, which said that in the first year you can import 90% of your intermediate input, only 60% and so on. So you can quote indigenize the intermediate inputs you're going to get. And that process was then related to what import license you would get. So after armed with the L-O-I, the entrepreneur could then type other requirements to set up the project. The import of capital goods to machinery was set up the project. They would have to go to the chief controller of imports and exports. In the Ministry of Commerce or Ministry of Trade, but it's also interesting that the license was given by the chief controller of imports and exports and Ministry of Commerce, but the approval is given by a committee set up in the Ministry of Industry. And most of those projects of course then needed foreign technology. So for that you didn't have to go back to the Ministry of Industry. And what it's called a foreign collaboration agreement and that the Ministry of Industry would then say you can give this kind of royalty so much for saying not so much etc. The foreign collaboration agreement or this foreign technology agreement was serviced by the Ministry of Industry, but chaired by the Secretary of Ministry of Finance. Because it involved output of foreign exchange when you would give the royalties. And once you got that you could then get permission allocation of foreign exchange from the Reserve Bank of India. Then if you wanted to raise domestic funds that was which you only used to have to do, you would go back to what is called the controller of capital issues in the Ministry of Finance. So you got to have a separate approval from the control capital issues for imports of raw material. First you got the permission to get permits to get capital goods, but then to run the industry would need imports for raw material components, separate licenses we need an annual basis from the chief control imports and exports. And the list actually was decided by the Ministry of Industry as part of phase manufacturing program because they said you can only in the first you can import this second you can put this etc. So the import license you got were from those lists. And in each case for before giving the permission the Ministry of Industry at something called the Director General for technical development. This is so called technical wing of the Ministry of Industry. Before giving the approval for getting an import, they had a called indigenous non availability clearance. So that is to say that if you wanted to import screws, I mean that's being trivial screws. They had to first find out if someone in India was producing them if they were they wouldn't get the import license. Once everything was tied up, the unit was about to go to production, the entrepreneur had to go back to the Ministry of Industry to turn the letter of intent industrial license. Okay. And then, and after that, then approach the government own development finance institutions to get financing. So that was the process which is summarized here. Now, what is interesting is people called. I say I was saying to Shruti yesterday that my non unthinking current economist friends call this India socialist development program, anything but socialism. And then in the research for the commands control paper I found the almost each of these controls actually inherited from the Second World War, which had a defensive India Act, which is promulgated in 1939 comprehensive economic controls were put in through in a motion through issuance of rules 81, I'm just giving the rules 81 and 84 in the defensive India act of the defensive India rules. Rule 81 had a blanket provision for regulating or prohibiting the production treatment, keeping storage, employment, transport, distribution disposable this acquisition, use or consumption of articles or things of any description whatsoever. By the way, you have had a similar act here and during the Second World War. So, and this is how a lot of this stuff started also here the UK and so on. Under rule 84 of the Senate government also empowered to prohibit or restrict import or export of all kinds, and to control the purchase of foreign exchange and to make restrictions and payments etc. These powers were later enshrined, immediately after independent 947 in a flurry of specific legislative enactments, soon after independence I said, a foreign exchange regulation act, imports and export controls act, the capital issues, Continuance of Controls Act, and little later the industrial industry development regulation act in 1951 of 1951 if I'm correct. So, these main instruments what you've listed here were really extensions of the defensive India powers acquired by the government during the Second World War. And they served as the administrative arrangements designed to move and thinking on national policy, which had been earlier expressed the statement of industrial policy in 1945. Industrial policy resolution 1948, and then later on after independence, the in 1956 industrial policy resolution. And with some in terms of general relevance of all this, whatever government does something. Particularly if it's negative and last for a long time. And then people forget where it came from this panoply of control that I said, has usually been seen to result from socialism and the practice of planning in India. But my view is that it is important to understand the first, the