Monday, 4 July 2016

Dr. Manmohan Singh on the days, 25 years ago, when India was pulled back from economic disaster and put on path to economic recovery

Last updated on 31st July 2016

IMHO, a must read interview for all Indians (is given below), where Dr. Manmohan Singh talks about the days, a quarter century ago, when he, then the Union (federal) Finance minister, with the all important political backing of then Prime Minister, Shri P.V. Narasimha Rao, pulled India back from the brink of economic disaster and put her on the road to not only economic recovery but a period of stunning economic and social growth.

The article also presents comparative data, 25 years ago (mostly) and now (mostly), on Macro stability indicators (e.g. deficit/GDP), Size/composition of the Indian economy (e.g. GDP growth), The changed Indian (e.g. telephone subscribers, foreign remittance) and Social Indicators (e.g. below poverty line rate, literacy rate).

A few indicators of great interest to me:

  • Indian economy has grown 6.3 times its 1991 size. 1990-91 GDP size was $326.76 billion. In 2015-16 it was $2,075.85 billion (over 2 trillion dollars).
  • No. 1 export item in 1990-91 was textiles ($4.34 billion). In 2015-16 it was Software services ($74.15 billion)
  • % below poverty line in 1993-94 was 45.43%. In 2011-12 it was 21.9%.
  • Literacy rate in 1991 census was 52.21%. In 2011 census, it was 74.04%
  • Under one-year infant mortality (per 1,000 live births) was 80 in 1991. It was 40 in 2013.

25 years on, Manmohan Singh has a regret: In crisis, we act. When it’s over, back to status quo, http://indianexpress.com/article/india/india-news-india/manmohan-singh-opening-indian-economy-1991-economic-reforms-pv-narasimha-rao-rbi-indian-rupee-devaluation-2886876/, dated July 1st 2016

Ravi: I was a young software professional then (during Indian 1991 economic crisis, https://en.wikipedia.org/wiki/1991_Indian_economic_crisis) living in Mumbai, with around 7 years of experience under my belt including long assignment stints in Europe & USA. I clearly recall the sense of despondency I and others in Mumbai felt at that time, as India had to send its gold to IMF/World Bank in return for the VITAL help they rendered. What a turn-around Dr. Manmohan Singh and team pushed through despite opposition (the opposition part is talked about in the interview)!

I learned from this interview that Dr. Manmohan Singh was willing to risk his life in serving the country as Finance Minister, at that time of deep crisis! A small extract from the interview where Dr. Singh says, "Well, I came to India soon after a bypass surgery. When the offer came to become finance minister, my friends advised me not to take it up as it could kill me, they said. So I said, ‘how does it matter if I die in the process of serving one’s own country, it is alright’."

Many, many thanks, Dr. Manmohan Singh sir, to you and your team for that yeoman service that you all rendered to generations of Indians including me. Your spirit of service to one's fellow people (country, in this case), is truly inspiring!
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Update on 31st July 2016

Here's an interseting article: 1991, the untold story by YASHWANT SINHA, http://www.thehindu.com/opinion/op-ed/yashwant-sinha-writes-on-25-years-of-reforms-1991-the-untold-story/article8912399.ece, dated July 29th 2016.

Ravi: Yashwant Sinha was the finance minister in the Janata Dal (opposed to Congress) govt. under Prime Minister Chandra Shekhar, prior to the P.V. Narasimha Rao Congress govt. that presented the July 1991 reform budget through its finance minister, Dr. Manmohan Singh.

From https://en.wikipedia.org/wiki/Yashwant_Sinha :
Yashwant Sinha, IAS (born 6 November 1937) is an Indian politician and a former finance minister of India (1990–1991 under Prime Minister Chandra Shekhar and March 1998 – July 2002 under Prime Minister Atal Bihari Vajpayee) and foreign minister (July 2002 – May 2004) in Atal Bihari Vajpayee's cabinet. He is a senior leader of the Bharatiya Janata Party (BJP) which is now the single most dominant party of the Indian parliament after the 2014 general election.
...
When the Janata Dal was formed in 1989, he was appointed General Secretary of the party. He worked as Minister of Finance from November 1990 to June 1991 in Chandra Shekhar's Cabinet.
--- end wiki extract ---

Ravi: According to https://en.wikipedia.org/wiki/P._V._Narasimha_Rao, the P.V. Narasimha Rao led govt. started its tenure on 21st June 1991 and ended it on 16th May 1996. Dr. Manmohan Singh, finance minister in the Narasimha Rao govt., presented his reform budget in July 1991.

The article mentioned above gives an alternative view to Dr. Manmohan Singh and his party's view of the July 1991 budget. Yashwant Sinha argues that if his party had continued to be in power instead of the Congress party forming the govt, he would have presented a similar reform budget. He writes, "Fate had intervened and taken away the opportunity from me to present the same Budget that the Congress later presented and won kudos for."

His view is that the previous Congress govt. (previous to 1990) had spent too much resulting in large fiscal deficit and short-term debt. In 1990 the Gulf war caused petroleum prices to go "through the roof" which worsened the situation and resulted in a full-blown financial crisis for the country.

[I thank Wikipedia and have presumed that they will not have any objections to me sharing the above extracts from their website on this post which is freely viewable by all, and does not have any financial profit motive whatsoever.]

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