It’s been 25 years since PV Narasimha Rao, the architect behind liberalising the Indian economy, took charge as Prime Minister.
It’s been 25 years since PV Narasimha Rao, the architect behind liberalising the Indian economy, took charge as Prime Minister. Rao, in a departure from the past, appointed Manmohan Singh as finance minister and began the process of dismantling the Licence Raj by introducing a new industrial policy and devaluing the rupee twice—9.5% and 11%—in the space of three days, taking the rupee-dollar parity to R25.95 per dollar. That was necessary to meet the conditions imposed by the IMF, for which India had pledged 67 tonnes of gold. India has moved a long way from being on the brink of defaulting on international payments in 1991. Rao managed to unshackle the Indian economy by opening up foreign direct investment, reducing import duties and allowing foreign institutional investors into the equity market. Much of what the Indian economy today is due to what Rao was able to achieve in that summer of 1991.