economic and industrial control system was put in place before planning started in 1952. As I said the system within the war powers 1939. Given these origin system was much more for control and less for socialism and development. And if I may say so this was consistent with the colonial bureaucratic mindset designed to control, rather than to foster development, a system that we inherited and to some extent have not changed to this date. But think about it in the in the colonial bureaucracy, the main first of all, it is incredible how few people from Britain control such a huge country in India, incredible actually. So the main aim was was really just to keep peace and control. You can't blame them that was their objective objective wasn't to develop India, or anywhere else so that control mindset in the bureaucracy just continued. So, as if these controls were not enough. These are our own invention this I can't blame the defensive India. Okay, new forms of control were added over the years. There's actually been great concern in India with the concentration of economic power. As a result, the monopolies and restrictive trade practices act was promulgated in 1969. Under this act companies with assets over some specified limit had to pin in addition to all those permits I mentioned, there to go a specific separate clearance from then established MRTP Commission. However, such companies could invest in only a specified set of in this other than they're not allowed to invest. Also the foreign direct investment was only also permit up to a limit of 40% equity in that same list of industries were large firms about to invest. Further, we had a inclination to promote small scale industries as an objective of Indian planning, some external narrative from the Gandhian view of how the country should develop. And that most consumer goods, that is, again, anything you buy and warm up now were produced in low technology, which was labor, it was assumed they should labor using and exhibit constant returns to scale. Therefore, you could promote manufacturing employment by confining the production of such items small scale enterprises, and thereby disallowed the production of large manufacturing units. And such items expanded significantly during the barrage of Versailles Prime Minister led John the government in 1977 to 1980. With the left leaning George Fernandez, who was a social, he was a socialist wire brand, he'd been trading leader, etc. And they only, I think, country were in railway strike that we all had. And 836 items were reserved for small scale enterprises and if you go around Walmart, you'll find all those items. That's why don't find India there because we've had this tradition of producing them small scale and so neither the marketing capacity is not technical capacity, etc. So it's even good items which were led led the East Asian manufacturing push in the 60s, 70s, 1980s. There's clothing of all kinds shoes, toys, hand tools, dinnerware, cutlery stationary and the like tables chairs included in this list. So Indian manufacturing was therefore in the uncompetitive in world markets by policy, although we didn't realize that. And ironically, manufacturing employment growth was severely stunted is the opposite of what was intended. Again, you know, you have to think what we do economic policy, what can be unintended consequences of what you do. So by the mid 1990s, while India had fewer than 10 million organized many factoring sector workers remember a population now is 1.4 billion. And by the way, the organized sector is a manufacturing it's not going to pass more than 14 or 15 million. If that in the mid 90s, China had more than 100 million in similar organized sector manufacturing activities from 1977 again you know the experts at doing ourselves in 1977, there's also a banner location of industries in the 20 to 30 largest cities. In 1988, this band extended to include municipal areas of all towns and cities, and the specific areas of influence around the 21 largest cities that you couldn't put manufacturing for 50 miles for the largest cities. So this was amongst the most irrational policy adopted, bordering on the bizarre ever since industrial revolution, industrialization and urbanization have gone hand in hand. By prohibiting the location of industries and urban areas, they would deprive the productivity gains that arrives from agglomeration economies and towns and cities were deprived of the energy and entrepreneurship industries bring with them. So you know even New York had lots of manufacturing. In the presence of such a Byzantine system of industrial trade controls. It is a miracle that industry Indian industry grew at all over the long period of 40 years since 1950. In fact, Indian industrial growth average in real terms about 6% for Adam 40 years and 50 90 90, and I was seven and a half percent from then 50 to 65 and during the 80s, the low time between 65 to 80. In the beginning, as savings investment rates went up along with large public sector enterprise investments, the current system therefore was quite successful in achieving industrial growth. The failure of Indian economy policy, in my view was that it did not adapt itself to the overall economy, becoming more complex and the rapidly changing international environment of relatively stable international period of 50s and 60s. It is very difficult to