How 1991 economic reforms changed India

Singh took over as the finance minister when the economy was close to sovereign default, and completely altered its course

- Roshan Kishore

Manmohan Singh will be remembered as the statesman who saved the Indian economy from going over the edge. When he took over as finance minister in the minority government of Narasimha Rao in 1991, the Indian economy was very close to sovereign default. Foreign exchange reserves were barely enough to cover a month of imports and the country had to suffer the ignominy of having to ship its gold reserves to England. The looming economic disaster was a result of fiscal and trade profligacy in the 1980s when the Indian economy, both public and private arms of it, had been spending beyond their means.

The crisis was a result of a deeper economic malaise in the economy where the post-Independence State-led planning model had failed to deliver and private enterprise had become shackled in what was infamously referred to as the Licence-Quota Raj. All of that would change with the famous 1991 Budget which Manmohan Singh presented, and the industrial deregulation which accompanied the Budget. More than three decades later, there is as big a consensus for reforms in India just as there was an opposition to it when the process started.