Historic 1991 Budget: How Manmohan Singh took bold steps for India's Economic Reform?

Manmohan Singh, the father of India's economic reforms, faced the litmus test to ensure the acceptance of his historic Union Budget of 1991, which pulled the country out of its worst financial crisis. Singh, the newly appointed finance minister in the government led by former Prime Minister P V Narasimha Rao, did this with utmost impunity.

From facing journalists at the post-budget press conference to angry Congress leaders who could not digest the sweeping reforms at the parliamentary party meeting, Manmohan Singh stuck to his decisions. His historic reforms saved India from bankruptcy and redefined its course as an emerging global power.

The budget presented by Manmohan Singh contained several drastic reforms. The proposals to increase the prices of fertilizers, petrol, and LPG created a stir in political circles. There was discontent within the party over these proposals, but Singh did not hesitate to put forth his point. Congress leader Jairam Ramesh wrote in his book 'To the Brink and Back: India's 1991 Story', "Finance Minister Manmohan Singh explained his budget and called it a "human budget". He strongly defended the proposals to increase the prices of fertilizers, petrol and LPG." Jairam Ramesh was his aide in the early months of PV Narasimha Rao's tenure.

Dr Singh held an impromptu press conference on 25 July 1991 after the budget. His aim was to ensure that the message of the budget was not distorted by the indifference of officials.

There was widespread discontent within the Congress party over the budget. In a Congress Parliamentary Party meeting on 1 August 1991, party MPs were allowed to express their views openly. In this meeting, only two MPs, Mani Shankar Aiyar and Nathuram Mirdha, supported the budget. Singh stuck to his proposals despite pressure from the party and agreed to only a 30 percent increase in fertilizer prices while keeping the increase in petrol and LPG prices unchanged.

Prime Minister PV Narasimha Rao had given Singh complete freedom and left him alone to face the criticism. Rao never defended Singh, which made it clear that Singh had full faith in his decisions.

Manmohan Singh's bold move was successful in rescuing India from the economic crisis. Although he showed leniency in some steps, he kept the basic reforms intact. In this way, he brought his policy to fruition by establishing harmony between the government and the party.