understand why such a system persisted over this long period, while much of the rest of the world had moved on, especially our neighbors East and Southeast Asia. What is interesting is that even by the early 1960s, it was well understood within the government that this system was ill suited for directing investments through planning. Secondly, in the 1960s, the government appointed one committee after another which I listed here to examine the industrializing system 1964 1964 1965 1967 1969 1969. The industrializing thing and policy inquiry committee 1969 had firmly concluded that the system had failed practically in all counts, not my words their words. Whether it was regional dispersal import substitution preventing concentration of economic power and force for licensing conditions or even implemented planning priorities. Even with the puzzle to be is which I don't have an answer, even with such damning indictments, these committees would typically conclude that despite his defects in industrializing system was useful and should continue. It was consistent reluctance to learn from experience and to change course. It will be easy to ascribe this in firm in firm in firm ability of the system to vested interest rent seeking, etc. Of course bureaucrats and politicians gained to the vast discretionary powers that the system grants them. In addition to optionaries for corruption, bigger incumbent industry gain because of the advantage of the preferential access they enjoy. That was the structure of the individual administrative service that explains this persistence. So what I said before what came naturally there was control rather than development. But inexplicably, and it's also interesting for this audience, much informed economic opinion also continued continued allegiance to the system. Finally, the deregulation gained from support 1980s, more in the bureaucracy interestingly than an academy. In the seminal work of Professor Janpej Bhagwati and his wife, Padma Desai, who originally passed away. Professor Bhagwati was teacher in Columbia. Much of academic opinion still supported the control system, underpinning the ideals of planned economic development. So the fig leaf of planned development licensing and controls remain for a long time. The workloads was too painful for the system to acknowledge. So you come back to our reforms. So such was the situation at the beginning of 1980s when Indira Gandhi returned to power as prime minister stagnation industrial growth system at 60 was mostly during her time had started being obvious. So political perception of the need to act gathered some force, not a great deal, but some force. So in work of tentative economic policy reforms towards deregulation by appointing a succession of committees, headed by no till noted technocrat civil servants, a number of committees that came in 1980s. And that's what I meant to say in the beginning that on this issue, there was a gathering degree of technocratic consensus and these reforms are homegrown in that sense. The reports of these committees when the direction of some liberalization, however tentative. Similarly, we had something called the Bureau of Industrial Costs and Prices, which are either to act it as the czar or at Mr. Industrial Prices, ranging from steel to cement copper pharmaceuticals in all manner of intermediate inputs that is the Bureau of Industrial Costs and Prices. And they examined the accounts of many companies, and they would say you can only sell cement at this price you only send steed at this price you can still have copper at this price, all the drug prices were controlled by them and so on. And that was in addition to all the other things that I talked about. What was interesting is that they began to change tack in 1980s under the successive leadership of another set of modernizing civil servant technocrats. In much to love Raj Kumar, I mentioned, you can do a lot of before, and Vijay Kalkar was a patient economics from Berkeley, and he'd been in the government in different positions, and including planning commission. So succession reports and steel cement, aluminum, et cetera, and soon, each of which recommended price regulation of some, some, some price regulation. And I think perhaps the success research economies, and finally made the government more accepted to his recommendation. So, will you come back to my story, and be self intelligent. So I came to the ministry of industry as economic advisor in December 1988. Full of enthusiasm to work in the policy reform, as I said I first had difficulty with my boss, but then changed. I'm busy myself research that mentioned before. And then, just when the Rajiv Gandhi government was on its last legs in 1989. You know the whole bureaucracy headed by the top civil servant, the cabinet secretary. He presides the whole government as a bureaucratic level. So there was a man called T and session SSH and who came as a cabinet secretary. He was a real activist. He was your cabinet secretary is actually very inactive in sense you basically sit all day. Heading committee they don't do very much I mean of course you, you know really just said the man was always come, confined to the cabinet secretary's office. But he was, this was too inactive for him. So he started a flurry of activity on in the government. So he asked all the major departments to prepare detailed presentations