Manmohan Singh – The man who laid the foundation for modern India, took his last breath on Dec 26, 2024. He died at the age of 92 and left behind us a legacy that will continue to inspire generations. The economic decisions he made, be it when he was the Finance Minister in the early 1990s or as the Prime Minister during 2004-14, have been instrumental in India achieving economic growth. Let’s check out his economic reforms that helped India stay competitive globally.
India Had Just Three Weeks of Import Left Before Manmohan Singh Played an Economic Masterstroke to Turn the Tide
The economic collapse was lurking for India back in 1991 as the country’s foreign exchange reserves fell drastically, leaving it with just three weeks of essential imports such as fertilizers and oils, leading to massive inflation and a widening fiscal deficit. The balance of payment crisis added to India’s economic woes. At the same time, the Soviet Union, India’s key trading partner, collapsed, further hindering the supply of cheap oil and raw materials. It was chaos all over.
Manmohan Singh, the finance minister back then, stepped in to rein in damage. The Reserve Bank of India pledged 46.91 tonnes of gold with the Bank of Japan and Bank of England to procure $400 million. The next step was the devaluation of the rupee to make exports competitive in the global market. Import tariffs were reduced and restrictions on foreign trade were lifted.
The End of the Licence Raj
Manmohan Singh launched an industrial policy that led to the abolishment of the Licence Raj that engulfed industries with a series of government approvals for operations involving production, expansion and other business activities. The deregulation of 80% of the industries, courtesy of this move, helped decrease the number of industries reserved for the public sector to 8 from 17. It led to increased private and foreign investment to lift industrial growth and improve employment.
Manmohan Singh Strengthens Financial Services Ecosystem
India’s financial services went through a series of transformations that shaped the country’s economic growth. Under his leadership, the Narasimham Committee made certain recommendations to improve the country’s banking and financial services. Considering the recommendations, the Reserve Bank of India lowered the Statutory Liquidity Ratio to 25% from 38.5%. The Cash Reserve Ratio (CRR) was reduced to 10% from 25% over a few years. It made banks confident of lending to businesses, leading to industrial expansion.
MGNREGA Scheme – A Programme That Brightened India’s Rural Employment
After a year as the Prime Minister of India, Manmohan Singh launched the Mahatma Gandhi National Rural Employment Guarantee Act (MGNREGA) which offers guaranteed wages to rural households for 100 days in a year. The programme, which addresses key issues such as unemployment, poverty and distress prevailing across rural India, is still prevalent. It only goes to show the strength of the programme and the faith people have in it.
RTI – One of the Key Developments Under Manmohan Singh
The Manmohan Singh government introduced the Right to Information (RTI) Act, allowing individuals with access to government information.
Wrapping Up
Manmohan Singh was way beyond a politician, he was a visionary, an economic reformer, and someone who wanted the betterment of the country. Before joining politics, he served as the RBI Governor and Senior Economist at the International Monetary Fund (IMF). His stellar work and decisions earned him respect from all over the world. India is reaping the benefits of the LPG (Liberalisation, Privatisation and Globalisation) Manmohan brought in 1991. As Manmohan Singh passed away, he left behind a sea of marvellous work and vision that remains a benchmark for economists to meet and exceed.
