Manas Dasgupta
NEW DELHI, Dec 27: The former Prime Minister Manmohan Singh is given due credit for bringing in financial liberation when the country was on the verge of an economic collapse, but the “silent reformer” has also introduced many other revolutionary changes during his 10 year rule as the head of the UPA government.
The credit to save the country from an economic collapse go to Dr Singh and his team of dedicated economists who assisted him, then the union finance minister to change the country’s track from social economy to liberal economy opening up the country’s borders to foreign investors.
India was facing a severe foreign exchange shortage with reserves sufficient to cover only a few weeks of essential imports, when Manmohan Singh became Finance Minister in 1991. Amid one of the most serious economic crises in independent India, Singh decided to introduce the economic reforms, focused on liberalisation, privatisation, and opening up India’s economy. He was ably assisted in these reforms by a skilled team of economists and advisors.
Among those in his team were Montek Singh Ahluwalia, who served as the Commerce Secretary (1990-91); Secretary, Department of Economic Affairs, Ministry of Finance (1991-93); and Finance Secretary, Ministry of Finance (1993-98) and went on to become the Deputy Chairman of the Planning Commission of the Government of India from 2004 to 2014 when Dr Singh was the Prime Minister.
He also had the assistance of Mr SP Shukla, the e Finance Secretary in 1991, continuing from the predecessor Chandra Shekhar government, and KP Geethakrishnan, who was the Revenue Secretary and became the Finance Secretary in July 1991 after Shukla’s exit. His creative approach to meet the International Monetary Fund’s (IMF’s) conditionality of fiscal deficit numbers by transferring the surplus in the oil pool account to the Consolidated Fund of India was dubbed as the “Geethakrishnan effect.” On retiring in 1992, Geethakrishnan served as an executive director in the IMF.
In addition, Mr Deepak Nayyar, who was the Chief Economic Adviser to three governments — two short-lived ones led by V P Singh and Chandra Shekhar and later, for the first few months of the Narasimha Rao-led government. For much of that period, the finance ministry was engaged in fire-fighting measures, given the grave prospect of a sovereign default and Nayyar was the government’s key man as he engaged in negotiations with the IMF and the World Bank, S Venkitaramanan, who was the Reserve Bank of India Governor during 1990-1992, who was the first to suggest to the then government in 1989 to initiate measures for opening up the economy, and Mr C Rangarajan, the RBI deputy governor in charge of exchange rate adjustments at that time.
From devaluation of the Indian rupee, to trade policies to boost exports, Dr Manmohan Singh as Finance Minister under then PM Narasimha Rao took several steps in 1991 to pull India out of crisis when the country was plunging into bankruptcy. He played a pivotal role in India’s economic liberalisation, introducing reforms that opened the economy to the world and shaped its modern trajectory.
The game-changing new industrial policy was unveiled on the eve of Dr Manmohan Singh’s Budget 1991. The policy relaxed some of the provisions in the Monopolies and Restrictive Trade Practices Act to facilitate easier entry and restructuring of businesses by facilitating mergers and amalgamations. The policy ended the public sector monopoly in many sectors and announced a policy of automatic approval for foreign direct investment up to 51 per cent as against the earlier cap of 40 per cent for foreign equity investments.
While Dr Singh will be remembered for the 1991 economic reforms he brought as India’s finance minister, he also holds some of the most transforming reforms to his credit as the Prime Minister about a decade later. From The Right to Information Act to the Indo-US Nuclear Deal, Dr Manmohan Singh, will be remembered as “the silent reformer” who changed how the world saw India.
In 2005, the Manmohan Singh government introduced Mahatma Gandhi National Rural Employment Guarantee Act (MGNREGA), India’s largest public programme, guaranteeing 100 days of wage employment annually to rural households. This was seen as a game-changer in India’s fight against poverty, providing employment and financial security to millions of people in rural India. The scheme also gave a means to rural women to become financially independent.
The Manmohan Singh government enacted the RTI Act in 2005, empowering citizens to seek information from public authorities, with responses required within 30 days or 48 hours for matters affecting life or freedom.
In 2010, the Manmohan Singh government brought the Right to Education (RTE) Act that aimed to provide free and compulsory education to children aged 6-14, ensuring education as a fundamental right.
The US-India Civil Nuclear Agreement, or 123 Agreement, signed by PM Manmohan Singh and President George W Bush, in 2008, saw India placing its civil nuclear facilities under International Atomic Energy Agency (IAEA) safeguards in exchange for US support for full civil nuclear cooperation. The 2008 deal ended India’s nuclear isolation and opened access to nuclear technology. The deal also allowed India to strengthen its relationship with the US and the rest is history.
In 2013, the government led by Dr Singh launched the National Food Security Act to ensure subsidised food grains to nearly 70 per cent of India’s population. Under this Act, families below the poverty line were given wheat, rice, and coarse grains at rates ranging from 1 to 3 rupees per kilogram.
