A vivacious Sikh man quickly ascended the platform stairs in 1992 during a law conference held in the Ashok Hotel in New Delhi’s main hall. He patiently discussed the nuances of India’s liberalisation process for an hour without using a shred of paper. He painstakingly told the ecstatic audience that it was required “to establish an environment facilitating growth” in order to continue growth and increase investments, particularly from international investors. Dr. Manmohan Singh, then-Finance India’s Minister, who was quickly steering the country out of its worst financial crisis, was the learned speaker who had a firm grasp of the subject.
India, led by Prime Minister Chandra Shekhar, was just one year earlier, in 1991, on the verge of an embarrassing national default. India’s trade balance with the rest of the world was hopelessly negative. In 1991, its external debt had increased by 2x, from $35 billion to $69 billion. Both time and money were running out for India. It only had enough foreign exchange reserves, less than $6 billion, to cover imports for about two weeks. The Union Bank of Switzerland purchased 20 tonnes of gold from the State Bank of India in May of that year for about $200 million.
On the home front, the situation was just as hopeless. As a percentage of GDP, the fiscal deficit was 8%. (GDP). India’s bond ratings were reduced by Moody’s. The budget couldn’t be approved by the government. As a result, the ratings were further lowered, which prevented India from obtaining short-term loans and exacerbated the already dire economic situation.
The Indian National Congress and the UPA came into power following the 1991 elections. I.G. Patel, the recently departed Director of the London School of Economics, was asked to become India’s finance minister by the country’s then-prime minister, Narasimha Rao. Later turned down the offer. Instead, he suggested that the nation’s most outstanding protege, Dr. Manmohan Singh, lead it out of its economic quagmire.
During the partition, Dr. Manmohan Singh was uprooted as a youngster and sent to India. Perhaps the difficulties he encountered gave him the drive to lead throughout his illustrious academic career in economics. He graduated from college in 1952 and from graduate school in 1954. Following that, he finished his Economics Tripos at Cambridge University under the guidance of Nicholas Kaldor and Joan Robinson, two of the most renowned and prominent Keynesians. Both Robinson and Kaldor were ardent proponents of how governments could integrate social equality with economic development and make capitalism work for the greater good. These two influential factors would have a significant impact on Dr. Singh’s strategy as he led India’s economy into a full-throttle growth engine.
Dr. Singh would return to the University of Oxford for his DPhil as part of his never-ending pursuit of knowledge. His work “India’s Export Trends and Prospects for Self-Sustained Growth” was based on his successful doctoral thesis from 1962.
The Indian economy saw a series of reforms that he appropriately referred to as “reforms with a human face.” The Industrial Policy, which was introduced in 1991, was the forerunner to the end of the License Raj. With the implementation of tradeable exim scrips, the Monopolies and Restrictive Trade Practices Act was broken, allowing for easier business restructuring through mergers and acquisitions, the end of the state-owned companies’ monopoly on imports, and the automatic approval of foreign direct investment in many sectors.
Under Sonia Gandhi’s leadership, the Congress-led United Progressive Alliance (UPA) regained power in 2004, and Singh suggested Dr. Manmohan Singh as India’s prime minister—the most reputable economist in the eastern hemisphere. He assembled the top administrators and economists of the day onto his team. The intelligent Mr. P.C. Chidambaram, a Harvard MBA, was appointed as his finance minister, which was crucial. The 10 prosperous years of the Indian economy lasted from 2004 to 2014. During this extraordinary decade, India’s GDP expanded on average by 8.1%. In the history of independent India, the real GDP growth reached a record 10.08% in 2006–07, trailing only the unequalled 10.2% attained during Rajiv Gandhi’s administration in 1988–89.
His accomplishments are notable in world history because they were based on a model of an inclusive and accountable democracy. Unlike China, where growth was achieved at the expense of democracy and on the foundation of authoritarian repression. If Dr. Singh’s extremely influential work as Prime Minister and an economist can be summed up in one outstanding accomplishment, it is the removal of 271 million people from multifaceted poverty. This was not simple to do. During Dr. Singh’s two tenure, numerous important laws were passed and projects were carried out with zeal and persistence.
After serving as Prime Minister for 10 years, he could confidently state that “India’s emergence as a major powerhouse of the expanding global economy is a concept whose time has come” in his final speech to the nation of 1.2 billion men and women.
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