I met Rajiv Gandhi for the first time on 18th September 1990 thanks to an introduction by Siddhartha Shankar Ray. We met a half dozen or so times until his assassination in May 1991. Yet our encounter was intense and consequential, and resulted directly in the change of the Congress Party’s economic thinking prior to the 1991 elections. I had with me the results of an interdisciplinary “perestroika” project for India which I had led at an American university for some years; this manuscript, later published by Sage, was given by me to Rajiv Gandhi, and was instrumental in the change of thinking that took place. It contained inter alia an unpublished memorandum by Milton Friedman done at the request of the Government of India in November 1955. After Rajiv’s assassination, The Statesman center-pages July 31-August 2, 1991 published some of the other work I had done for him. Ten years after this death, I look back on the encounter with some nostalgia.
That first day, Rajiv came to the door to greet me. He was a handsome tall man with the most charming smile and manner, seemed pleased to see me and put me at ease at once. We exchanged books; I gave him my Philosophy of Economics and Pricing, Planning and Politics: A Study of Economic Distortions in India, as well as the manuscript of the Indian “Perestroika” I had led for the University of Hawaii and the East West Centre since 1986. He gave me a copy of a hagiography of Nehru that had just been published.

Public Goods
He began by talking about how important he felt panchayati raj to be, and said he had been on the verge of passing major legislation on it but then he lost the election. He asked me to spend some time thinking about it, and said he would get the papers sent to me. I said panchayati raj could be seen as decentralized provision of public goods, and gave the economist’s definition of public goods as those essential for the functioning of the market economy, like the Rule of Law, roads, fresh water, and sanitation, but which were unlikely to appear through competitive forces. I distinguished between federal, state and local levels and said many of the most significant public goods were best provided locally. Rajiv had not heard the term “public goods” before, and he beamed a smile and his eyes lit up as he voiced the words slowly, seeming to like the concept immensely. It occurred to me that for most of his life, he had been a family man and a pilot of commercial aircraft. Now he seemed intrigued to find there could be systematic ways of thinking about navigating a country’s governance by common pursuit of reasonable judgement.

Edistribution of Wealth
I said the wastefulness of the public sector had drained scarce resources which should have gone instead to provide public goods. Since the public sector was owned by the public, it could be privatized by giving away its share to the public, preferably to panchayats of the poorest villages. The shares would become tradeable, drawing out black money, and inducing a historic redistribution of wealth while at the same time achieving greater efficiency by transferring the public sector to private hands. Rajiv seemed to like that idea too, and said he tried to follow a maxim of Indira Gandhi’s that every policy should be seen in terms of how it affected the common man. I wryly said the common man often spent away his money on alcohol, to which he said at once it might be better to think of the common woman instead.

Many Problems
The Hawaii project had identified the Congress’s lack of internal elections as a problem; when I raised it, he spoke of how he, as Congress President, had been trying to tackle the issue of bogus electoral rolls. I said the judiciary seemed to be in a mess due to the backlog of cases, many of which seemed related to land or rent-control, and it may be risky to move towards a free economy without a properly functioning judicial system or at least a viable system of contractual enforcement. I said a lot of problems which should be handled by the law in the courts in India were instead getting politicized and decided on the streets. Rajiv had seen the problems of the judiciary and said he had good relations with the Chief Justice’s office, which could be put to use to improve the working of the judiciary.
Our project had worked on Pakistan too, and I went on to say we should solve the problem with Pakistan in a definitive manner. Rajiv spoke of how close his government had been in 1988 to a mutual withdrawal from Siachen. But Zia-ul-Haq was then killed and it became more difficult to implement the same thing with Benazir Bhutto, because, he said, as a democrat, she was playing to anti-Indian sentiments while he had found it somewhat easier to deal with the military. I pressed him on the long-term future relationship between the countries and he agreed a common market was the only real long-term solution. I wondered if he could find himself in a position to make a bold move like offering to go to Pakistan and addressing their Parliament to break the impasse. He did not say anything but seemed to think about the idea. He then talked about his visit to China, which seemed to him an important step towards normalization. He said he had not seen (or been shown) any absolute poverty in China of the sort we have in India. He talked about the Gulf situation, saying he did not disagree with the embargo of Iraq except he wished the ships enforcing the embargo had been under the U.N. flag.
The meeting seemed to go on and I was embarrassed at having taken too much time and that he was being too polite to get me to go. Just before we finally stood up, I expressed a hope that he was looking to the future with an eye to a modern political and economic agenda for the next election, rather than getting bogged down with the domestic politics of the moment. That was the kind of hopefulness which had attracted many of my generation in 1985. I said I would happily work in any way to define a long-term agenda. His eyes lit up and as we shook hands to say goodbye, he said he would be in touch with me again.

Drafting A Manifesto
The next day, I was called and asked to stay in Delhi for a few days as Mr. Gandhi wanted me to meet some people. I was not told whom I was to meet but that there would be a meeting on Monday, 24th September. On Saturday, the Monday meeting was postponed to Tuesday because one of the persons had not been able to get a flight into Delhi. I pressed to know what was going on, and was told I was to meet Gen. K. V. Krishan Rao, V. Krishnamurthy, M. K. Rasgotra, and Sam Pitroda. The group met for the first time on September 25 in the afternoon. Rasgotra did not arrive. The rest of us gathered in the waiting room next to V. George’s office. They knew each other but none of them knew me and I was happy enough to be ignored. It seemed mysterious while we gathered, especially when the tall well-dressed General arrived, since none of us quite knew why we had been called by Rajiv; the General remarked to the others that he had responded at once to the call but could not get a flight into Delhi for a day. On that Tuesday, when our group was finally called in by Rajiv, we entered hesitantly now knowing what the meeting was going to be about.
Rajiv introduced me to the others, then spoke of why he had gathered us together. He wanted us to come up with proposals and recommendations for the direction the country should take on an assumption the Congress Party was returned to power in the near future. He said it would help him to have an outside view from specialists who were not party functionaries, though the others obviously had been involved with the Congress governments before. Rajiv said we were being asked to write a draft of what may enter the manifesto for the next election which we should assume to be forthcoming by April 1991. I asked what may have become of the “perestroika” manuscript I had given him at our previous meeting. He said he had gotten it copied and bound, and that along with my 1984 monograph, it had been circulated among a few of his party colleagues who included P. Chidambaram and Mani Shankar Aiyar.
The initial meeting left us breathless and excited. Yet within a few days, the others became extremely tied up for personal causes, and I found myself alone in getting on with doing what we had been explicitly asked to do. I felt I should get done what I could in the time I had while keeping the others informed.

