Manmohan Singh. File photo.
July 24, Saturday marks the 30th anniversary of the 1991 budget of Manmohan Singh which officially set the economic path of the country in the 'liberalised, privatised and globalised' route.
Though Rajiv Gandhi showed some indications of the policy change, it was the Narasimha Rao government that brought in the paradigm shift. Manmohan Singh took India to the other side of the Licence Raj which was till then the hallmark of the Indian economy.The '91 budget' is commonly referred to as 'The Epochal Budget' by its supporters.
Rajiv Gandhi, Indira Gandhi and Jawaharlal Nehru were socialists and torchbearers of nationalisation. Nehru even called the public institutions the 'temples of modern India.' One of the main challenges before the Rao govt was the growing fiscal deficit. Apart from going for more foreign investments, Manmohan and his team in the North Block cut down the corporate taxes in order to attract more domestic investments.The government re-wrote the industrial regulations.
Even before 1991, several governments attempted to liberalise the economy, mostly to meet the criteria for IMF and World Bank loans. However, '1991' marks the radical shift. Taking privatisation to another level, BJP appointed Arun Shourie as the 'disinvestment minister' in the Atal Bihari Vajpayee cabinet. The successive governments sold several public institutions and opened many fields for foreign investment.
Indian left parties have been opposing this from the beginning. On the occasion of its 10th anniversary, left ideologue and economist Prabhat Patnaik wrote: '[Liberalisation] corresponds to a new phase of world capitalism with new class configurations. '' In so far as 'liberalisation' is not a mere policy option but a process driven by international finance capital in the current stage of imperialism, it follows that the nation-State that is carrying forward this process is trapped willy-nilly into defending the interests of international finance capital even against its own population.'' To provide even a mere 'human face' [to liberalisation], it has to abandon that path altogether which in turn can become possible only with the widest mobilization of classes against those promoting liberalisation,' he said.
A liberalised 'free market' does not want government intervention in almost all fields. For the supporters, it is a perfect world as there is always an equilibrium achieved through the bargain of the buyers and sellers. The fare price is ensured through the competition. But reality quite often has been the other way. Along with the benefits came the rotten fruits of inequality and disparity of income distribution. This was exposed like anything when the pandemic wreaked havoc in the country.
While presenting his dream budget in 1991 Manmohan Singh quoted Victor Hugo, the French writer who famously said that nothing can stop an idea whose time has come. The 30 years of liberalisation have seen the celebration and rejection of this idea as the country went through different phases of economic growth and setbacks.