Dr. Manmohan Singh’s journey through the labyrinth of political and semi-political arenas commenced long before he ascended to the position of Finance Minister. Lauded as “The Great Liberaliser” and a reformist of the Indian economy, Singh’s tenure as Prime Minister earned him the peculiar label of being “not a politician.” Despite his extensive academic laurels, his demeanor was a harmonious blend of gentleness and sagacity. This attribute enabled him to maintain amicable relations with those around him, treading cautiously to avoid discord.
In 1982, Singh transitioned from being Member-Secretary of the Planning Commission to the Governor of the Reserve Bank of India (RBI), a position he held from September 16, 1982, to January 14, 1985, under the aegis of Prime Minister Indira Gandhi. He openly opposed the high Statutory Liquidity Ratio (SLR), which mandated banks to allocate a substantial 36% of deposits into government securities. Singh resolutely declined a government proposal to further increase this ratio by two percentage points, an action that would have siphoned an estimated ₹1,550 crore from non-food credit towards government coffers.
The RBI, acting as the bedrock of India’s economy, often found itself at odds with Finance Ministers over its independent stance. Singh himself acknowledged, in his daughter Daman Singh’s book Strictly Personal: Manmohan and Gursharan, significant differences with then-Finance Minister Pranab Mukherjee. One notable instance was Singh’s resistance to granting a banking license to the Bank of Credit and Commerce International (BCCI), a foreign bank founded by Pakistani businessman Aga Hasan Abedi. Despite governmental pressure and eventual moves to curtail RBI’s authority, Singh stood firm, even tendering his resignation in protest, only to be persuaded to remain.
During his tenure, Singh and Mukherjee also clashed over the contentious attempted hostile takeover of Escorts and DCM by UK-based industrialist Swaraj Paul, highlighting his unwavering commitment to economic sovereignty.
When India’s current account deficit ballooned to 3% of GDP by 1990-91 and foreign reserves dwindled to an alarming three-week import cover, Prime Minister P.V. Narasimha Rao appointed Singh as Finance Minister. It was a period of dire economic straits, compelling India to pledge 67 tonnes of gold to secure an emergency $2.2 billion loan from the International Monetary Fund. Singh, in this tumultuous environment, dismantled the “Licence Raj,” ushering in economic liberalization. Rao reportedly rejected Singh’s initial budget draft, leading to a revised version that paved the way for Public Sector Undertakings (PSUs) to be privatized, an end to monopoly laws, and heightened competition.
The reformist budget had its critics. The liberalization wave initially buoyed the stock market but spiraled into chaos with the Harshad Mehta scam, as detailed in A Fly on the RBI Wall. The scandal exposed systemic weaknesses, with Mehta exploiting banker’s receipts for stock market manipulation, causing losses estimated at ₹50 lakh crore and leading to significant reforms, including the establishment of the Securities and Exchange Board of India (SEBI).
While Singh’s economic policies spurred growth, criticisms persisted. By 1993, GDP growth reached 4.75%, rising to 7.5% by 1995-96. However, manufacturing remained stagnant, prompting accusations of “jobless growth.” His tenure as Prime Minister during UPA-I introduced transformative measures such as the Right to Information Act, MGNREGA, and the Nuclear Agreement with the US. Yet, these successes were marred by allegations of corporate favoritism, burgeoning non-performing assets (NPAs), and inflation, culminating in political defeat in 2014.
Dr. Singh’s legacy is a complex tapestry of visionary reforms and contentious debates, illustrating the intricate interplay between economic strategy and political exigencies. His stewardship shaped modern India, leaving an indelible imprint on its economic and political landscape.
