It was an unassuming June night in 1991 when a phone call changed the course of India’s economic history. Manmohan Singh, then chairman of the University Grants Commission, had just returned from a conference in the Netherlands and was settling in for the night.
His son-in-law answered the phone. On the line was P.C. Alexander, a close aide of Prime Minister P.V. Narasimha Rao, with an unexpected summons for Singh.
By June 21, Singh was at his UGC office, unaware of what lay ahead. A directive came: go home, prepare, and head to Rashtrapati Bhavan for the swearing-in ceremony. Singh, an economist with no political experience, was puzzled. “Everybody was surprised to see me as a member of the new team lined up to take the oath of office. My portfolio was allotted later, but I was told straight away by Narasimha Rao ji that I was going to be finance minister,” Singh recalled in Strictly Personal: Manmohan & Gursharan, authored by his daughter Daman Singh.
The economy Singh inherited was in free fall. Forex reserves had plunged to cover barely two weeks of imports. Inflation was in double digits, and global banks had shut their doors to India. The challenge was immense, but within days, Singh, with Rao’s unwavering support, rolled out bold reforms that dismantled decades of economic stagnation.
On July 24, Singh presented a groundbreaking budget. The Licence Raj—a system that choked industries with excessive regulations—was abolished. Industrial licensing was scrapped in most sectors, foreign direct investment was welcomed in 34 industries, and state monopolies began to dissolve. The rupee was devalued to boost exports, trade policy was liberalized, and fiscal discipline was enforced.
These reforms, however, did not go unopposed. Among the most vocal critics was the Bombay Club, a group of industrialists who feared that liberalization would expose Indian businesses to overwhelming foreign competition. This informal coalition sought continued government protection through tariffs, subsidies, and other safeguards. They argued that Indian industry was not ready to face global giants on equal terms.
Singh, along with Rao, remained steadfast. The reforms moved forward despite the resistance, proving the Bombay Club’s fears unfounded. Liberalization unleashed India’s entrepreneurial energy, turning a controlled, low-growth economy into one of the world’s fastest-growing major economies.
“The price situation, which is of immediate concern to the vast mass of our people, poses a serious problem as inflation has reached a double-digit level,” Singh had warned in his first budget speech. But by stabilizing the economy and initiating structural reforms, he and Rao laid the foundation for the India we see today—a global economic powerhouse.