on the current and future activities. Most clueless things were given by the bureaucrats, like our friend here, I think, to economic advisors, you know, so being so being seen as clueless activity by the industry ministry the senior mandarins. Such thankless stars as well as trust on people like me economic advisors, so they could continue happily with the license permit activities, while we were busy doing all these useless stuff. So I had to prepare the ministry presentation for Mr session. So the question I don't answer was, what is India's industrial policy. This was not easy, given complexity, what I've now, now it's easy to say whatever but if you think that you're sitting in the government, it's not no one anyone has put together all this stuff. So given the complexity. This is also the complexity increase, because the Rajiv Gandhi government in the after 85 had done some piecemeal reforms, doesn't come these committees. Okay, so the complexity increase even more because something liberalized something not liberalized understand what you can do what you can do with more complex. So the process of compiling and collating all the existing industrializing policies was in retrospect, the first step that led to the national policy from 1991. After first know what the hell you have to reform. So this was the first time they said that the many different licensing and control mechanism that existed could be seen in one place. However, not much came of this exercise, since the Rajiv Gandhi ministry unravels towards the late 1989 new elections were called and the Congress power, Congress Party lost power, as in Mr session. So that was useless. The new government, the new Prime Minister was Mr. VP Singh would actually worked as Rajiv Gandhi's finance minister but they had broken with him and then he became Prime Minister would opposition party. So, the non Congress government that came in 1989, December 1989 wanted to differentiate itself from the Congress history of license for meteorology. As finance Mr. Rajiv Gandhi's government, Mr Singh had acquired a reputation for being a liberal reformer in the context of those days. So that was renewed expectation of liberalizing economy reforms. He appointed Mr. Ajit Singh, who was the son of the former Prime Minister Charan Singh. Mr. Ajit Singh was very well known, he was the former leader, etc. Though Ajit Singh relatively unknown, as it was a point in the industry minister, he was also a breath of fresh air. When I say this people in India will say what are you talking about, you know, because why he later reputation was sullied by repeatedly opportunistically changing parties and coalitions all the time. At that time he was seen as a smart techie. So in fact, he probably was a member of almost every government that came in because he just kept switching parties and because he had a political base, he could do that. So, his education at the Indian Institute of Technology, Kharagpur, he was the first in IIT and at the Illinois Institute of Technology here and then also he worked for IBM in the US. He had made him instinctively critical of the then licensed per meterage. With the new government came reshuffle of secretaries and Mr. Amunath Verma, a commerce then commerce secretary. At that time succeeded, what was mentioned before as the industry secretary. He had spent a number of years in the S cap secretary in Bangkok to become very familiar with happening in East Asia, economic miracle. So what happens whenever new minister comes, the civil servants make a presentation describing the ministry and the work content with Verma being new himself, this new thankless task again for me. I didn't tell anyone, but I said in no time was a dugout by presentation prepared earlier for Mr. Session impressing Mr. Verma my boss no end that I was so quick. So, living up to image of technocratic modern man, which are these things reaction when I've made the presentation was something to be something like, what is all this nonsense. How can we function this way in this country, and we were tasked to prepare a gender for industrial reforms. This was 1990. Now the lightning rod was the annual World Economic Forum summit in Davos in January 1990. The developing countries eager to attract global attention and capital display their ways to the symbol collectivity of Davos man. Ajit Singh was nominated by the Prime Minister to lead Indian contingent. So once again a presentation had been prepared this time for the minister, including a pitch for liberalization of foreign direct investment, so he would then present that to Davos man. And then further and proposing changes to what already had that would possibly pass must have the powers that be, which could be put forward an elite international setting. So those are busy weeks before in January, that I was meeting with frequent meeting between the minister, the secretary industry and myself is prepared for his trip. And so in some sense this was the second stage of preparation of internal policy reforms of 1991 what became later. And ultimately this effort also came to not because of the last minute the Prime Minister VPC for some political reason ditched Mr. Ajit Singh to leave the delegation to Davos, he continued industrial minister and inexplicably nominated the last RF Mohammed Khan, who is currently governor of Kerala, and now in the BJP and asked him