Click to play videoIn 1991, when Manmohan Singh became the finance minister in the PV Narasimha Rao-led Congress government, the country was close to bankruptcy and had mortgaged its gold to pay for loan installments.
India's fiscal deficit in 1991 was close to 8.5 per cent of GDP and the balance of payments deficit was huge.
The Government had to choose between continuing with its populist socialist economic structure or pursuing reforms at the cost of public anger. The then prime minister PV Narasimha Rao and finance minister Manmohan Singh chose the second route.
Manmohan Singh unshackled the country from bureaucratic controls and licence-permit raj, taking the economy to a high growth path of 6-7 per cent. He also devalued the rupee and slashed subsidies for domestically produced goods.
It's been 20 years since Manmohan Singh opened up Indian economy and freed up Indian entrepreneurship.
"India is on the move again, we shall make the future happen. As the poet say sarfroshi ki tamana ab hamari dil mien hai dekhna hai zor kitna bazuaii katil mien hai (We are ready for sacrifice, let's see how much hardship we can endure)," Singh had said while presenting his Union Budget in 1991 that signalled the beginning of economic reforms.
CNN-IBN talked to people who worked with economist Manmohan Singh and those who watched the two decade journey of India.
Former Reserve Bank of India governor Bimal Jalan shared his experience on the economic reforms.
Significant announcements in 1991 Budget:
I appreciate that it was a commitment towards opening of the economy to competition to investment, to making India Competitive and to make Indian industry, Indian investment produce the kind of result, which we had the right to expect.
What worked:
The most important thing was to remove the shackles from enterprise, shackle from investment of saving into productive asset by corporate by anybody else to make the Indian economy competitive and more very interesting that there were interest at that particular point of time - special interest you know the Bombay club which was not in favor of Bombay club of industrialist who were not in favour of opening up of the economy, but we got over of that problem.
What did not work:
The fiscal issues are still dominant that is one. Two the productivity of our enterprises is still an important issue. Three the elevation of poverty which was equally important then, these are points we still haven't achieved what we wanted to achieve in the last 20 years and similarly governance and delivery of services the kind of corruption you are seeing and kind of ministerial powers which are leading to that kind of corruption we have seen that we have not been able to curb so there are those are important issues which still remain with us and I hope to tackle it.
On Rao's role:
I must pay compliment to the Government and to the prime minister. It was decided to find a person outside normal spectrum of civil surface or political authorities to device a package of reforms, which can give us a balance payment system ability and so on and so forth that's how the finance minister came to the seat and he did what needed to be done. I am only very glad that it could be done under the leadership of the then Indian prime minister PV Narasimha Rao.
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