December, 27, 2024
India Today - Dr Manmohan Singh's tenure as Finance Minister in the early 1990s and later as Prime Minister from 2004 to 2014 introduced policies that continue to influence India's growth.
"I honestly believe that history will be kinder to me than the contemporary media, or for that matter, the opposition parties in Parliament," Dr Manmohan Singh famously said in 2014 towards the end of his second term as the Prime Minister.
These words resonate deeply today as the nation mourns the loss of its former Prime Minister and Finance Minister, who died at the age of 92 in New Delhi.
The former PM widely regarded as the architect of India’s economic liberalisation, played a pivotal role in transforming the country’s economy during a time of severe crisis. His tenure as Finance Minister in the early 1990s and later as Prime Minister from 2004 to 2014 introduced policies that continue to influence India’s growth. Known for his humility and academic brilliance, Singh’s economic reforms and social welfare programmes remain his enduring legacy.
When Singh was appointed Finance Minister in 1991 by Prime Minister Narasimha Rao, India was on the brink of an economic collapse. The foreign exchange reserves had dwindled to levels that could barely cover a few weeks of essential imports like oil and fertilisers. Inflation was rising, the fiscal deficit was widening, and India faced a balance of payments crisis.
Adding to the challenge, the Soviet Union, a key trading partner, had collapsed, cutting off a major source of cheap oil and raw materials. The situation demanded urgent and bold action. Singh, with his deep understanding of economics, introduced a series of sweeping reforms to stabilise the economy and pave the way for long-term growth.
THE 1991 ECONOMIC REFORMS
Manmohan Singh’s reforms were centred around liberalisation, privatisation, and globalisation, which fundamentally changed the Indian economy. Some of the key reforms were:
Devaluation of the Rupee and trade liberalisation - In July 1991, the Reserve Bank of India pledged 46.91 tonnes of gold with the Bank of England and the Bank of Japan to raise $400 million, stabilising the immediate crisis. Singh then devalued the rupee to make Indian exports more competitive in global markets. He also reduced import tariffs and dismantled restrictions on foreign trade, allowing India to integrate with the global economy.
Industrial policy reforms: Abolishing the Licence Raj - On July 24, 1991, Singh presented a new industrial policy that ended the ‘Licence Raj.’ Previously, industries required government approval for most operations, including expansion and production. The new policy deregulated nearly 80% of the industrial sector, reducing the number of industries reserved exclusively for the public sector from 17 to 8. This move encouraged private enterprises and foreign investment, fostering industrial growth and job creation.
Banking and financial sector reforms - The financial sector underwent significant changes under his leadership. Following the Narasimham Committee’s recommendations, the statutory liquidity ratio (SLR) was reduced from 38.5% to 25%, and the cash reserve ratio (CRR) was lowered from 25% to 10% over a few years. These measures allowed banks to lend more freely, supporting economic expansion. Licensing requirements for bank branches were eased, and interest rates were deregulated, creating a more competitive and efficient banking system.
His reforms not only saved India from the brink of collapse but also laid the foundation for sustained economic growth. The policies attracted foreign investments, boosted exports, and created new industries. Millions of Indians were lifted out of poverty as job opportunities expanded. By dismantling socialist controls, India transitioned into a market-driven economy, setting the stage for its rise as one of the world’s fastest-growing economies.
LEGACY AS PRIME MINISTER
Singh’s contributions went beyond his tenure as Finance Minister. As Prime Minister, he championed initiatives that targeted India’s rural and underprivileged population, recognising that economic growth alone could not bridge the gap between urban and rural India.
Mahatma Gandhi National Rural Employment Guarantee Act (MGNREGA) - Launched in 2005, this programme guaranteed 100 days of wage employment annually to rural households. It addressed poverty, underemployment, and rural distress, becoming a cornerstone of his government.
Right to Information (RTI) and Right to Education (RTE) - Singh’s government introduced the RTI Act, empowering citizens with access to government information. The RTE Act aimed to provide free and compulsory education to children aged 6-14, ensuring education as a fundamental right.
Manmohan Singh was not only a politician but also a distinguished economist. He held roles at the Reserve Bank of India, Planning Commission, and International Monetary Fund (IMF) before entering politics. His expertise earned him respect globally, with many recognising his efforts to integrate India into the global economy.
His economic liberalisation policies transformed India into one of the world’s fastest-growing economies. He dismantled socialist regulations, attracting foreign investment and creating jobs. His legacy includes a modernised industrial sector, a strengthened banking system, and policies that uplifted millions from poverty.
As India mourns his loss, history indeed remembers Dr Manmohan Singh kindly—as the architect of modern India’s economic journey and a leader whose policies continue to shape the nation’s future.
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