to lead, he was the minister of civil aviation energy, asked him to lead the delegation. The funny thing was that the very powerful bureaucratic delegation of Ed Verma, Monty Singh Alawaliya, Secretary Prime Minister's office, within their side and then Chief Economic Advisor with me carrying the bags of course, not physically because I'm too small to do that. Since RF had no background. So actually we went one day earlier before the Prime Minister, so before the industrial minister was supposed to reach. It's only when we reached Barza Zurich, the Indian ambassador who received us said, your minister is not coming. What happened? Well, Mr. RF Mohammed Khan is coming. So RF had no background, there would be no time for a briefing, there could be no productive presentation in the meeting, so the trip ended up being a fiasco. And Mr. RF Mohammed Khan, I guess he's still alive so I shouldn't say it but I will spend most of his time doing shopping in Davos, how he got the foreign exchange at that time I don't know, because foreign exchange is all completely restricted. The funny thing was whenever Indian ministers have a special assistant, again member of bureaucracy who accompanies them anywhere they go. So because the special meeting at last minute, Mr. Ajit Singh's special assistant would got his visa and so on, there was no time for Mr. RF's special assistant to get the visa to go to Switzerland. So Mr. Ajit Singh's, especially went with Mr. RF to Davos. So it was his special assistant who gave me all the information what Mr. RF Mohammed Khan was up to during visit to Davos. However, this experience did not deter Ajit Singh from continuing with the work, preparing a new national reform blueprint. And under the continued leadership away at Burma, we prepared a detailed comprehensive framework for a very significant departure for Indian industrial policy for after almost four decades. Much of the difficulty in pushing reform was within the government. The cabinet consisted of a motley group of leaders, assembled in an unwieldy coalition. The finance minister Madhu Dandavate was an old socialist, and a senior staff consisted of Bimal Jalal who later became governor of Reserve Bank, who hired me as deputy governor in the Reserve Bank, as finance secretary and the size of chief economic advisor. As we sought the prime minister's approval in principle to go ahead with the liberalizing industrial policy, ask Ajit Singh to forge a consensus with other many ministries, particularly finance ministers. At the high level meeting, the finance minister, the industry minister, at which we have said what we wanted to say, and basically they didn't agree. And I was trying to speak up so my close friend, Nitin Desai, chief economic advisor related to Khan, he came under general of the UN and a very, very, very close friend. At one point he got so frustrated, he said shut up now Rakesh, in front of all the minister and everyone present. And after the meeting, Bimal Jalal again, who is one of the most respected people, we again became very, very close. Later, as I said he hired me. He rang up A. N. Varma, the secretary, never bring this fellow again to a meeting. You know, so those were the days. But our hard work did result in something concrete, though much diluted, a relatively comprehensive policy statement, clumsily titled, policy measures the promotion of small scale and agro based industries that was to satisfy that particular lobby and changes in procedures for industrial approvals, the whole name of the policy document. This long forgotten policy passed the cabinet and was formally announced by Ajit Singh in parliament on May 31 1990. So this was the third stage of the preparation 1991 national policy reforms, almost everyone is forgotten, but that document even was formally placed in parliament. And the only place that I know that you can find the draft of that the actual policy document is in an annex and appendix to Arvind Panagariya's book, India the emerging giant 2008 book where he has an appendix of that particular policy. So, so, but then there was a something I have to mention. So among, among other ideas that was at various licensing requirements we were drawn for certain certain sets of port priority industry. Similarly, it was proposed a major departure and liberalizing foreign direct investment, once again a specified list of industries, the major doc drawback of the document, which I drafted and admit with major drawback was a lack of clarity of what those lists of industries would be, which would be notified later. And then there was a comical bureaucratic interlude, which I guess no one else would know, which effectively buried the policy even before into got into political difficulty. So in the modernization effort, I had attempted to make the in the in the old industrial list in national policy, 1956, and so on, and the act of 1952 had very antiquated classification of the industry remained all through. So globally accepted harmonized system international trade classification ITCHS. So I among the modernization effort. I, I was attempting to make those listen to this new list. So, as we labor to make these lists in the new classification. There are documents to be taken the committee of secretary then headed by the then cabinet secretary, someone called VC Monday for approval. And luck would have it. Unfortunately, the