Finance Minister Manmohan Singh on his way to Parliament to present the Budget on July 24, 1991.
| Photo Credit: The Hindu Archives
Less than a month after he took over as India’s 22nd Finance Minister, Manmohan Singh presented a Union Budget in July 1991, that changed the country’s economic trajectory with some of the hard decisions that were desperately needed. The Budget was prepared amid what he termed an acute and deep crisis that was unprecedented in independent India’s history.
It is rare for a Finance Minister of any regime to make even a nuanced critique of their own party’s predecessors in office, especially if the party swore by those leaders’ indelible imprint. Manmohan Singh, inarguably India’s most educated leader, was not one to be weighed down by such expectations.
In his historic speech to Parliament on July 24, 1991, Dr. Singh explained in painstaking detail the need for India to embrace a new era of industrial delicensing and economic liberalisation, that paved the way for everything from cars, shoes, burgers and stock market trading accounts that Indians now take for granted, but didn’t hesitate in calling out past mistakes.
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Noting that the efforts of former PMs Jawaharlal Nehru, Indira Gandhi and Rajiv Gandhi, had given India a ‘well-diversified industrial structure’, Dr. Singh, however, didn’t hesitate to link the genesis of the crisis firmly to policies of the past, including the entry barriers for firms, proliferation of licensing and an increase in monopolies that hurt consumer interests.
It is well known that Dr. Singh opened up the doors for foreign investments in myriad sectors during his time as Finance Minister, and subsequently as Prime Minister, when he pushed back on Left allies’ resistance on issues like easing telecom and insurance FDI limits and pursuing the critical India-U.S. nuclear cooperation deal.
However, few would remember his maiden Budget also set the foundations of India’s modern stock market boom as he announced the formation of the Securities Exchange Board of India (SEBI) to protect investor interests. Or that he talked passionately against protectionism and batted for consumer interests as well as wealth creators, even has he held strong reservations against “mindless and heartless” conspicuous consumerism — issues that resonate today as well.
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It speaks volumes for his sagacity that he could take on the staunchest criticism with a dose of humour or literary references. So when the Left attacked him for drafting a budget policy on the diktats of the World Bank, he joked that the WB’s interests were indeed at work – elaborating it as West Bengal instead. He would also nonchalantly quote Victor Hugo, or Percy Shelley’s ‘Ode to the West Wind’ in response to journalists’ contentious queries, for instance.
He also peppered his famous Budget speech with a gem about his wife being ‘very unhappy’ since he was appointed the FM. “The House will agree that it is not good for the health of our economy if the Finance Minister has strained relation with his own finance minister at home,” Dr. Singh joked, announcing a tax exemption for household items, particularly tiffin boxes.
In his 2007 autobiography The Age of Turbulence: Adventures in a New World’, former U.S. Federal Reserve chairman Alan Greenspan credited Dr. Singh for tearing a modest hole in India’s regimented economy in 1991 and demonstrating a little economic freedom and competition can exert extraordinary leverage on economic growth.
That task, as any economist would admit in private, remains incomplete, and some of those themes resonate even today if not louder. Dr. Singh’s exit leaves a vacuum in public policy discourse, the absence of which may make it tougher for India to rip apart the hole he managed to tear, in what Mr. Greenspan called India’s Fabian socialism fabric.
Published – December 27, 2024 01:07 am IST