Then FM Yashwant Sinha: Took steps to weather fallout in markets, post-Pokhran sanctions helped

The al-Qaeda attack on the World Trade Center towers in New York happened more than 7,000 miles away. However, the Indian government, still steering the country through the economic sanctions imposed after the Pokhran nuclear test three years earlier, knew that the tremors would hit home.

Then finance minister Yashwant Sinha recalls that the Cabinet Committee on Security (CCS), of which he was a part, took immediate decisions to tighten the belt and shield the public from the volatility that was expected to follow in the global markets.

Sinha was in Mumbai attending a key meeting of financial institutions when the planes hit the towers, and came to know about the incident only when he came out for lunch. “I switched on television to see what had happened. I realised the gravity of the situation. I decided to return to Delhi immediately,” Sinha, now 83, told The Indian Express.

“In Delhi, we had various consultations and meetings. The CCS met the next day. The most important issue as far as I was concerned — and the entire government was concerned — was to ensure that everything in India was normal. We wanted to give the impression that it was business as usual,” he said.

That meant ensuring banks stayed open, and stock and exchange markets worked as usual. “We took a risk, because in the aftermath of such an attack, wild swings happen. There could have been some withdrawals, but we decided to keep everything open and normal. All kinds of assessments were made — security, global chains, global investments etc. Fortunately, there was some volatility, but then everything settled down as far as the financial market was concerned,” Sinha said.

The former BJP leader believes the measures put in place due to the economic sanctions post-Pokhran in May 1998 helped. “We had put the economy to shock treatment post-Pokhran. We had met that frontally without necessarily conceding any ground to anyone. One of the things that happened post the nuclear test was that a number of big firms that used to give us financial aid had discontinued it. When normalcy returned, I made an analysis and we phased out all the small donors. I told them we don’t need your help and that they could help other nations that required it more. Some of them used to give small funds and lecture us on morality. Some of them were upset about it — at an international event, one of the ministers of these countries came to me and almost fought with me over it,” Sinha said.

The former finance minister added that 9/11 was also a reminder to India of the very tough and rough neighbourhood it was a part of — in fact the country saw several terror attacks in the wake of the World Trade Center incident. “The real culprit is not so much Afghanistan, it’s Pakistan. But the international community is not prepared to argue with Pakistan or persuade them not to do things they are doing,” he said, adding that the situation remains the same even now, seeing the developments in Afghanistan.

That is why, Sinha feels, it is time for India to stop following narratives of other countries, including that of the US, on security issues. With the US more concerned about its own security, it does not have to act against Pakistan, he said. “We should be solely guided in security, esepcially in anti-terrorism matters, by our own national interests and take whatever steps we need to. No other country will come to our rescue, we have to defend ourselves.”

Having said earlier that while India should not take the Taliban’s initial statements at face value but not dismiss them either, Sinha now believes he was wrong. “Subsequent events including government formation show that we cannot expect much from this Taliban government. It is under the thumb of Pakistan and we can’t rule out Pakistan misusing its influence on the government and making them act against the interests of the other countries,” he said.

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