first in entry the ITC agents classification happens to be live horses, asses mules and kidneys and horses. The document open at the meeting one day's eyes fell his unfortunate client. And he exploded the claim, claiming in Hindi, they're very few people under any process. So he said, yeah, you are good. Good a good day. In India industrial policy, that is, he said, have you assembled here discuss horses, asses and mules. And then the policy statement modernizing the most of course that ensued among the assemble group of I was a door faced secretaries of economic ministries, sitting in the verified confines of the cabinet room can only be imagined. The curmudgeonly VC Pande led the charge, and I've answered a mostly hustled out of the room to my great and lasting embarrassment. Thus, ended the life of the still more 1990 industrial policy statement. But this was fortunate, because the eventual 91 policy state was much better, much more comprehensive and radical. In this case, several political forces in starting with Mr Chandrasekhar rebellion are stensibly with industrial policy combined to bring down the PPC government on November 1099, November 10 1990, and Mr Chandrasekhar an old politician finally realize his dream to become the as a leader behind the opposition to industrial reforms, policy reforms prime minister Chandrasekhar chose to retain the industrial policy portfolio he became the industry minister, along with the prime minister. So, he, he said I want you to. So, he came industry minister he came himself to industry ministry building as prime minister. He came and spoke to us and he said, I have become industry minister because I disagree with what you had done. However, I want you to know that I want you to keep giving me the best impartial advice or whatever you think is correct. Don't worry about what I said in the past few months. So this is what we did. And within a few months by mid March 91 Chandrasekhar's run by administration collapsed and elections were called the final this final brings me shares to the national policy reform 1991. So the new industrial, so the new Congress government got elected with TV Narsimhar Rao as the prime minister. He retained many of the faces of the outgoing regime, but perhaps the greatest consequence was his decision to select Varnath Verma somehow, as his principal secretary, the Indian Prime Minister has a principal secretary who was always very senior was bureaucrat. So this made Verma the prime minister's personal enforcer, and the most powerful bureaucrat along with then cabinet secretary in the rest of the time. Mr. Rao likes on shaker chose to retain the industry portfolio, again is an incredible thing and some sense that was I would say Chandrasekhar's role in that having opposed policy from the became industry minister. So successor also decided to become industry minister. I don't know whether this was because the new principal secretary Verma influence Rao I wouldn't have no idea. Because I can certainly say that if you had an industry minister, we could never have done this reforms because no industry minister would want to let go of all the controls and power that you have. In any case, that one of the author 90 industrial policy reforms landed the Prime Minister's office. The Prime Minister chose to retain the portfolio turned out to be incredible coincidence along with Verma you also chose to direct. In the Prime Minister's office will also in will also be involved. And in view of the grave economic crisis appointed Dr. Manmohan Singh is a finance minister. So, Manmohan Singh which he called a meeting of the secretaries of all the major current ministries. As soon as he first or second building finance minister. I was the only non secretary present as a new industry secretary after a and Verma was some of the Suresh Martha, he said you know about all this I don't know anything because I'm new, you come with me. So Manmohan Singh outlined the full economic reform program that was we followed the next five years in 10 minutes. And more importantly, a detailed thing on the next six weeks, the latter included immediate action to take on industry policy. He said quite clearly they had the full mandate of the Prime Minister to do whatever had to be done to solve the crisis and to put India on a self sustained medium and long term growth path. And he knew that some of the Mandarin's present were not on board with the kind of reforms proposed. He said, if any of you are very difficult to do the proposal for a program, we can find other things for you to do. So this was perhaps the most firm and forceful that ever saw Dr. Manmohan Singh to be. And he knew of the document, because he'd been cabinet economic advisor at the cabinet level to Chandrasekhar. And he'd known me for a long time. He knew I'd done it. So he called me personally, he said, I have an initial policy document, could he, can I see it. So of course I trotted off to the cabinet secretariat, where he was office was with electricity, and within those is hard copy of the internet, nothing. So came in the hot copy. So he knew this thing existed. So after the horses after the news fiasco of June 1990. We continued our work. We filled the blacks blanks and prepared the whole list. And we retained the original classification, so that things would not horses would not come into action again. With the finance