Manmohan
Singh's 1991 Budget: the day that changed India forever
Yesterday, July
24, 2016, marks 25 years of liberalisation. The economic reforms kick-started
in 1991 brought about expansion of the services sector helped largely by a
liberalised investment and trade regime. They also increased consumer choices
and reduced poverty significantly.
That day 25 years ago changed India decisively. At about 12.50 p.m.,
P.J. Kurien, the Minister of State for Industry and now the Deputy Chairman of
the Rajya Sabha, got up in the Lok Sabha and read out a brief statement: “Sir,
I beg to lay on the table a statement (Hindi and English versions) on
Industrial Policy”. That was it: a bland statement to usher in a radical
transformation of Indian enterprise and open up a whole new future for Indian
entrepreneurs. The statement made a bonfire of all licensing controls. The
occasion was made more ironic by the fact that the junior minister’s heart was
not in the revolutionary contents of the new industrial policy. Indeed, at
various points, he and his officials had acrimonious disagreements, and Finance
Minister Dr. Manmohan Singh had to tell him that he had to fall in line to
avoid international embarrassment. Perhaps this tepid introduction had been
provoked by a fear of protests from political parties and trade unions. In
fact, I had reason to believe that lobbying by some prominent figures of
industry — nervous about the bold approach to attracting foreign investment —
had delayed the approval of the new industrial policy. The new industrial
policy almost did not happen. It was rejected by the Cabinet when it was first
taken up on July 19. Many ministers objected to the sweeping changes being
proposed, saying that it was a wholesale and unwarranted condemnation of over
four decades of planned development. Some were not convinced that a strong case
had been made out for these far-reaching changes. It is only after
consultations in a Group of Ministers, and some political repackaging and
repositioning, that the Cabinet had approved the proposals on July 23.
Thereafter, they were given the go-ahead in a special meeting of the Congress
Working Committee (CWC) in which Dr. Singh quoted chapter and verse from the
Congress’s 1991 Lok Sabha election manifesto to demonstrate that he and Rao
were only implementing what might be considered Rajiv Gandhi’s last will and
testament.
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