Manmohan Singh’s tenure as the finance minister in the early 1990s marked a watershed moment in the country’s economic history, setting the stage for robust growth and global integration.
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Manmohan Singh, India’s 14th Prime Minister and an esteemed economist, passed away on Thursday. He is often credited as the architect of India’s economic liberalisation. His tenure as the finance minister in the early 1990s marked a watershed moment in the country’s economic history, setting the stage for robust growth and global integration.
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The Prelude: Economic Crisis of 1991
By 1991, India was on the brink of an economic collapse. The country faced a severe balance of payments crisis, with foreign exchange reserves plummeting to precariously low levels, barely enough to cover a few weeks of imports. Inflation soared, and the fiscal deficit spiralled out of control. This dire situation necessitated bold and urgent measures.
The Economic Reforms: Vision and Implementation
As Finance Minister in the P V Narasimha Rao government, Singh spearheaded a series of transformative reforms to rescue the Indian economy. Here are the key highlights:
1. Liberalisation of the Economy:
- The Licence Raj, a complex web of bureaucratic controls, was dismantled, allowing industries to operate with greater autonomy.
- Restrictions on private sector participation were eased, encouraging entrepreneurship and investment.
2. Trade Policy Reforms:
- Import licensing was abolished for most goods.
- Tariffs were significantly reduced, facilitating greater integration into the global economy.
3. Financial Sector Reforms:
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- Banking sector policies were revamped to enhance efficiency and competition.
- The capital markets were modernised, including the establishment of the Securities and Exchange Board of India (SEBI) as a regulator.
4. Foreign Investment:
- Restrictions on foreign direct investment (FDI) were relaxed, attracting multinational corporations to invest in India.
- Foreign exchange controls were eased, laying the groundwork for a convertible rupee.
5. Tax Reforms:
- Simplification of the tax structure and rationalisation of rates made the system more efficient and equitable.
A New Economic Trajectory
The reforms initiated by Singh had profound and far-reaching effects:
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Economic Growth: India’s GDP growth rate accelerated, averaging around 6% annually throughout the 1990s, compared to the sluggish 3-4% of previous decades.
Global Integration: The share of international trade in GDP surged, transforming India into a global economic player.
Entrepreneurial Ecosystem: The liberalised environment fostered innovation and the rise of dynamic enterprises across sectors.
Poverty Reduction: Higher growth translated into job creation and poverty alleviation for millions.
Beyond the 1990s: Singh as Prime Minister
Manmohan Singh’s economic legacy extended into his tenure as Prime Minister from 2004 to 2014. During this period, landmark initiatives such as the Mahatma Gandhi National Rural Employment Guarantee Act (MGNREGA) and significant investments in infrastructure and social welfare schemes were implemented. The country witnessed an era of high growth, with India emerging as one of the fastest-growing economies globally.
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A Lasting Legacy
Manmohan Singh’s contributions to the Indian economy are monumental. He not only pulled the country out of a dire economic crisis but also paved the way for sustainable growth and development. His pragmatic approach and unwavering focus on economic reforms remain a cornerstone of India’s economic narrative.
As we revisit his legacy, it is evident that Singh’s vision continues to inspire policymakers and economists, reaffirming his place as one of the most influential architects of modern India.
Manmohan Singh’s Death
Former prime minister Manmohan Singh died in New Delhi on Thursday night. He was 92. his death was announced by the All India Institute of Medical Sciences, Delhi, where he was admitted in the Emergency ward around 8.30 PM in a critical condition.
An AIIMS bulletin said “he(Singh) was treated for age related medical conditions and had sudden loss of consciousness at home” on December 26.
