Manmohan Singh Birthday: PM Narendra Modi wished him good health and long life
- How did Dr Manmohan Singh help to revive the Indian economy back then?
- Dr Singh had two significant challenges when he took office
- Various trade policies were introduced to increase the export
Manmohan Singh’s Birthday: Today is former Prime Minister Manmohan Singh birthday. Manmohan Singh was PM of India from 2004 to 2009.
India is one of the fastest-growing economies today. The credit must go to Dr Manmohan Singh for his historic budget in 1991 when India’s economy was on the edge of collapsing. The current Prime Minister Narendra Modi has shown a dream of India becoming a $5 trillion economy, and then Manmohan Singh’s earlier contributions can’t be forgotten. India’s rapid transformation from a tattered socialist economy to an emerging liberal global leader has become possible only because of the gifts of Manmohan Singh way back in 1991.
How Dr Manmohan Singh helped to revive Indian Economy back then
He helped revive the economy and took India into a new era of free markets. This development was termed India’s economic liberalisation. India was on the brink of a financial collapse. There was substantial economic pressure as foreign exchange reserves were left to sustain imports only for two weeks.
Manmohan Singh was made the finance minister in the P.V. Narasimha Rao government in 1991. Just a few days into the ministry, Dr Singh, in consultation with the RBI, allowed the Indian rupee to depreciate by 9.5%. Indian Rupee was then considered the symbol of India’s economic pride. The move took the value of the Indian rupee per dollar down to ₹21 from ₹23 in one stroke.
Dr Singh had two significant challenges when he took office:
1. Rising internal public debt and a growing debt crisis
The minority Congress-led government limited room for Singh, so he had to take tough decisions that were important to liberate the Indian economy.
Manmohan Singh announced the historic budget for 1991-92 on July 24, 1991. He announced harsh measures to free up fiscal space as the first step to liberalising India’s economy. In his maiden budget speech, he said the road to reviving the ailing Indian economy would be filled with adversity.
He increased fertilisers, fuel, and cooking gas prices and scrapped certain subsidies as short-term measures for controlling India’s spiralling debt. However, the former Prime Minister knew that stabilisation and fiscal adjustment wouldn’t be enough to support India’s liberalisation.
2. Doctor Singh proposed the use of foreign technology & foreign investment
Making the historic move, Doctor Singh proposed using foreign technology and investment to increase productivity and ensure rapid modernisation of India’s public and financial sectors. Various structural reforms were made that shattered barriers that limited industrial growth.
A fundamental import/export policy change was introduced to reduce import licensing, optimal import compression and vigorous export promotion. Freeing up space for direct foreign investment helped India boost its economy. FDI (Foreign Direct Investment) was allowed in high-priority industries along with 51% foreign equity for trading companies engaged in export activities.
Attractive tax incentives were announced for exporting companies to boost slow industrial productivity. Restructuring key interest rates were proposed as a specific scheme to reduce nominal and actual interest rates.
Various trade policies were introduced to increase the export
Besides announcing a slew of calculated and strict measures, Singh also brought packages for comprehensive development of village-level enterprises. Various trade policies were also introduced to increase export. For better direct tax collection, several stricter tax reforms were made.
India escaped the clutches of economic crisis by the year 1992-93. The country slowly started heading towards an era of rapid growth. By the time of the following finance budget for 1992-93, India saw inflation and fiscal deficit growth while foreign reserves grew sharply.
We are in 2022 when an economic slowdown has come back to haunt us. The government is making reforms to tackle the situation, but the shortage of demand has led to unemployment Textile sector. The former Prime Minister did his bit here, too; he suggested 5-point remedy plans to revive the economy. The five steps are Rationalising GST rates, restoring demand by giving money to consumers, liquidity boost, fixing labour-intensive sectors, and recognising export opportunities.
Edited By Ayushi Mittal