25 Years on, Manmohan Singh Talks About the Liberalisation of 1991

Manmohan Singh speaks to the Indian Express about liberalisation, what has been and what the future holds for India.

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Hindi Female

On 2 July this year, it will be 25 years since the Indian economy was opened up, with the devaluatuion of the rupee on 1 July 1991.

Twenty five years on, former Prime Minister and the then Finance Minister, Manmohan Singh, looks back at the reforms he set in motion, as the key engineer of liberalisation.

In a rare interview with The Indian Express, the reticent Singh spoke about what has passed, and what the future holds for India.


On Hurdles to the Reforms in 1991

“There was a lot of opposition in the country and within the (Congress) party. But Prime Minister Narasimha Rao’s political management made it possible to overcome all that,” said Singh to The Indian Express.

On the Infamous Mortgaging of Gold

Singh goes back to the economic crisis which compelled the government, led by the then Prime Minister Narasimha Rao, to mortgage gold. A historic move, which widely came under criticism.

“... I used that occasion to honour the commitment of the previous government to mortgage gold but at the same time, I sensitised the country on how serious the economic situation was, and that if we do not want to go down the disastrous path, reforms were the only answer,” said Singh in the interview.

On What the Reforms Mean for the Indian Economy Today

The opening up of the economy in 1991 was momentous, the effects of which continue to ripple through the economy. On how the reforms affect the Indian economy today, Singh told The Indian Express:

“Certainly, Indian industry is much more confident. They are the children of the 1991 reforms. We removed wealth tax in the 1991 budget. That is one way in which the children of those who had wealth could put money honestly into their enterprises. Now they all feel that we did a good thing.”

On the RBI and the Government

Singh was also the Governor of the Reserve Bank of India from 1982 to 1985. He describes being on friendly terms with the Finance Minister then. When he was appointed Finance Minister in 1991, he alludes to a comfortable understanding between him and the then RBI Governor, C Rangarajan.

“There have always been differences between the finance minister and the RBI Governor. But in our time, the relationship was smooth. When I was the Finance Minister, we entered into a historic agreement with the RBI on doing away with automatic monetisation of the deficit. Rangarajan wanted it and I endorsed it. It was one way to ensure that financial policy was supportive of what we wanted to do.”

Difficulty of Carrying out Reforms Now

Singh lamented that India acts only in time of crisis, but not when things are good. On the difficulty of carrying out economic reforms now he said:

“I think in a crisis, we act constructively. When it is over, status quo takes over.”

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