In a new book, a journalist relates the curious hold of a ‘godman’ over former PM PV Narasimha Rao

When PV Narasimha Rao took over, India was going through a massive economic crisis. During PM Chandra Shekhar’s short tenure, the country was on the verge of a foreign exchange reserve collapse, with reserves dropping to below $1 billion, only enough to meet three weeks of imports. Inflation was in double digits, from 13.7% in February to peaking at 16.7% in August 1991 due to the Gulf War (1990–91) and fiscal mismanagement. Credit rating agencies downgraded India due to political and economic instability.

To avoid defaulting, the RBI pledged 46.91 tonnes of gold with the Bank of England and the Bank of Japan in July 1991 to raise $400 million. The RBI had to pledge 67 tonnes of gold to the IMF to secure a $2.2 billion emergency loan. This sent shockwaves throughout the nation. Sonia Gandhi and other senior leaders chose Rao to head the government because no one knew how to pull India out of this enormous financial crisis. They expected Rao to fail and be blamed for the deepening economic crisis India was facing. However, Rao silently faced and analysed the situation without panicking, and took necessary but unpopular steps. His advantage was that he didn’t have to face the electorate, nor was he expected to lead the party into the subsequent polls.

I remember that just before his death, Rajiv invited Dr Manmohan Singh for several breakfast meetings to discuss measures to pull India out of the economic quagmire it found itself in. Rajiv was confident that the Congress was coming back to power and the burden of reviving the economy would be on his shoulders, and he was preparing a road map with the help of Dr Singh to accomplish this. He was appointed as the finance minister by the Rao government in June 1991.

Immediately after taking over, Rao and Dr Singh took a bold and unpopular step – the devaluation of the rupee. On July 1, 1991, the rupee was devalued by 9%, and two days later by another 11%. Only Rao and Dr Singh could take such a bold step while heading a minority government. Jitendra told me that Rao took Vajpayee and Left Front leaders into confidence before doing that. According to him, Rao did not confide in Sonia regarding important political and economic decisions. More than Sonia, it annoyed a few people, like Captain Satish Sharma, Arjun Singh and Vincent George, who were close to her.

On July 9, a week after administering the bitter pill of devaluation, Rao addressed the nation, preparing it for more “sacrifices”. Addressing the nation in his drab voice, he said, “It would be dishonest for me to pretend that the job of repairing the economy will be easy, quick or smooth. Each one of us will be called upon to make sacrifices.” Manmohan Singh and he are rightly credited with changing the nation’s economic direction, and taking it on the path to high economic growth.

In his budget speech on July 24, Dr Singh unveiled a new industrial policy while presenting his first budget or what was then called LPG, “liberalisation, privatisation, globalisation”. Still, the process was initiated by Rajiv Gandhi and Rao; the latter admitted it in his address to the nation. “What we have done is a continuation of the policies initiated by him [Rajiv Gandhi].” As Rao said, “Desperate maladies call for desperate remedies.” A major overhaul of the trade policy was announced. Rao’s motto was “trade, not aid”. He said, “Aid is a crutch, trade builds pride, and India has been trading for thousands of years.”

Despite his bold steps on the economic front, Rao received a lot of flak because of the activities of the people who surrounded him. One of them was Chandraswami, who moved in and out of the PM’s residence at will. There were rumours within the Congress circles in those days that he had tremendous powers to influence Rao and his government. One might be led to ask, were those merely tantric, spiritual powers, or was he “blackmailing” Rao?

Jagadacharya Chandraswami, whose real name was Nemi Chand Jain, was a Jain born in Rajasthan, but his father, an active member of the RSS, moved to Hyderabad when he was still very young. Chandraswami was a mind-reader who impressed everyone with his capability to read a person’s thoughts. He had also impressed Mrs Gandhi and gained her confidence for some time. During Indira’s time, he started travelling abroad and impressed everyone he met with his telepathic power. During these travels, Rao introduced Swami to some top global leaders and businessmen; they travelled with him and acted as Chandrawami’s interpreters.

It is alleged that it was Rao who introduced him to Adnan Khashoggi, a Saudi business tycoon and one of the biggest suppliers of illegal arms in the world. From what I have heard, Rao introduced Chandraswami to some prominent people. I am not sure who made the introductions, but one thing is well known – they were both helping each other gain influential friends. Khashoggi and Chandraswami had a mutually beneficial relationship – one where Chandraswami was vital in providing him access to Indian elites, and Khashoggi enabled him to form connections in the world of finance and global arms suppliers.

One person Chandraswami impressed very highly was the Sultan of Brunei, one of the wealthiest men in the world at that point. Swami had been mastering the art of networking and using his contacts to make large amounts of money from a young age. So he used these connections for mutual benefit and emerged as one of the biggest wheeler-dealers in the world. He used the Sultan’s unlimited wealth to influence politicians, film personalities, businessmen and criminals. He created one of the most robust networks, cutting across continents and influential positions – from Margaret Thatcher and Elizabeth Taylor to Mobutu Sese Seko of the Democratic Republic of Congo (earlier Zaire).

At that point, important postings in the government and even the judiciary required a nudge from Chandraswami. The most powerful and influential people lined up outside his ashram for his sifarish (recommendation). Rao could ignore Sonia but not Chandraswami. He was called the “Super Prime Minister” in the political and journalistic circles in Lutyens’ Delhi. I know of one case of a senior IAS officer from a minority community who was in the running for the most coveted government position.

Sometime in June 1993, he came to me with my friend, a minister in Karnataka, asking me to recommend his case to the PM. I sought an appointment and requested the PM not to sideline this officer, as it would send the wrong message to the Muslim community. Unlike his usual style, Rao was candid in telling me that it was impossible to do so as there were many allegations of a personal nature against the bureaucrat. He asked me to speak to Rajesh Pilot, the state minister for home, as a second option. Pilot was an old friend and very informal with me. He bluntly told me there were murmurs about the officer’s personal life, and hence, he was not the right man to be in that exalted position.

I informed the officer about the situation. He then desperately approached Chandraswami, who prevailed over all objections and asked the PM to appoint him to the high office. The PM could never deny Chandrasawami what he wanted. Pilot later described the turn of events, saying, “Chandraswami ke age kisi ki nahi chalti.” (Chandraswami always has the final word.)

Chandraswami was certainly Rao’s Achilles’ heel. Sonia and people close to the Gandhi family were distraught by his overt display of influence over the PM, which was one of the primary reasons for the increasing conflict and confrontations between them. Rao used the Bofors investigation to pressure Sonia and sent a message to her that they had some new documents on the scandal that could be detrimental to the interests of her family.

Vincent George hinted this to me, and later HR Bhardwaj, who was serving as minister of state in the Ministry of Law, Justice and Company Affairs, and was well-informed about the details of the Bofors investigation, confirmed this. He also informed me that Rao was not being truthful. However, Sonia, who was already under considerable stress, chose to remain silent. More than Bofors, she was worried about the safety of her son Rahul and daughter Priyanka. She once told Bhardwaj that those who assassinated her husband could go to any length to silence her and her family. The threat to her and her family came from Rao’s “Rasputin” – Chandraswami.

Excerpted with permission from I, Witness: India from Nehru to Narendra Modi, Shahid Siddiqui, Rupa Publications.