Manmohan Singh's 5 Reforms that Transformed Indian Economy "We are a mixed economy. We will remain a mixed economy. The public and private sector will continue to play a very important role. The private sector in our country has very ample scope and I am confident that India's entrepreneurs have the capacity, and the will to rise to the occasion," Manmohan Singh

Former Prime Minister and Finance Minister Manmohan Singh, one of India's most influential leaders and a key architect of the country's economic liberalisation, passed away at the age of 92 in New Delhi. A soft-spoken technocrat with immense academic brilliance, Singh's leadership and economic reforms reshaped India's growth story, lifting the nation out of a severe financial crisis in the early 1990s. His two consecutive terms as Prime Minister from 2004 to 2014 were marked by significant social welfare programs and economic policies that continue to shape India's development today.

Singh's defining moment came in 1991, when he was appointed Finance Minister by Prime Minister P.V. Narasimha Rao. At the time, India was grappling with a severe financial crisis — external debt at 23 per cent of GDP and internal public debt at 55 per cent. Wholesale price inflation had surged by 13 per cent, while retail inflation soared to 17 per cent. Meanwhile, the fiscal deficit stood at 8 per cent of GDP, and the current account deficit was at 2.5 per cent. Foreign exchange reserves had dwindled to a mere INR 2500 crore – 75 percent lower than the previous year.

In July of that year, the Reserve Bank of India pledged gold to raise emergency funds. Simultaneously, Singh devalued the rupee, a move that would bolster exports and stabilize foreign reserves.

But Singh knew that solving the immediate crisis wasn't enough. He realized that India needed long-term economic changes to prevent future problems. Singh introduced Liberalization, Privatization, and Globalization (LPG) reform in 1991 that ended the Licence Raj, a system that required businesses to get government permits for almost every operation, from opening a factory to expanding production. His policy deregulated nearly 80 per cent of the industrial sector, reducing the number of industries reserved exclusively for the public sector from 17 to 8.

As a result, private enterprises flourished, foreign companies invested in India, and sectors like IT, telecom, and manufacturing began to thrive, creating millions of jobs and boosting economic growth. In the decade following these reforms, India's GDP grew by an average of over 6 per cent annually. In 2010, as per World Bank data, India's GDP growth rate touched 8.498 per cent.

His leadership extended beyond economic reforms. Singh's tenure as Prime Minister from 2004 to 2014 was marked by the expansion of social welfare programs.

Four social welfare policies under Singh's leadership

Under his government, the Mahatma Gandhi National Rural Employment Guarantee Act (MGNREGA) was launched in 2005. The policy guarantees at least 100 days of wage employment annually to every household whose adult members are willing to undertake unskilled manual labor. This scheme acts as a crucial safety net for rural households, providing livelihood opportunities when better employment options are unavailable.

In the financial year 2023-24, the total number of registered workers under the scheme reached 25.68 crore. As of November 29, 2024, for the current financial year 2024-25, this figure stands at 25.17 crore.

Recognising illiteracy in India, Singh introduced the Right to Education (RTE) Act of 2009, establishing free and compulsory education for children aged 6-14, ensuring education as a fundamental right.

Aadhaar, a policy prominently championed by the current government, was actually initiated in 2009. It created a biometric identity system that streamlined welfare distribution and improved financial inclusion for millions.

Additionally, Singh's banking sector reforms, initiated in the early 90s, gradually reduced the statutory liquidity ratio (SLR) from 38.5 per cent to 25 per cent, while the cash reserve ratio (CRR) was brought down from 25 per cent to 10 per cent over several years. These adjustments enabled banks to increase lending capacity, driving economic growth. Simultaneously, branch licensing regulations were relaxed, and interest rates were deregulated, fostering greater competition and efficiency within the banking system.

A Man of integrity amidst political storms

Despite his numerous achievements, Singh's second term was marred by allegations of corruption, including the 2G spectrum, Commonwealth Games, and coal block allocation scams. Yet, Singh never reacted much in public. Known for his personal integrity and humility, he often chose silence over confrontation, believing that history would be kinder in its judgment.

"I honestly believe that history will be kinder to me than the contemporary media, or for that matter, the opposition parties in parliament," Singh remarked in 2014 during his final press conference as Prime Minister.

His lasting legacy

Singh's contribution to India extends beyond economic reforms, his social justice, and educational reform continues to shape the nation.

In his iconic 1991 budget speech, Singh quoted Victor Hugo: "No power on earth can stop an idea whose time has come." Today, as India stands as a major global power, it is evident that Singh's ideas and policies paved the way for the country's ascent.

His leadership underscored the importance of blending public and private sector efforts to drive economic growth, echoing his own words: "We are a mixed economy. We will remain a mixed economy. The public and private sector will continue to play a very important role. The private sector in our country has very ample scope and I am confident that India's entrepreneurs have the capacity, and the will to rise to the occasion."

Despite being labeled by critics as a "remote-controlled" Prime Minister, Singh remained focused on his vision for India.