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A legacy squandered

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In 1991, Manmohan Singh rescued a bankrupt and shackled economy and prepared it for capitalism, for growth. In 1991, Manmohan Singh rescued a bankrupt and shackled economy and prepared it for capitalism, for growth.
SummaryIn 1991, Manmohan Singh rescued a bankrupt and shackled economy and prepared it for capitalism, for growth. In 2014, he returns it to low growth and, more important, back to greater state intervention, higher subsidies and, dare we say, povertarianism.

Coalgate scams on which Dr Singh’s amazing defence at his press conference was that he had always been in favour of auctions — no one asked him why, if that was so, he never pushed for it or resigned. The silence of the reformists at Dr Singh’s retirement press conference recalls the old adage about how it is better to go when people ask “Why” than when the reaction is “Why not?”

FM (1991-96): THE CHANGE AGENT

*Licensing abolished for all but 6 industries, number of industries reserved for PSUs also cut to 6

*Automatic FDI raised to 51% in 48 industries, 74% in 9 industries. In 1997, India got into the list of top 10 FDI destinations

* Peak import rates cut from 400% to 50% (avg falls from 80% to 40%), so export-to-GDP ratio doubles

*Maximum income tax rate cut from 56% to 30%, corporate tax rates cut from 51.75% to 35%

*Rupee made convertible

*SLR cut from 38.5% to 25%, CRR from 15% to 10.5%, interest rates decontrolled and PLR introduced, recognition rules for NPAs put in place, market pricing of GSecs

*CCI replaced by Sebi, electronic trading and demat introduced, sweeping capital market reforms

*Price controls abolished for many items, including iron & steel

*Private fixed investment rises from 12.1% of GDP to 15.6%

PM (2004-09): THE MAINTENANCE MAN

* Passed the SEZ Act in 2005, giving specific sops to both developers

and the units in them

* Accelerated PPP, achieved success through the model in airports

* Launched MGNREGA, guaranteeing 100 days of employment a year

* Created an airports regulator via AERA, 2008, to regulate tariffs

* Passed Forest Rights Act to protect the rights of forest communities

* Right to Information Act, 2005

* Brought down peak customs duties from 25% in 2004 to 15% in 2009

* Tax-to-GDP ratio raised from 9.2% in FY04 to 12.5% in FY09 through better enforcement using TIN, etc

* MSP raised 56% in wheat, 33% in paddy — good for farm income, bad for the overall macro and inflation

* Flagship programmes like Bharat Nirman, NHRM,JNNURM launched, meaning higher infra spend

* Nuclear deal with US signed, but troublesome fine-print remains

PM (2009-PRESENT): THE PLASTIC SURGEON

* FDI in multi-brand retail passed by Parliament, Tesco comes in

* Jet-Etihad deal signals dramatic opening up of Indian skies

* Diesel partially deregulated, cap on subsidised LPG cylinders

* Land Acquisition Act, which makes purchase very difficult, passed

* Food Security Act passed, which hikes subsidies dramatically

* Cabinet Committee on Investment

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