From UPSC perspective, the following things are important :
Mains level: Economic reforms;
Why in the News?
People around the world paid tribute to Dr. Manmohan Singh, known for opening up India’s economy and making it a global player, who passed away at the age of 92.
How did Manmohan Singh’s reforms transform India’s economic landscape?
- 1991 Economic Liberalization (LPG): He abolished the “License Raj,” which required businesses to seek government approvals for setting up industries.
- Example: The IT sector flourished, with companies like Infosys and Wipro gaining international prominence.
- Tax Reforms and Currency Devaluation: Singh’s government implemented substantial tax cuts and devalued the Indian rupee to enhance competitiveness.
- Example: Corporate tax was reduced from 50% (pre-1991) to around 35% by the mid-1990s, boosting business sentiment.
- Welfare Schemes: Alongside economic liberalisation, Singh’s administration introduced welfare initiatives aimed at sharing the benefits of growth with the rural poor, thereby addressing socio-economic disparities.
- Introduced schemes like MGNREGA (2005) and expanded rural credit, improving employment and poverty alleviation.
- Poverty rates dropped from 37.2% (2004-05) to 21.9% (2011-12), and India’s middle class expanded significantly due to higher income levels.
- Economy growth: As Finance Minister, in 1991 economic reforms addressed the balance-of-payments crisis by reducing the fiscal deficit from 8.4% of GDP (1991) to 5.7% (1993) and reviving GDP growth from 1.1% (1991-92) to 5.3% (1992-93) through measures such as dismantling industrial licensing, devaluing the rupee, and encouraging foreign investment.
How did he left a lasting imprint on external relations?
- US-India Civil Nuclear Deal (2008): He played a pivotal role in finalising the Civil Nuclear Agreement, which ended India’s nuclear isolation and strengthened strategic ties with the United States.
- It also marked a shift in global recognition of India as a responsible nuclear power.
- Strengthening India’s Strategic Partnerships: Deepened ties with major global powers, including the US, EU, Japan, and Russia, enhancing India’s diplomatic and economic engagement globally.
- Championing India’s Role in Global Governance: Advocated for reforms in international institutions like the UN, IMF, and World Bank to reflect the rising stature of emerging economies, particularly India.
- His leadership elevated India’s voice in global forums like G20 and BRICS.
- Focus on Regional and Economic Integration: Fostered closer economic and diplomatic ties with ASEAN, SAARC nations, and other Asian neighbours, reinforcing India’s position in regional trade and security frameworks.
- His outreach contributed to India’s Act East Policy and improved relations with key partners in the Indo-Pacific region.
Conclusion: The Indian government should embrace Dr. Manmohan Singh’s legacy by prioritizing bold economic reforms, fostering global partnerships, and championing inclusive growth. Emphasizing strategic investments in infrastructure, skilling, and technology while deepening ties with regional and global partners can sustain long-term growth, reduce disparities, and solidify India’s leadership in global governance.
Mains PYQ:
Q Has the Indian governmental system responded adequately to the demands of Liberalization, Privatization and Globalization started in 1991? What can the government do to be responsive to this important change? (UPSC IAS/2016)
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