A politician and a gentleman

The man who pioneered India's liberalisation, returns to take charge of the country

Manmohan SinghIndia's Prime Minister-designate Manmohan Singh was born in Gah, West Punjab (now in Pakistan), on September 26, 1932, to Gurmukh Singh and Krishna Kaur. One of 10 children, he graduated from Amritsar's Hindu College and did his M A and D Phil from Oxford. He was conferred a D Lit (Honoris Causa) by Assam University.He is married to Gursharan Kaur, they have three daughters.

An academic, he started his career from Punjab University, going on to become professor of international trade at Delhi University's prestigious Delhi School of Economics (D-School). Inducted into the government as an advisor to the finance ministry in the late '70s, Singh spent much of his career as a bureaucrat. He became principal economic advisor to the finance ministry and went on to become a director and then the governor of the Reserve Bank of India from 1982 to 1985 before being inducted into politics and, finally, into Narasimha Rao's Congress government as finance minister in 1991.

As finance minister in Rao's government in the '90s, Manmohan Singh was responsible for the reforms that liberalised India's economy. He ended the licence-permit raj, which changed fundamentally, the way corporate India was used to thinking and, with it, the lives of millions of middle class Indians.

Manmohan SinghWhen Singh became finance minister, India's economy was in shambles, with an unsustainable fiscal deficit close to 8.5 per cent of the gross domestic product (GDP) — almost double what it is at present — a huge balance of payments deficit and foreign currency reserves at a perilously low $1 billion, roughly equal to two weeks' imports. The country was on the verge of bankruptcy.

Singh slowly started the process of restructuring the economy. The only condition he put before Prime Minister Narasimha Rao was that India needed a strong vision to take it forward, and that he needed a reasonably free hand with the minimum interference. Rao backed Singh's vision all the way, and India embarked on a path of reforms.

Singh saw the crisis as an opportunity, to build a new India and to do things, which ought to have been done much earlier, but, somehow, never were. By 1994, when he presented his historic budget, the economy was well on its way to recovery. As a result nearly 10 million new jobs were created, an environment of liberalisation was set in motion, new sunrise sectors opened up to entrepreneurs and the foundation of an IT and telecom revolution was laid

But he wasn't satisfied with a mere turnaround and moved ahead, instituting deep structural changes in the institutions of the country. Under Singh, that year, the government of India entered into an understanding with the Reserve Bank of India to deny itself the right to 'draw' on the RBI to fund its deficit. This put paid to the unlimited monetisation of the fiscal deficit — a historic step.

Manmohan SinghMost remarkable was his ability in the midst of an unprecedented crisis to think 'out-of-the-box' rather than just 'tighten the belt'. Singh's reforms were somewhat removed from the usual, radical World Bank / IMF prescriptions which, in many third world countries, have led to dramatic increases in misery following rampant unemployment. He chose an alternative path; of stabilisation plus a credible structural adjustment programme that shortened the period of hardship and released the innovative and entrepreneurial spirit.