Updated: Jun 7, 2020
What is Manmohanomics ?
Dr. Manmohan Singh is One of the Outstanding Finance Ministers of India ever had.Undoubtedly Numero Uno Finance Minister.His Economic Policies combined together called as Manmohanomics and his Budget on 24th July 1991 has changed the Destiny of Indian Economy Forever.He ended the Licence Raj thereby encouraging the Entrepreneurs and new Businessmen , Which earlier enjoyed by a few Select Business Families through Lobbying in Power Circles.
Allowed the Foreign Direct Investment ( FDI ) and encouraged Foreign Institutional Investors ( FII) and Unleashed the Animal Spirits of Businessmen and opened the flood gates of Indian Economy to the World and had the Lasting Impression on Indian Economy Permanently.
Subsequent FMs have followed his path of Reforms and He brought the Prosperity to the Nation as a whole and lifted up the millions of Indians out of Poverty, brought the International Limelight on India and He remains as Shining Star in the History of Indian Economy.
“I do not minimise the difficulties that lie ahead on the long and arduous journey on which we have embarked. But as Victor Hugo once said, "no power on earth can stop an idea whose time has come." I suggest to this august House that the emergence of India as a major economic power in the world happens to be one such idea. Let the whole world hear it loud and clear. India is now wide awake. We shall prevail. We shall overcome.”
This impassioned speech made byDr Manmohan Singhas the Finance Minister while introducing the Budget of 1991 is a trademark to the changing fortunes of theIndian Economy, which at the time was almost near bankruptcy.
Dr.Manmohan Singh introduced the New Economic Policy ( NEP ) in the Budget Speech in 1991. This NEP 1991 radically changed the Indian Economy and rest is history.
I. Objectives of New Economic Policy 1991
Enter into the field of ‘globalisation’ and make the economy more market-oriented.
Reduce the inflation rate and rectify imbalances in payment.
Increase the growth rate of the economy and create enough foreign exchange reserves.
Stabilise the economy and convert the economy into a market economy by the removal of unwanted restrictions.
Allow international flow of goods, capital, services, technology, human resources, etc. without too many restrictions.
Enhance the participation of private players in all sectors of the economy. For this, the reserved sectors for the government was reduced to just 3.
II. Branches of New Economic Policy 1991:
All commercial banks were now free to fix their interest rates. This was previously done by the RBI.
Investment limit for small-scale industries was increased to Rs. 1 Crore.
Indian industries were given the freedom to import capital goods.
Companies were given freedom to expand and diversify their production capacities based on market requirements. Previously, the government used to fix the maximum limit of production capacity.
Restrictive trade practices were abolished. Licensing was removed in the private sector and only a few industries were required to obtain licenses, namely, liquor, cigarette, industrial explosives, defence equipment, hazardous chemicals and drugs.
Under this, many public sector undertakings (PSUs) were sold to private players.
PSU shares were sold to private players.
PSUs were disinvested.
The number of industries reserved for the public sector was reduced to 3 (mining of atomic minerals, railway and transport, and atomic energy).
Tariffs were reduced – reduction of custom duties in import and export to attract global investors.
Foreign trade policy was for the long-term – Liberal and open policy was enforced.
Indian currency was made partially convertible.
The equity limit of foreign investment was increased.
Manmohan Singh in Biography in Brief :
Manmohan Singh ( born 26 September 1932) is an Indian economist, academic, and politician who served as the 13th Prime Minister of India from 2004 to 2014. The first Sikh in office, Singh was also the first prime minister since Jawaharlal Nehru to be re-elected after completing a full five-year term.
Born in Gah (now in Punjab, Pakistan), Singh's family migrated to India during its partition in 1947. After obtaining his doctorate in economics from Oxford, Singh worked for the United Nations during 1966–69. He subsequently began his bureaucratic career when Lalit Narayan Mishra hired him as an advisor in the Ministry of Commerce and Industry. During the 1970s and 1980s, Singh held several key posts in the Government of India, such as Chief Economic Advisor (1972–76), governor of the Reserve Bank (1982–85) and head of the Planning Commission (1985–87).
In 1991, as India faced a severe economic crisis, newly elected Prime Minister P. V. Narasimha Rao surprisingly inducted the apolitical Singh into his cabinet as Finance Minister. Over the next few years, despite strong opposition, he as a Finance Minister carried out several structural reforms that liberalised India's economy. Although these measures proved successful in averting the crisis, and enhanced Singh's reputation globally as a leading reform-minded economist, the incumbent Congress party fared poorly in the 1996 general election. Subsequently, Singh served as Leader of the Opposition in the Rajya Sabha (the upper house of the Parliament of India) during the Atal Bihari Vajpayee government of 1998–2004.
In 2004, when the Congress-led United Progressive Alliance (UPA) came to power, its chairperson Sonia Gandhi unexpectedly relinquished the premiership to Manmohan Singh. Singh's first ministry executed several key legislations and projects, including the Rural Health Mission, Unique Identification Authority, Rural Employment Guarantee scheme and Right to Information Act. In 2008, opposition to a historic civil nuclear agreement with the United States nearly caused Singh's government to fall after Left Front parties withdrew their support. Although India's economy grew rapidly under UPA I, its security was threatened by several terrorist incidents (including the 2008 Mumbai attacks) and the continuing Maoist insurgency.
The 2009 general election saw the UPA return with an increased mandate, with Singh retaining the office of Prime Minister. Over the next few years, Singh's second ministry government faced a number of corruption charges—over the organisation of the 2010 Commonwealth Games, the 2G spectrum allocation case and the allocation of coal blocks. After his term ended in 2014 he opted out from the race for the office of the Prime Minister of India during the 2014 Indian general election.Singh was never a member of the Lok Sabha but served as a member of the Parliament of India, representing the state of Assam in the Rajya Sabha for five terms from 1991 to 2019.In August 2019, Singh filed his nomination as a Congress candidate to the Rajya Sabha from Rajasthan after the death of sitting MP Madan Lal Saini.
After Manmohan Singh's tenure as Finance Minister, Whenever Budget is presented in Indian Parliament, Whole World Media started tracking FM's Budget Speech and Its Presentation and Its Impact on Indian Economy in particular and Integrated World Economy in general.
India will never forget his contributions to Indian Economy and History will judge him as One of the Stalwarts and Proud Son of India.
He is a Great Technocrat Economist .