Gulf War
In December 1990, I was back in Hawaii when I was called on the phone to ask whether I could come to Delhi. With the rise of Chandra-shekhar as Prime Minister, Rajiv had called a meeting of the group. But I could not go. In January 1991, the Gulf War brought an odd twist to my interaction with Rajiv. On January 15, the UN deadline for the withdrawal of Iraq from Kuwait passed without Iraqi compliance, and American-led forces started the heavy aerial bombardment of Iraq. The American media had built up the impending war as one of utter devastation and mass killing, especially when the American infantry became engaged. Estimated casualties on the American side alone were being wildly exaggerated by the number of “body-bags” being ordered by the Pentagon. An even larger conflagaration was being imagined if Israel entered the fighting, while Saddam Hussein had vowed to set fire to Kuwait’s oil-fields before retreating.
I, like everyone else, erroneously believed the media’s hyperbole about the impending regional catastrophe. On January 16, just after the bombing of Iraq had begun, I called an American family friend who had retired from a senior foreign policy role and who had known me from when I was an infant. In informal conversation, I mentioned to him that since other channels had by then become closed, an informal channel might be attempted via India, specifically via Rajiv who was still Leader of the Opposition but on whom the Chandrashekhar Government depended. The sole aim would be to compel an immediate Iraqi withdrawal without further loss of life. What transpired over the next few days was that a proposal to that effect was communicated at Rajiv’s decision to a high level of the Iraqis on the one hand, and evidently received their assent, while at the same time, it was mentioned to the authorities on the American side. But nothing came of it. Rajiv initiated a correspondence with Chandrashekhar beginning January 19, demanding a coherent formulation of Indian policy in the Gulf war, and faxed me copies of this.
By February 8, The Times of India led by saying Rajiv’s stand “on the Gulf War demonstrates both his experience and perspicacity ... in consonance with an enlightened vision of national interest”, and urged Rajiv to “give the nation some respite from [the] non-government” of Chandrashekhar. My phone conversations with Rajiv during this time were taped by me, because notes could not be taken at the necessary speed; after his death, I gave his widow on December 6, 1991, a copy of the tape for her personal record.
I returned to Delhi on Monday, March 18, 1991 as new elections had been announced. Rasgotra said I should speak to Krishna Rao, and the next day, Krishna Rao met me for several hours. I told him what I thought were the roots and results of the Gulf war. He in turn generously told me about the group’s meeting with Rajiv in December. He said our group had now been asked to draft the manifesto, reporting to a political committee of three senior party leaders who would report to Rajiv. They were Narasimha Rao, Pranab Mukherjee and Madhavsingh Solanki. Krishna Rao said I should be in touch with Krishnamurthy who was preparing the economic chapters of the draft of the manifesto.
Krishnamurthy told me he had brought in A. M. Khusro to the group, and there would be a 5 p.m. meeting at Khusro’s office at the Aga Khan Foundation. I arrived early and was delighted to meet Khusro, and he seemed pleased to meet me. Khusro seemed excited by my view that India and Pakistan were spending excessively on defence against each other, which seemed to resonate with his own ideas, and he remarked the fiscal disarray in India and Pakistan could start to be set right by mutually agreed cuts in military spending. (Khusro was eventually to accompany Prime Minister Vajpayee to Lahore in 1999).

Working on the Draft
Krishnamurthy had prepared a draft dated March 18, 1991 of the economic aspects of the manifesto. After our discussions, Krishna-murthy was hospitable enough to open it to change. That evening, I worked through the night and the next morning to get by noon copies of a revised version with all the members of the group. The next day, Friday, March 22, I worked from dawn to get the penultimate draft to Krishna Rao before noon as planned the night before. Rasgotra arrived shortly, and the three of us working until evening to finish the job. I left for an hour to print out copies for a meeting of the entire group, where the draft we were going to submit would come to be decided.
When I got back, I found one member had launched an extended and quite unexpected attack on what I had written on economic policy. Would someone like Manmohan Singh, it was demanded, agree with all this talk we were putting in about liberalisation? I replied I did not know what Manmohan Singh’s response would be but I knew he had been in Africa heading something called the South-South Commission. I said what was needed was a clear, forceful statement designed to restore India’s credit-worthiness, and the confidence of international markets. I said what we should aim for was to make clear, e.g. to the IMF’s man in Delhi when that person read the manifesto, that the Congress Party at least knew its economics and was planning to take very bold new steps in the direction of progress. Others came to my defence saying the draft we had done greatly improved on the March 18 draft. For a bare half hour or so with all of us present, the draft was agreed upon. Later that night, I gave Krishna Rao the final copy of the draft manifesto which he was going to give Narasimha Rao, and sent a copy to Krishnamurthy who was liaising with Mukherjee. Pitroda got a copy on a floppy disc for Solanki.
In its constructive apsects, the March 22, 1991 draft of the Congress manifesto went as follows regarding economic policy: