Dr Manmohan Singh, a prominent figure who held the positions of finance minister and prime minister, is widely recognised as a trailblazer in the implementation of economic liberalisation policies within the country. When discussing matters pertaining to the economy, it is customary to make reference to Dr Singh. While there may exist divergent perspectives regarding his tenure as the prime minister, it is universally acknowledged that his efforts in safeguarding and fostering the Indian economy have been of considerable importance.
Dr Manmohan Singh held various esteemed positions within the government, including serving as the economic advisor in the Ministry of Foreign Trade, chief economic advisor in the Ministry of Finance, and secretary to the Ministry of Finance. The individual in question assumed the position of Director of the Reserve Bank of India during the period spanning from 1976 to 1980, thereafter transitioning to the role of governor from 1982 to 1985. Additionally, he has served as the deputy chairman of the Planning Commission and held the position of chairman of the University Grants Commission. He assumed the position of the 14th Prime Minister of India while leading the United Progressive Alliance (UPA) coalition, which was dominated by the Indian National Congress. The individual in question assumed the position of Prime Minister for two uninterrupted periods, spanning from 2004 to 2009 and subsequently from 2009 to 2014.
One of the most significant contributions made by Dr Singh was his initiation of economic reforms during his tenure as the finance minister. In 1991, India’s international trade balance had a significant deficit. Also, in 1991, the foreign debt of the subject in question had a twofold increase, rising from $35 billion to $69 billion. India had limited financial resources and a constrained timeframe. The nation possessed foreign exchange reserves amounting to less than $6 billion, a quantity sufficient to finance a mere two weeks’ worth of imports. Foreign capital investment was subject to government oversight.
A multifaceted licensing system was in place for imports. The economic progress of the country was hindered by several factors such as conflicts with China and Pakistan, fraudulent activities in the stock market, and government intervention in manufacturing. These challenges posed a significant threat to the stability of the economy, leading to the imminent risk of collapse. In an effort to salvage the situation, the government made the decision to reintroduce the rupee on two separate occasions in July 1991.
A decision was made to implement a devaluation strategy, initially reducing the value by approximately 9 per cent, followed by an additional reduction of 11 per cent. The depreciation of the rupee has resulted in a decrease in the value of our exports, thereby addressing the issue of our deteriorating trade deficit. In response to the prevailing current account deficit, the Reserve Bank of India (RBI) has undertaken a proactive approach by pledging its gold holdings with the Bank of England. This strategic move aims to generate an estimated sum of $400 million, which will be utilised to mitigate the existing deficit in the current account.
Dr. Singh initiated a series of reforms in the Indian economy, which he referred to as “reforms with a human face.” These reforms were implemented thereafter. The inception of the Industrial Policy in 1991 marked the forerunner to the dismantling of the License Raj. In order to address the prevailing situation, Manmohan Singh implemented a policy in the budget that facilitated the entry of foreign enterprises into the Indian market. In December 1991, the government achieved its initial accomplishment after a few months by effectively retrieving the gold that had been promised overseas and then transferring it to the RBI.
The influx of foreign capital initiated a transformation within the nation, resulting in increased financial resources for individuals and a subsequent shift in lifestyle. Prominent multinational corporations encountered setbacks in the Indian market. The number of jobs and industries experienced growth. The present system of globalisation can be characterised as a manifestation of the principle of ‘survival of the fittest’.
Singh successfully reduced the country’s fiscal deficit from approximately 8.5 percent of the GDP to 5.9 per cent within a span of one year. The initiation of globalisation within the country can be attributed to Singh’s actions in 1991. The individual in question not only facilitated India’s integration into the global economy, but also streamlined the regulations pertaining to international trade. Singh implemented significant reforms in three key domains, namely liberalisation, globalisation, and privatisation. These reforms encompassed various measures such as the liberalisation of foreign commerce, financial sector liberalisation, tax reforms, and the promotion of foreign investment. In essence, the determination of production quantity and pricing for a product was entrusted to the market rather than the government.
During the period from 2004 to 2014, under the leadership of the Prime Minister, the Indian economy saw a decade of notable growth and prosperity, sometimes referred to as the “golden years.” India saw a notable decade of economic growth, with its Gross Domestic Product (GDP) expanding at an average annual rate of 8.1 per cent. The real GDP experienced an unprecedented growth rate of 10.08 per cent during the year of 2006-07. In the year 2007, India experienced a notable increase in its GDP growth rate, reaching a peak of 9 per cent.
This economic performance positioned India as the second most rapidly expanding major economy globally. In the year 2005, the government led by Singh implemented a Value Added Tax (VAT) system as a replacement for the intricate sales tax structure. The Right to Information Act of 2005, the National Rural Health Mission (NRHM) of 2005, the Unique Identification Authority of India (UIDAI/Aadhaar) established in 2009, the Mahatma Gandhi National Rural Employment Guarantee Act of 2005 (MNREGA), the Right of Children to Free and Compulsory Education Act of 2009 (RTE), the Rajiv Awas Yojana (RAY) initiated in 2011 to address housing needs of the impoverished and homeless in urban areas, and the National Food Security Act of 2013 are significant policy measures that have brought about transformative changes in the country.
Dr. Manmohan Singh implemented extensive economic changes inside the Indian economy, and it is widely acknowledged that his efforts have played a substantial role in the transformation of the Indian economic landscape.
The author is an Associate Professor at Atal Bihari Vajpayee School of Management and Entrepreneurship, Jawaharlal Nehru University (JNU), New Delhi.
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