The thirteenth prime minister of India, late Dr Manmohan Singh, was often credited as the father of economic liberalisation in India. Dr Singh leaves behind a legacy of strong economic policies and financial changes that changed the face of modern India.
From CEA to RBI governor
Dr Manmohan Singh took up the role of the chief economic adviser (CEA) in the Ministry of Finance back in 1972. Singh later became the secretary of the ministry. Before he was appointed as the RBI governor, Singh was also in the planning commission from 1980 to 1982.
From 1982 to 1985, Dr Manmohan Singh served as the 15th Governor of the Reserve Bank of India, under finance minister Pranab Mukherjee. In poetic fashion, Mukherjee later went on to serve as finance minister in Singh’s cabinet during the latter’s second term.
The infamous financial turnaround of India in 1991
However, the true highlight of Singh’s political and economic career came in 1991 when he served as the finance minister to prime minister P.V. Narasimha Rao. The Rao-Singh combo faced a monumental task with India’s soaring fiscal deficit and paltry foreign-exchange reserves.
The country’s biggest problem, however, was a massive balance of payments deficit due to relying too much on imports and dwindling trade relations tightened by the fall of the Eastern bloc, the Gulf War, and the Iraq-Kuwait conflict. For the first time—and so far, the last time—India sought assistance from the International Monetary Fund (IMF), of which the country is a founding member. Funds were raised by pledging gold reserves as collateral to the central banks of England and Switzerland.
In a bid to correct the course of India’s trajectory, Singh led a sea of economic reforms like abolishing the license raj and replacing it with a liberalisation, privatisation, and globalisation (LPG) model.
Adopting the LPG model aided Manmohan Singh later in liberalising trade, cutting tariffs from 300 per cent to around 50 per cent, and opening India to global players.
India becomes FDI-friendly under Manmohan Singh
Under Singh’s leadership, India opened its arms to foreign direct investment (FDI) across critical sectors such as retail and telecommunications.
While economics was Singh’s forte, his landmark legislation came in 2013 in the form of the National Food Security Act (NFSA). It made subsidised food grains available to more than 60 per cent of the population.
Aadhaar, NIA, and the right to education
Singh’s first term as prime minister saw the establishment of both the Right to Education Act and the Unlawful Activities (Prevention) Act (UAPA). The National Investigation Agency (NIA) and the Unique Identification Authority of India (UIDAI)—the body responsible for Aadhaar identity cards—were also set up during the term.
Dr Manmohan Singh is regarded as one of the key architects of the modern Indian economy, and rightly so. His swift action saved the financial makeup of the country in 1991 and paved the way for the globalisation of the economy. It led to the privatisation of many public sector establishments, leading to foreign investments and healthier market competition.
In 1992, the National Stock Exchange—the country’s biggest stock exchange—was founded during Manmohan Singh’s tenure as finance minister. From saving a struggling debt-strapped economy to kickstarting an equities market in a period of just one year was proof of the financial and economic acumen of the former prime minister.