Budget 1991: How then FM Manmohan Singh announced a slew of reforms to turn around the economy

Former Prime Minister Manmohan Singh, who passed away on Thursday night, is widely considered the harbinger of reforms for economic liberalisation during his term as the finance minister. The Budget which came at a time when the economy was in the midst of a severe crisis—both in terms of fiscal management and balance of payments and double digit inflation, announced a slew of reforms.
 
“In sum, the crisis in the economy is both acute and deep. We have not experienced anything similar in the history of independent India,” Singh said in his Budget speech on July 24, 1991.
 
“There is no time to lose. Neither the Government nor the economy can live beyond its means year after year. The room for maneuver, to live on borrowed money or time, does not exist anymore,” he further underlined before announcing several reforms aimed at boosting investments and enabling FDI in select sectors.
 
Here’s a look at some of the top reforms by then Finance Minister Manmohan Singh in the Union Budget 1991-92 that helped turn India into today’s economic powerhouse:
 
FDI regime liberalisation: FDI in specified high priority industry upto 51% foreign equity would be given prompt approval; FDI upto 51% allowed for trading companies primarily engaged in export activities; special board set up to negotiate with large international firms and approve FDI in selected areas
 
 Banking reforms: Set up the Narsimhan committee to consider all relevant aspects of the financial system and advise the Government on appropriate measures that would be needed to enhance the viability and health.
 
Set up SEBI: For healthy growth of capital markets, protecting the rights of investors and for preventing trading malpractices. Also announced a comprehensive package of reforms relating to trading on the Stock Exchanges, including a system of national clearing and settlement and setting up of a central depository.
 
Fiscal deficit: Embarked on fiscal adjustment and expenditure management and underlined the need to lower fiscal and revenue deficit as a percentage of GDP, limiting of non plan spending.
 
 Tax policy: Extended tax concessions to software export to give a boost to IT industry, extended TDS to new payments, raised corporate tax rates but promised review of rates to make India globally competitive

Published on: Dec 27, 2024, 2:49 PM IST