Manmohan Singh interview on reforms: ‘Trade policies were finalised in two days’

On this day 25 years ago, in a watershed event in Indian economic history, devaluation of the rupee set in motion, and opened the Indian economy, paving a path to make the Rupee one of the most stable currencies.

On July 1, 1991, the RBI announced a downward revision in the rupee’s external value against major foreign currencies.

Previous government had been struggling to battle the crisis due to their policies of expansionary growth and failure of V P Singhs government to act, added to that the first Gulf War that began in August 1990.

And yet the process of economic reforms in India continues to be trapped in the circumstances in which it began: act only when there is a crisis says then PM Manmohan Singh

In an interview with The Indian Express, then Finance Minister and former Prime Minister, reflected on the reforms that he, and then Prime Minister P V Narasimha Rao, incorporated. He talked about opposition from within, role of the Prime Minister’s “political management,” fear of “blood and tears,”and the crying need to revisit old orthodoxies.”

Read | Manmohan Singh interview on reforms: ‘When crisis is over, status quo takes over’

Talking about the government’s ideas or solutions Manmohan Singh said that the ideas weren’t truly original, since they were discussed within and without.

He said, “All I did was put them all together in a coherent whole, when I got an opportunity. The Budget for 1991 set out the roadmap that we wanted to adopt for the next two to three years.”
Security and Exchange board of India (SEBI) got a legal status from being just an advisory body. Singh set up the Narsimham committee on financial sector reforms, follwed by tax reforms.

He belives that P Chidambaram during that time was very supportive. “Without him, the trade policy would not have moved as fast as it did,” said Singh.

The trade policy reforms were finalised in a matter of just two days. Chidambaram and Singh met PM Narasimha Rao. “The PM asked ‘What do you think?’,” and Singh said, ” ‘I entirely endorse it’. That was the end of it, and the Prime Minister put his signature on it.”