Manmohan Singh implemented his own reform agenda, not World Bank-IMF diktats

My first meeting with Dr Manmohan Singh happened by chance. In the early 1980s, I was a faculty at the Sardar Patel Institute of Economic and Social Research in Ahmedabad, and was in Delhi for a seminar at Jawaharlal Nehru University. I got a message from the vice chancellor’s office, asking me to immediately call a telephone number. The man who picked up the call was Singh, who politely asked me to meet him at his office in the Yojana Bhawan.

That was the time when the All Assam Students’ Union-led movement was at its peak and he told me that Indira Gandhi had asked him to prepare a document on the economy of Assam and he could not find much published materials. He wanted me to elaborate on Assam’s economy, its challenges and prospects.

I was not at all prepared. Nevertheless, I collected my thoughts and shared them with him. He took elaborate notes, and then sought my permission to use them for his document. We had been in touch ever since. I could experience his humility and modesty time and again despite his exceptional intellect and accomplishments.

In 1991, when the country was going through the foreign exchange crisis, I published an op-ed page article titled ‘Why not a Gold Bank?’ in the Hindustan Times. The essence of the article was to stop the rampant smuggling of gold by drastically reducing import duty and setting up a Gold Bank and incentivising households to place their unproductive gold with it to circulate so that it becomes a productive asset.

The then Reserve Bank governor S. Venkitaramanan told me that the ideas in the article were brilliant and that I should firm them up in collaboration with RBI researchers. While we were at the job, he asked me to prepare a concrete proposal for Singh, who was then finance minister. Singh tweaked the suggestion and placed a budget proposal to drastically cut the custom duty on gold and permitted NRIs to bring in a specific quantity of gold duty-free. Later, Singh profusely thanked me for the suggestion. Then I reminded him there was also the suggestion of a Gold Bank. His response: setting up of a Gold Bank is complex. Here he is, an adept policymaker.

Singh presented his landmark budget for 1991-92 that ushered in a new direction for the Indian economy and laid the blueprint for a Viksit Bharat. It was a difficult time for the economy. India was on the verge of defaulting on its debt obligations and had witnessed shrinkage in foreign trade, unsustainable fiscal deficit and inflation in two digits.

The government was left with limited options: default in the debt obligations or accept structural reforms assistance of the World Bank and IMF. It opted for the latter. India liberalised the economy, introduced comprehensive reforms and integrated itself with the global economy.

Singh’s critics accused him of following the diktats of the World Bank and the IMF. Those who followed his reform policies knew that he continued largely with his own reform agenda even as some of the targets such as fiscal deficit were not quite in sync with those set by The Bank-Fund. Eventually they made compromises willy-nilly.

Being at the helm of policymaking for years, Singh understood the working of the Indian economy and its strengths and weaknesses. He had the wisdom accumulated in the reports of various committees and commissions appointed to study and recommend on almost every aspect of the economy. Many of these recommendations were not entirely different from those under structural reforms. Benefitting from all these, he followed a homegrown agenda of reforms.

It was a difficult journey on the new path Singh charted for the economy, ending ‘permit, quota, and licence raj’, and bringing in a market-driven system. It was more difficult for his colleagues in the government and the party, not being quite ready for such transformative reforms.

During that time, I organised an international conference on a global project I was leading as the Indian partner at the Indian Statistical Institute. The international participants of the conference were keen to hear Singh and Montek Singh Ahluwalia on the reforms. I requested them both. Ahluwalia agreed and shared his thoughts over a lunch. Singh suggested a Saturday morning when he was relatively free. The preceding day, he called me and said that the prime minister had scheduled a meeting on economic reforms which could be stormy and his presence was essential, and he excused himself. But around 10pm, he called and said the meeting was postponed and he would make it. He gave a brilliant speech that prompted a rousing ovation from the audience.

When he became the ‘accidental prime minister’, he went ahead with the reforms but with a little difference. His two terms witnessed an average growth of 7.8 per cent, millions of people being lifted out of poverty, a growing middle class and an aspirational society. However, there were also areas of failures. High growth worsened income distribution and created fewer jobs than expected. As partial correctives, he enacted a number of right-based legislations such as MGNREGA, RTE, NFSA and RTI.

The UPA’s second term was tainted by corruption charges, but even Singh’s worst opponent would not doubt his honesty and integrity. And all the loud and shrill charges will not efface his many an enduring contribution.

Sarma, a member of the Thirteenth Finance Commission, was vice chancellor of Rajiv Gandhi University, Itanagar.