In 1991, when India was going through a deep economic crisis, the then Finance Minister Dr. Manmohan Singh presented a budget that changed the course of the Indian economy. While presenting the budget in Parliament, Dr. Singh said,
“No power in the world can stop an idea whose time has come.”
This statement was an indication of the upcoming revolutionary reforms in the Indian economy.
Critical phase of Indian economy
In 1991, the situation in India was extremely worrying:
- Foreign exchange reserves had come down to only 5.80 billion dollars.
- The country had a foreign debt of $70 billion.
- Political instability was at its peak, as India saw three prime ministers in three years.
The then Prime Minister PV Narasimha Rao handed over the command of the Finance Ministry to Dr. Manmohan Singh and gave him complete freedom to implement economic reforms. Dr. Singh took this as an opportunity and gave a new direction to the Indian economy.
Beginning of economic liberalization
The 1991 Budget under the leadership of Dr. Manmohan Singh paved the way for opening up the Indian economy:
- End of License Raj:
Businesses and industries were freed from the complicated process of obtaining licenses, which led to rapid growth in the private sector. - Encouragement to foreign investment:
Many foreign companies started investing in India. - Increase in foreign exchange reserves:
As a result of the reforms, India’s foreign exchange reserves began to increase.
These reforms made India self-reliant as well as connected it to the global economy.
What is Hindu growth rate?
Before 1991, the average growth rate of the Indian economy was about 4%. This was called Hindu Growth Rate.
- The term was coined by Indian economist Raj Krishna in 1978.
- It was used to reflect the slow economic growth of India.
The economic reforms of 1991 broke this notion. Dr. Singh’s policies led to India’s growth rate exceeding 7% in the next 15 years.
golden age of economic progress
Dr. Manmohan Singh’s tenure as Prime Minister (2004-2014) is called the golden period of the Indian economy.
- As a result of his policies India’s GDP growth rate reached 8-9%.
- In the year 2007, India became the second fastest growing economy in the world.
This period not only marked economic progress but also established India as a strong economy globally.
Corrective action for the public
During his tenure as Prime Minister, Dr. Manmohan Singh took several important steps to improve the lives of the common people:
- Mahatma Gandhi National Rural Employment Guarantee Scheme (MGNREGA):
Rural laborers were guaranteed 100 days of employment. - Food Safety Law:
Food grains were made available to the poor section of the country at cheap rates. - Right to Education and Right to Information (RTI):
Free education for all children and right to information for citizens was ensured. - Loan waiver for farmers:
Agricultural loans worth Rs 60,000 crore were waived off. - Banking Reforms:
Banks were expanded in rural areas, thereby promoting financial inclusion.
