Dr. Manmohan Singh: Architect of India’s Economic Transformation

Dr. Manmohan Singh’s name dominates discussions on India’s liberalization and the end of the license raj. Before becoming Finance Minister and later Prime Minister, Singh served in critical roles, including Chief Economic Advisor, Finance Secretary, RBI Governor, and Economic Advisor in the Department of Foreign Trade. Transitioning from economist to politician, Singh is revered as the father of India’s economic reforms.

In the early 1990s, India faced a dire economic crisis. The treasury was nearly empty, and foreign exchange reserves had dwindled to $6 billion, insufficient for even a month of imports. Rising debt, coupled with reduced remittances from Indians in the Gulf during the Gulf War, worsened the situation. Amid this turmoil, Singh, with Prime Minister PV Narasimha Rao’s support, devised bold reforms to rescue the economy.

Singh tackled the crisis with swift actions. He mortgaged part of India’s gold reserves to boost foreign exchange. He devalued the rupee by 20% to make exports competitive and attract foreign currency. He also reformed trade and industrial policies, dismantling the license raj that stifled industries. These steps opened India’s economy to global markets.

Singh’s 1991 budget marked a turning point. He introduced measures like Tax Deduction at Source (TDS) and allowed the private sector to participate in mutual funds. He raised the foreign investment limit to 51%, reducing government monopolies in key sectors. These reforms strengthened the economy and set India on a path to globalization.

As Prime Minister, Singh continued his reformist approach. His tenure saw India’s GDP growth peak at 9% in 2007, making it the world’s second-fastest-growing economy. He introduced Value Added Tax (VAT), simplifying the tax system, and implemented a service tax to boost revenue. In 2006, he established Special Economic Zones (SEZs) to attract investments.

Singh also prioritized rural development. His government launched the National Rural Employment Guarantee Scheme (NREGA), which provided job security to millions. Despite controversies and allegations of corruption during his tenure, Singh’s economic policies earned him recognition as a visionary leader.

Critics highlight flaws during Singh’s tenure, but his reforms laid the foundation for India’s global economic rise. His efforts turned an economic crisis into an opportunity, ushering in a new era of growth and liberalization.