Manmohan Singh's take on India's present economic state
The former PM Manmohan Singh said that with the successful growth of the 1991 reforms, the Indian industry is now better placed and much more competitive. He noted that although the changes initiated in 1991 were led by the Congress government, the governments that came in later carried the process forward. The liberalisation measures initiated in 1991 helped halve infant mortality rates and poverty.
What is devaluation?
Devaluation of a currency is the lowering of a currency's value against another official currency which is used as a standard. This is done intentionally by the country, usually aimed at making the country's exports more lucrative in the global market with its cheaper prices.
1980's : India's economic crisis
The early 1980's saw India pile up massive debts, as a result of fiscal imbalances by means of waning investor confidence, increasing imports and an ever-growing current account deficit. The nation soon started showing signs of an economic breakdown. By the late 1980's, India slid to an economic crisis. It had to borrow a huge loan from the IMF to cover its debts.
1991: India's policy on liberalization and globalizing its market
After a period of monetary turmoil, the Indian government brought into effect its first policy on liberalising its economy and opening up the Indian markets for foreign trade and capital. Manmohan Singh, the then finance minister, helped enable the currency's devaluation and reduced the quotas and licences that had earlier dictated India's production. The reforms on privatising India's industries helped scale-up their efficiency.
The resultant changes after India's 1991 policy came into effect
After the 1991 policy on liberalisation was brought into effect, India underwent a series of positive changes that helped boost its growth over the past 25 years. India's economic size has grown over 6.3 times since the 1990's and is now a $2 trillion plus economy. The country's current account deficit of 2.96% in 1991 has been more than halved to 1.06% in 2015-16.
Manmohan Singh on the challenges in carrying out reforms
"I think in a crisis, we act constructively. When it is over, status quo takes over", the former Prime Minister said on the India's inclination to react only upon a crisis arising in the country.
