A lot of individuals are going to be shocked, perhaps justifiably, that Manmohan Singh should feature ‘below the spine’ during this piece. After all, he defanged the debilitating depression of 1991 with breath-taking policy moves.

Recall that India had to pledge 67 tonnes of gold to debar a default sovereign debt. We were downgraded to junk status, with barely any exchange left to buy critical imports or service foreign debt.

Now just imagine the usually restrained Manmohan Singh doing a ‘hop, skip, and jump’ (which is what the reckless operation was code-named).

On Monday, 1 July 1991, India’s pegged rupee was devalued nine percent by a government order — yes, i will be able to say it again, nine percent in one chop to the neck. it had been a straw-clutching move to prevent a run on rapidly dwindling foreign currency reserves. But a nervous market began to panic even more. So, two days later, on 3 July 1991, the rupee was devalued another 11 percent — yes, another eleven percent — but with a promise to prevent . That calmed the market and stanched the outflow.

Eventually, two years later, India put its tightly controlled currency on a ‘managed float’. As economic shocks go, this one had clothed to be bold & beautiful

(PS: We are holding nearly USD 600 bn of foreign currency reserves now)

Manmohan Singh Saved A Sinking Ship

Dr Singh also took another uncharted action to harness the American dollar and make an equity cult within the country. India’s closed, clubby, and scam-prone stock markets were thrown hospitable foreign investors.

The sheltered, fragile rupee was made partially convertible on the capital account. Two new institutions, the Securities & Exchange Board of India (SEBI) and National stock market (NSE), were empowered and inaugurated to wash the Augean stables . Soon, India’s remarkably digitised stock exchange , perhaps the foremost modern within the world at that point , won over the foreigners.

Yes, Manmohan Singh did 1,000,000 other things to liberalise our hopelessly controlled/trussed-up economy, but he did it to save lots of a sinking ship. He was forced to act by a fatal crisis.

As finance ministers go, his impact was infinitely greater than anything Jaswant Singh could have done. But on the opposite hand (he will hate me for employing a ‘two-handed phrase’), Jaswant Singh was keen to liberate a healthy economy out of conviction. That’s why I remember him with an exclamation mark!


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