was having clear direction, a steering committee economic reforms was created in the PMO from his office under Mr. Ian Verma. It's also very unusual. And he held a meeting every Thursday, every week for five years to push all the reforms. So, the main difficulties ironically came from finance ministry officials, I can name them Mr. S. P. Shukla's van secretary, and Deepak Ramayur, a chief government advisor, who hold a watch from Chandrasekhar's government. They're honest and principal differences and views, and did not hesitate to express them. The discussions will help greatly by the support of Jaram Ramesh on one side Montek Alwalia and meetings. So this will continue. It will decide the additional policy would present be presented along with the budget on July 24 1991. However, the cabinet new cabinet had to approve it on July 1991. We both present on five days later. Unfortunately, no, they didn't approve it. They, they were, they were, they were not willing to be so quote revolutionary 1991. The years that are actually, they felt that the years will be, people will be disowned. So they felt that Jovalar Nehru Indira Gandhi is Congress government was being repudiated. So the note did not pass the cabinet. Instead, a group of ministers was set up look into the policy proposed again. And it met on the evening July 20 to discuss an amended somewhat toned on cabinet vote, but we had actually not changed any language in the actual substance. So this was, this again did not assuage the other side. And much of the opposition came from old card Gandhi family loyalists like M. L. Putridhar and Arjun Singh at the meeting broke up without a decision. It was filled the political packaging with the forms is not right. Instead of tinkering with the policy proposed again, a long preamble to the cabaret was then prepared, authored by the deft hands of wordsmiths, Jerome Ramesh, and commerce minister P. Chidambaram later became finance minister in constantly one thing. Just did a preamble with stress continued in change in the policy reforms proposed is stressed that all interest will be taken care of, and mentioned the successive contributions of Prime Minister Nehru. And then we ended up Gandhi Rajiv Gandhi to another policy over the years, and how this document was in the same position, not a word was changed. Not a word was changed substantive part of the document which had failed to pass much earlier. The new preamble to the trick, and the cabinet gave its approval that will policy reforms on July 23. And the Congress working committee the Congress party has a top committee of their own. The Congress working committee followed suit the same afternoon, and you got approved and we, before we thought they will get to change, we said we better put it tomorrow, the day after the decision. So I'll give a last point before I conclude. So having learned the horses and this is a new lesson. This time I retreated to the original antiquated classification of industries in the different lists and modern in the policy document. These lists were later on notified in the ITC modern HS classification. The only discussion that took place around midnight in the room of the Cabinet Secretary Nareesh Chandra was whether the industry lists appended to the policy statements should be called annexes or annexures. This is my contribution again. I have been combing dictionaries to find the word annexure which is usually all indeed documents till today. So I insisted to the Cabinet Secretary middle of the night that word annexure did not exist any decree that I could find. So, search was then made in the Cabinet Secretary office to find different dictionaries at midnight. And I had my little victory. So among other innovation, the biggest innovation industrial policy 1991 is the use of a term annex and not annexure. The next day at 1250 p.m. on July 24, 1991, quite unceremoniously, a reluctant PJ Kurian, who was the Minister of State, we have Cabinet Minister under the Minister of State, stood up and looked over and just table the new industrial policy, ushering in a new India, along with Finance Minister Manmohan Singh, who was breaking budget the same day at five p.m. Oh, I want to thank you. So this is the content of all the reforms. We abolished international licensing to a great deal, some still remained. Foreign investment was significantly liberalized, liberalized much more later, foreign technology agreements were made automatic, except for some limits. And there were a number of industries that also been reserved for only public sector. And that list was proved tremendously MRTP Act was abolished. And then I also mentioned the MRTP Act was defined large companies, had a limit of assets at any given time or the large companies in the definition. So, we had, you know, we wanted to abolish it. But we didn't as technocrats have the courage to go to the minister and say look, abolish this. And now a large number, like 1000 crores would be how many million 1010,000 10 billion. So the minister at that time, that particular ministry was someone called Kumar among them. And I went to him and he says, What's the rationale behind this 10 billion. And he's a professional. She's a very good. Thank you very much. So, I'll stop here. Sorry for changing your patience. But thank you very much for listening to me. As you can see, I've had a good time preparing this.