Manmohan Singh: Doctor who turned sick India into a global power
By : DC Correspondent
Update: 2024-12-28 05:06 GMT
Decades back, Dr Manmohan Singh had said, “Never let a crisis go waste.” He was presented with a similar opportunity, when he was picked by then Prime Minister P.V. Narasimha Rao to steer India out of the economic collapse after former finance minister Pranab Mukherjee and former RBI governor I.G. Patel refused to take up the challenge.
As he took charge of the finance ministry, India’s foreign exchange reserves were merely enough to cover 15 days of imports and the new government had its task cut out — do or die. It should either turn around the economy or remain consigned to history as a failure. Manmohan Singh — with full political backing of Narasimha Rao — chose the former and presented his first Budget with such an elan that none of his successors could ever match it.
“There is no time to lose. Neither the Government nor the economy can live beyond its means year after year. The room for maneuver, to live on borrowed money or time, does not exist any more,” Dr Manmohan Singh declared in his first Budget on July 24, 1991.
Drawing attention of Parliament to the fact that inflation hurts everybody, but it hurts the poorest the most, Dr Singh made it clear that any further postponement of macroeconomic adjustment would make inflation, already high, intolerable.
However, Dr Singh was quite forthright with his assessment and prescription to cure malaise affecting the Indian economy — a bitter pill. “But there can be no adjustment without pain. The people must be prepared to make necessary sacrifices to preserve our economic independence and restore the health of our economy,” he said in his 1991 Budget.
He slashed an overpriced rupee by 19 per cent, which shot up the prices of imported goods. He also proposed to increase the prices of fertiliser, petrol and LPG prices.
Dr Singh also tried to end the deep-rooted fear among Indians for foreign investors. “After four decades of planning for industrialisation, we have now reached a stage of development where we should welcome, rather than fear, foreign investment. Our entrepreneurs are second to none. Our industry has come of age. Direct foreign investment would provide access to capital, technology and markets.”
In spite of the economic crisis, many Indians, including those in the Congress, were not ready to take Dr Singh’s prescription. The responsibility to sell his idea fell on him. He faced journalists as well as irate Congress leaders to sell his reforms. Though he was forced to lower the proposed price hike for urea, he succeeded in convincing everybody of the inevitability of reforms.
After Independence, Dr Singh was the first person to unabashedly support the creation of wealth. “We must encourage accumulation of capital. This will inevitably mean a regime of austerity. We have also to remove the stumbling blocks from the path of those who are creating wealth.”
Dr Singh was so supremely confident of his reform measures that he went on to declare that India is now wide awake and no power on earth can stop India from emerging as a major economic power in the world. His words were truly prophetic. As he bid adieu to this world, Dr Singh must be truly satisfied to see India emerge as the fifth largest economy in the world in nominal terms and third largest economy in the purchase power parity terms.
As he took charge of the finance ministry, India’s foreign exchange reserves were merely enough to cover 15 days of imports and the new government had its task cut out — do or die. It should either turn around the economy or remain consigned to history as a failure. Manmohan Singh — with full political backing of Narasimha Rao — chose the former and presented his first Budget with such an elan that none of his successors could ever match it.
“There is no time to lose. Neither the Government nor the economy can live beyond its means year after year. The room for maneuver, to live on borrowed money or time, does not exist any more,” Dr Manmohan Singh declared in his first Budget on July 24, 1991.
Drawing attention of Parliament to the fact that inflation hurts everybody, but it hurts the poorest the most, Dr Singh made it clear that any further postponement of macroeconomic adjustment would make inflation, already high, intolerable.
However, Dr Singh was quite forthright with his assessment and prescription to cure malaise affecting the Indian economy — a bitter pill. “But there can be no adjustment without pain. The people must be prepared to make necessary sacrifices to preserve our economic independence and restore the health of our economy,” he said in his 1991 Budget.
He slashed an overpriced rupee by 19 per cent, which shot up the prices of imported goods. He also proposed to increase the prices of fertiliser, petrol and LPG prices.
Dr Singh also tried to end the deep-rooted fear among Indians for foreign investors. “After four decades of planning for industrialisation, we have now reached a stage of development where we should welcome, rather than fear, foreign investment. Our entrepreneurs are second to none. Our industry has come of age. Direct foreign investment would provide access to capital, technology and markets.”
In spite of the economic crisis, many Indians, including those in the Congress, were not ready to take Dr Singh’s prescription. The responsibility to sell his idea fell on him. He faced journalists as well as irate Congress leaders to sell his reforms. Though he was forced to lower the proposed price hike for urea, he succeeded in convincing everybody of the inevitability of reforms.
After Independence, Dr Singh was the first person to unabashedly support the creation of wealth. “We must encourage accumulation of capital. This will inevitably mean a regime of austerity. We have also to remove the stumbling blocks from the path of those who are creating wealth.”
Dr Singh was so supremely confident of his reform measures that he went on to declare that India is now wide awake and no power on earth can stop India from emerging as a major economic power in the world. His words were truly prophetic. As he bid adieu to this world, Dr Singh must be truly satisfied to see India emerge as the fifth largest economy in the world in nominal terms and third largest economy in the purchase power parity terms.