How Dr. Manmohan Singh Scripted India's Economic Reforms As Finance Minister In 1991

New Delhi: Former Prime Minister Manmohan Singh died at 92 on Thursday following a prolonged illness. The former Prime Minister was admitted to Delhi AIIMs on Thursday evening after his health deteriorated. Senior Congress leaders including Priyanka Gandhi Vadra among others were present at the hospital after he was admitted. According to AIIMS bulletin, Manmohan Singh was brought to the Medical Emergency at AIIMS, New Delhi at 8:06 PM. Despite all efforts, he could not be revived and was declared dead at 9:51 PM.

“With profound grief, we inform the demise of Former Prime Minister of India, Dr Manmohan Singh, aged 92. He was being treated for age-related medical conditions and had sudden loss of consciousness at home on 26 December 2024, Resuscitative measures were started immediately at home. He was brought to the Medical Emergency at AIIMS, New Delhi at 8:06 PM. Despite all efforts, he could not be revived and was declared dead at 9:51 PM,” said Dr Rima Dada, Professor In-Charge Media Cell, Delhi AIIMS.

When Manmohan Singh saved India from economic crisis? 

Manmohan Singh became the Member of Parliament (MP) from Rajya Sabha for the first time in 1991, when he was appointed the Union Finance Minister in the Congress-led government under the leadership of former Prime Minister PV Narasimha Rao.

Manmohan Singh, who was appointed as Union Finance Minister in 1991, presented his first ever budget on July 24, 1991, under PV Narasimha Rao government.

Singh is credited for saving India going into a big economic crisis when he took a landmark move to open the economy.

As Finance Minister, Manmohan Singh brought a game-changing industrial policy when he scrapped and reformed the existing industrial policy.

• In 1991, India witnessed its worst economic crisis as it was on the verge of an economic collapse.
• One of the reasons why India was under tremendous pressure to save its economy arised when oil prices sour to a new high caused by 1990-91 Gulf War. The surge in oil prices severely exhausted  India’s forex reserves when it stood at $ 6 billion. This amount could have taken the burden of imports for not more than 2 weeks.
• The oil prices were not the only woes that the government was facing.
• India in 1991 had a fiscal deficit of 8 per cent of the Gross Domestic Product ( GDP ) while its current deficit was at 2.5 per cent of the GDP and these numbers were not impressive. Also, the inflation at that time was in double digits.

How India under Manmohan Singh as  Finance Minister avoided economic default

The Finance Ministry under Manmohan Singh took two major steps: 

Devaluation of rupee 

• The government devalued rupee against major currencies by approximately 9 per cent.
• Two days later, it was followed by another devaluation of 11 per cent.
• The devaluation of rupee placed Indian exports at a more competitive spot compared to others.

Central bank pledged gold holdings 

• Apart from devaluing rupee, the Central bank pledged India’s gold holdings with Bank of England in four tranches and raised around $400 million.
• The State Bank of India sold around 20 tonnes of gold to Union Bank of Switzerland and raised $200 million.

What was Manmohan Singh's new Industrial policy

• Manmohan Singh announced a new industrial policy which was unveiled on eve of his first budget in 1991.
• The new industrial policy was aimed at moving away from licence raj system.

What the new Industrial policy actually did?

• Under the new industrial policy, the government relaxed provisions in monopolies and Restrictive Trade Practices Act. This facilitated the entry and restructuring of businesses.
• The new policy ended public sector — government owned — monopoly in various sectors.
• It also allowed automatic removal for foreign direct investment for upto 51 per cent against the existing cap at 40 per cent.

Others steps taken to save Indian economy under Dr Singh as Finance Minister 

• India also took loans from International Monetary Fund in two instalments and raised around $2 billion, 1991.
• Under Manmohan Singh as Finance Minister, India announced a new trade policy aimed at changing the licensing process. 
• The government also removed export subsidies apart from devaluing rupee.