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Let us know how this situation arose and with which policies or planning Dr. Manmohan Singh brought India out of the crisis of economic recession.Early life and education of Manmohan Singh - Dr. Manmohan Singh education.
Manmohan Singh was born on 26 September 1932 in Gah (then Punjab Province, British India). Today, this place is located in the Punjab province of Pakistan. He moved to India after the partition of 1947. He did his bachelor's and master's in economics from Punjab University (Hoshiarpur), securing first position in both.He then went to Cambridge University and completed the Economics Tripos in 1957.He later received a D.Phil. (doctorate) degree from Oxford University and was a member of Nuffield College.After completing his education, he returned to India and became a teacher at Punjab University.From 1966 to 1969, he worked as an economist at the United Nations (UN).First time in 1991-
The first such financial crisis in India occurred in 1991, when P. V. Narasimha Rao was the Prime Minister of India. In 1990, Iraq attacked Kuwait and occupied it. Due to this, India had to call back its workers working there, who used to send a lot of foreign currency. This had now completely stopped due to the war. Also, the price of crude oil increased in the international market, due to which India had to buy crude oil at expensive rates.
Besides, the excessive subsidy given by the government on many schemes was becoming a burden on the government. And the political instability of that time was also a reason.
This resulted in India's foreign exchange reserves rapidly depleting. In 1991, India's foreign exchange reserves fell to just under $1 billion, enough to cover only two weeks of foreign payments.
This meant India could only import goods from foreign countries for two weeks to pay for them. Because international import and export payments are made in US dollars, India's foreign debt doubled from $35 billion to $69 billion in 1991. This made it difficult for India to obtain loans from foreign institutions or the IMF. The IMF provides loans to developing countries to improve their economies.
The situation was dire for India, with both time and money running low. In such a situation, then-Prime Minister P.V. Narasimha Rao appointed Dr. Manmohan Singh as Finance Minister.
Dr. Manmohan Singh started the work of changing the economy as soon as he took oath.
The first change was made in the industrial policy, from now on he abolished the licensing rules in all industries.
In total, only 18 industries would require licensing. The primary objective was to encourage more industries, thereby creating more jobs.
The second change was the relaxation of the government's monopoly rules for private companies.
To increase private companies' trust in the government, the government has begun changing regulations that it believes allow large companies to dominate. These regulations have been relaxed to allow companies to invest more.
The third revolutionary change was to increase the foreign direct investment (FDI) limit from 40 per cent to 51 per cent in 34 sectors.
Due to which, foreign companies opened up outside India. Investments came into India through Invest India. This helped the Indian economy. But for this, the government made rules that for investment, any foreign company will have to make Indian companies as partners. The government's thinking behind this was that such foreign companies will come to India but they will not have monopoly. And at the same time, Indian companies will get a chance to learn.
Under this, Hero Honda, Maruti Suzuki, General Motors with Hindustan Motors and many other companies entered India which boosted the country's economy.
Devaluation of the rupee twice
Under Dr. Manmohan Singh's policy, the government devalued the rupee twice in international currency terms, in order to boost India's exports and foreign investment.Dialogue with industrialists
Narasimha Rao gave appointments to all the big industrialists so that they could invest more in the country's economy without any fear.
Fiscal Reforms:
Efforts were made to reduce the fiscal deficit. Petrol and cooking gas prices were raised, and sugar subsidies were eliminated. This was to manage the Indian government's expenditures and fill the country's coffers.
Arranging emergency funds by pledging gold.
India pledged its gold to raise emergency funds. This was Manmohan Singh's most bold and decisive move.
Manmohan Singh secretly airlifted 67 tons of Indian government gold and pledged it with foreign banks. This included 47 tons to the Bank of England and 20 tons to the Union Bank of Switzerland to secure emergency loans. In return, India received approximately $400–$600 million in foreign exchange assistance.
IMF assistance: To overcome the crisis, India obtained an emergency loan of approximately $2.2 billion from the International Monetary Fund (IMF). Initially, the IMF refused, but later granted the loan with certain conditions.
By mid-1992, India's foreign exchange reserves had increased moderately. This would not have been possible without the political acumen of Narasimha Rao and the policy and planning of Manmohan Singh.
When did the pledged gold come back to India?
The gold pledged in 1991 was technically redeemed by November 1991 of that year, but was not physically brought to India.
After the loan was repaid, the gold belonged to India, but for security, logistics and ease of international trade, it was kept in the vaults of the Bank of England in London.
Recently, in May 2024, the Reserve Bank of India (RBI) brought back 100 tonnes (1 lakh kg) of gold from the Bank of England to India, which is the largest repatriation since 1991.
The second time was in 2008…
The second such opportunity arose when the United States experienced a severe recession. At that time, American banks began offering mortgage loans without properly verifying people's repayment capacity. This led to a
surge in borrowing. Later, as the Federal Reserve raised interest rates, people couldn't afford the repayments. This gradually led to a financial crisis, known as the 2008 US subprime mortgage crisis. This crisis
initially led to the collapse of the insurance company, followed by the collapse of the banks. A financial crisis swept across the United States. The US financial crisis plunged the entire world into a financial crisis, leading to a global economic recession. Because the US is the global economic center, a recession there means a global economic recession.
After 1991, India faced another economic recession in 2008. While the 1991 recession had many internal causes, the 2008 global recession was driven by global factors. In 2008, when the entire world was hit by recession, Manmohan Singh had rescued the country from this crisis.
The Indian stock market also collapsed during this crisis. It plummeted by more than 50%, foreign investors withdrew $12 billion in a single month, and the GDP rate fell from 9% to 6.7%. While it seemed Indian industry would collapse, Manmohan Singh's policies and plans pulled the country out of this crisis.
1- To maintain the flow of money in the market, huge government expenditure was made and interest rates were reduced.
2. Government and Reserve Bank employees and the general public were given relief, which brought India's economy back from a deep recession and quickly returned to normal.
3. Agricultural loans worth ₹71,600 crore were waived for 40 million small farmers.
4-His strategy included stimulus programs worth Rs 1.86 lakh crore, which led to a rapid improvement in growth rate to 8.5% by 2010.
5-Investment of Rs 20,000 crore was made with excise duty exemption.
6 - An additional Rs 30,000 crore was added for key schemes like the National Rural Employment Guarantee Act (NREGS).
7. The Reserve Bank of India changed its supermarket policy, allowing cheap money to enter the market.
Due to which India's economy gradually came back on track and India was saved from going into a deep economic crisis.
Due to the policies and economic plans of Dr. Manmohan Singh, India was able to avoid economic crisis twice.”
We salute this visionary person or hope that in future also when such situation arises in the country, the present government will also put the country in crisis, otherwise it will come out of it like Dr. Manmohan Singh did in Netarwa.
Former Prime Minister Manmohan Singh died on 26 December 2024 at the age of 92 in AIIMS , New Delhi .
India's economic situation in May 2026 is much stronger than it was during the 1991 crisis.Key Economic Statistics (May 2026)Foreign exchange reserves: About $697 billion, up from just $1.1 billion in 1991.
Gold reserves: RBI has 880.5 tonnes of gold deposits (as of March 2026), worth over $115 billion.Today, India has emerged from the economic crises of 1991 and 2008 and has become the fourth largest economy, surpassing Japan.
Had Dr. Manmohan Singh not saved the country from the economic crisis through his policies, it is possible that India's current situation would have been different.Would today's India have become a global power without the economic reforms that Dr. Singh initiated three decades ago?
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