Astute economic thinker who leaves behind a lasting legacy

What is the economic legacy of Manmohan Singh in India? Both the Left and the Right would like to remember him as the man who brought economic reforms and privatisation to what was a State-dominated Licence-Quota Raj economy.

- Roshan Kishore

Singh, himself would have liked to differ. "What is the future of capitalism especially in India?" Singh was asked in a 2009 Financial Times interview. His answer would have disappointed market fundamentalists. "Capitalism with a human face. We are a mixed economy. We will remain a mixed economy. The public and private sector will continue to play a very important role," he answered.

To be sure, Singh's ideas of a mixed economy were radically different from what his party, the Congress, tried to achieve when India gained Independence.

The Report of the South Commission, published in 1990 (Singh was the secretary-general of the commission) provides some insights into Singh's thoughts on the misplaced romanticism on State-led development strategies in the Third World.

"In many countries, the State has underachieved precisely because it has tried to do too much, too soon... In such conditions, the withdrawal of the State from some activities may well enhance its effectiveness as an instrument of development," the report said.

Singh's 1991 budget speech, perhaps the most important in post-Independence India till date, echoed this sentiment. "The public sector has made an important contribution to the diversification of our industrial economy. But there have been a number of shortcomings. In particular, the public sector has not been able to generate internal surpluses on a large enough scale. At this critical juncture, it has therefore become necessary to take effective measures so as to make the public sector an engine of growth rather than an absorber of national savings without adequate return," it said.

The 1991 Union Budget was accompanied by a new industrial policy which de-reserved a large number of sectors from public sector monopoly.