Manmohan Singh Passed Away
In 1991, Manmohan Singh, then the finance minister, was instrumental in reversing the fortunes of the Indian economy, guiding the nation through one of its most severe financial crises.
Serving under the government led by PV Narasimha Rao, Singh encountered numerous challenges to ensure the acceptance of his Union budget for 1991-92, which ultimately yielded transformative outcomes.
At that time, India was teetering on the brink of economic disaster, grappling with dwindling foreign exchange reserves and the instability of the Soviet Union, a crucial supplier of affordable oil and raw materials. To address the economic turmoil, Singh implemented a series of reforms in the 1991 Budget.
He articulated in his budget address to Parliament, “Macroeconomic stabilization and fiscal adjustment alone cannot suffice. They must be supported by essential reforms in economic policy and economic management, as an integral part of the adjustment process, reforms which would help to eliminate waste and inefficiency and impart a new element of dynamism to growth processes in our economy.”
Singh emphasized that the primary objective of the reform initiative was to “enhance the efficiency and international competitiveness of industrial production, leveraging foreign investment and technology to a far greater extent than previously, increasing the productivity of investments, ensuring the rapid modernization of India’s financial sector, and improving the performance of the public sector, thereby equipping key sectors of our economy with the necessary technological and competitive advantages in a rapidly evolving global landscape.”
Nevertheless, to transition towards a more optimistic outlook for India’s future, Singh had to endure what many would describe as a “trial-by-fire.” He encountered inquiries from the media, the ire of Congress leaders who struggled to accept the reforms during the parliamentary party meeting, and numerous other challenges.
Singh remained resolute regarding his budget. He convened an impromptu press conference on July 25, 1991, the day following the presentation of the Union budget. Congress leader Jairam Ramesh, in his book ‘To the Brink and Back: India’s 1991 Story,’ noted that the then finance minister took this step to “ensure that the message of his budget did not get distorted by less-than-enthusiastic officials.”
Prime Minister Rao allowed Manmohan Singh to endure all criticism “on his own.” Ramesh recounted that after Rao assumed the prime ministerial role in June 1991, rapid transformations began to unfold in the nation.
Ramesh, who served as an aide to Rao during the early months of his administration, mentioned in his 2015 publication that Singh characterized his budget as a “budget with a human face.” “He diligently defended the proposals to raise prices of fertilizer, petrol, and LPG,” he added.
The Congress leader recalled that only two Members of Parliament, Mani Shankar Aiyar and Nathuram Mirdha, fully supported Singh’s budget. Recognizing the unrest among Congress leaders, Rao swiftly called a meeting of the Congress Parliamentary Party (CPP) on August 1, 1991. While allowing the MPs to express their grievances openly, the prime minister chose to remain absent, permitting Singh to confront all criticism “on his own.”
Subsequently, two additional meetings were held on August 2 and 3, during which Rao was present. Ramesh noted that “In the CPP meetings, the finance minister appeared isolated, and the prime minister did nothing to ease his distress.”
Mani Shankar Aiyar endorsed Manmohan Singh’s budget, asserting that it resonated with Rajiv Gandhi’s vision of necessary actions to avert the financial crisis.
Yielding to pressure from Congress members, Singh consented to reduce the proposed 40 percent increase in fertilizer prices to 30 percent, while he opted to maintain the hikes in LPG and petrol prices as originally planned.
