THE ARCHETYPICAL INSIDER WHO GUIDED INDIA TOWARDS ITS ECONOMIC POTENTIAL

During Singh's tenure at RBI, India embraced a more flexible exchange rate to promote exports

- NIRANJAN RAJADHYAKSHA

Manmohan Singh was chief guest at the annual convocation of the Indian Institute of Management Bangalore on 15 April 1991. He was then chairman of the University Grants Commission and an advisor to the flailing government led by Chandrashekhar.

He told the assembled B-School students how the country was living beyond its means, that the private sector had to be unshackled so that it could seize global opportunities, how the inefficiency of the public sector was a drag on the economy, the need to modernize the creaking tax system, and the opportunities from new technologies. What he proposed that day, in his own quiet and understated way, was a radical overhaul of the way economic policy had been conducted in India till then.

Manmohan Singh then seemed to be at the end of his distinguished career as an economic policymaker that had seen him in leadership positions in the finance ministry, the Reserve Bank of India (RBI) and the Planning Commission. Instead, a little more than two months later, he became finance minister of the country, and took charge of a crisis-ridden economy that was close to an international default.

Four days after becoming finance minister, Manmohan Singh summoned his 12 top officials in the ministry, firmly telling them there was a need to change course. He had the full backing of his prime minister, and whoever was uncomfortable with the new strategy would be reassigned to some other part of the government.

These two anecdotes—his speech to business school students and the meeting with the top officials in the finance ministry—should help clear the air about two questions that have puzzled many. First, was Manmohan Singh an economic reformer by conviction or was he merely carrying out the instructions of P.V. Narasimha Rao? Second, was he capable of firm decision-making or did he habitually sit on the fence?