The Bold Decision by Manmohan Singh that Saved India from Bankruptcy

Dr. Manmohan Singh, India’s former Prime Minister and a renowned economist made a historic decision that rescued the country from a severe economic crisis and paved the way for future growth. In 1991, as Finance Minister, Dr. Singh faced an economic crisis where India was on the verge of bankruptcy, with only 15 days of foreign reserves left.

The 1991 Economic Crisis: Only 15 Days of Reserves Left

India’s economy was in dire straits in 1991, with only enough foreign currency reserves to last 15 days. If urgent measures weren’t taken, the country wouldn’t be able to import essential goods like petroleum, medicines, and electronics. At this critical juncture, Dr. Manmohan Singh made a bold decision that changed the course of India’s economic history.

IMF and European Nations’ Condition: Open Your Economy

When India sought financial help from the International Monetary Fund (IMF) and European countries, they imposed a condition that India must open its economy to foreign companies. In response, Dr. Manmohan Singh and Prime Minister P.V. Narasimha Rao’s government introduced the policy of “Liberalization, Privatization, and Globalization” (LPG). This policy allowed foreign and private companies to operate in India, which significantly boosted the country’s economy.

The Impact of the LPG Policy: Rapid Economic Growth

The implementation of the LPG policy not only attracted foreign investments but also allowed Indian industries to flourish. This led to rapid economic growth and integrated India into the global economy. However, the government imposed strategic restrictions, ensuring that foreign companies couldn’t enter sectors like defence, space, and petroleum to safeguard national interests.

Conclusion

India might have faced economic collapse if Dr. Manmohan Singh had not taken this decisive step in 1991. His leadership not only averted a financial disaster but also set India on the path to becoming a global economic power.

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