Twenty five years after he started the process of opening the Indian market to the world, former Prime Minister Manmohan Singh has recalled how economic liberalisation was ushered into the country when he was Finance Minister in 1991, under the leadership of then Prime Minister P.V. Narasimha Rao.
India's economy was in the gallows when Singh took drastic steps such as devaluing the rupee, lowering taxes, and encouraging foreign investment, which sparked an economic boom in the decades to come.
Here are some highlights of Singh's interview with The Indian Express published today.
While Singh is credited for overhauling India's economy, the Congress Party leader told The Indian Express that several reforms were already in discussion but there was no political will to see them through until Rao took the plunge. "What I am saying is that what we did wasn’t original. There were ideas which were in the air. Several discussions had taken place but the political system was not responsive to implementing those reforms," he said.
Singh told the The Indian Express that "ideological differences" did not plague the Congress Party government's move to reform the economy. "Well, when you are in a hurry, you don’t worry too much about ideological issues that will come in the way. I knew that if it did not work, I could have been the scapegoat. I was prepared for that," he said.
Singh recalled that trade policy reforms were finalised in a matter of two days. "Chidambaram and I went to meet Prime Minister Narasimha Rao and the Prime Minister turned to me and said, ‘What do you think?’ and I said, ‘I entirely endorse it’. That was the end of it, and the Prime Minister put his signature on it," he told The Indian Express.
Singh told The Indian Express that the government brought "young and learned" people, including Nicholas Stern, Jagdish Bhagwati and T.N. Srinivasan and Vijay Joshi, "to back the process that we were embarking upon." "I wanted to sensitise the people of India on the need to revisit old orthodoxies," he said.
Singh told The Indian Express that the economy recovered much faster than anticipated at the time. "When I took over, I said that the next three years will be nothing but blood and tears. Ultimately, I said that I had confidence that the economy would emerge victorious from this crisis but there were no shortcuts. And the economy recovered faster," he said.
In response to a question about why it is difficult to carry out reforms, 25 years after liberalisation, Singh said, "I think in a crisis, we act constructively. When it is over, status quo takes over."
While the Congress Party government had initiated liberalisation in 1991, Singh told the The Indian Express it was support of successive government under varied political leadership, which ensured that the reforms were successful.
"I think it is remarkable that even if the process was put in place by a Congress-led government, the next United Front government, led by H D Deve Gowda and I K Gujral, carried forward the process. In fact, Chidambaram presented what came to be known as a ‘dream budget’. Then came the BJP government which also continued the reform process," he said.
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