Sunday Times 2
Manmohan Singh and the making of the Indian miracle
View(s):By Anne O. Krueger, Project Syndicate, Exclusive to the Sunday Times in Sri Lanka
WASHINGTON, DC – At a time when demagogic populists often overshadow experienced, empathetic politicians, the recent passing of former Indian Prime Minister Manmohan Singh at the age of 92 serves as a stark reminder of how our perceptions of leadership have changed.
Singh, who led India from 2004 until 2014, was not only an adept politician who spearheaded his country’s economic reforms with the backing of then-Indian National Congress leader Sonia Gandhi and his own predecessor Narasimha Rao. He was also a gentle and open-minded person—a true global citizen. And he will almost certainly be remembered as the architect of India’s transformation from one of the world’s poorest, slowest-growing countries into the emerging power it is today.
Before becoming prime minister, Singh had already held several prominent roles in government and policymaking, including governor of the Reserve Bank of India (1982-85) and secretary-general of the South Commission in Geneva (1985-87). In 1991, he was appointed finance minister during one of the worst periods in India’s economic history. Although the country had made some progress since gaining independence in 1947, it remained deeply impoverished and plagued by slow per capita income growth, low health and educational standards, frequent power outages, and woefully inadequate transportation, communications, and water and sanitation infrastructure.
Singh’s appointment marked a turning point. In the decades following independence, Indian politicians were committed to boosting growth and reducing poverty through public enterprises and stringent government controls over virtually all private-sector activity. But this approach fostered rent-seeking and resulted in dismal economic performance, widely ridiculed as the “Hindu rate of growth.”
India’s economic problems could be partly attributed to its trade policies. Jawaharlal Nehru, the country’s first post-independence prime minister, championed import substitution, aiming to replace foreign goods with domestic production through high tariffs and other protectionist barriers. Yet, demand for imports outpaced export growth, and widespread shortages gave rise to domestic monopolies that had little incentive to improve quality.
A popular joke from this period—a man awaiting surgery grows terrified when his doctor mentions a “local” anaesthetic—perfectly captured the mood among Indians. Meanwhile, applications for lucrative import licences faced rigorous scrutiny, leading to processing delays, so smuggling and other forms of evasion became rampant.
By 1991, India’s share of global trade had fallen to 0.5%, from 1.8% in 1950. Despite decades of government efforts, the poverty rate had remained largely unchanged since independence. When Singh became finance minister, the country was grappling with a severe balance-of-payments crisis and derided as a “basket case.”
With the backing of then-Prime Minister Narasimha Rao and a team of talented economists, Singh implemented sweeping reforms that revolutionised India’s policy framework. The rupee was devalued, import controls were largely dismantled, regulations on private-sector production and prices were relaxed or eliminated, and large swaths of the economy were liberalised.
The results were impressive. Within a year, economic conditions had improved dramatically, and despite a change in government, the reforms were not reversed. Following the Indian National Congress’ victory in the 2004 election, Singh was named prime minister by party leader Sonia Gandhi, enabling him to advance his reformist agenda.
India’s subsequent transformation is nothing short of extraordinary. In 1993, 48% of the country’s population lived below the World Bank’s poverty line. By 2015, this figure had dropped to 18.8%, and it has since fallen to 12.9%. Three decades ago, it seemed inconceivable that the low-income, struggling Indian economy could evolve into a middle-income emerging market. Today, India’s economy is one of the world’s fastest-growing, with a 2.6% share of global trade. In fact, growth has been so rapid that Prime Minister Narendra Modi has set the ambitious goal of achieving advanced-economy status by 2047.
In addition to abolishing import licensing and other government controls, Singh championed a rural employment scheme that guaranteed 100 days of work per year, providing low-income households with a critical safety net. Under his leadership, India’s long-standing hostility toward foreign direct investment diminished, and FDI emerged as a key driver of GDP growth. He also supported the creation of Aadhaar, India’s groundbreaking biometric identification system, which enables direct transfers of government benefits, thereby eliminating intermediaries and reducing corruption and graft.
But Singh’s legacy extends beyond economic reforms. As prime minister, he sought to strengthen India’s relationships with the United States and other global powers. One of his major foreign-policy achievements was a landmark agreement with the US on nuclear energy.
Singh was also known for treating everyone with respect, including his political opponents. His leadership style reflected his modest demeanour, personal rectitude, and, perhaps most importantly, his unwavering dedication. As a reformer in a challenging environment, he combined political acumen and moral integrity to overcome resistance and embrace compromise when necessary, thus avoiding the divisiveness that often accompanies reform efforts.
The success of Singh’s bold policy agenda offers an enduring lesson for political leaders: courage and commitment to long-term goals can vastly improve a country’s economic prospects. If India continues on its current reform path, it could establish itself as a global powerhouse by the end of the century, if not sooner. If policymakers everywhere took a page (or two) from Singh’s playbook, the world would be a far better place.
(Anne O. Krueger, a former World Bank chief economist and former first deputy managing director of the International Monetary Fund, is Senior Research Professor of International Economics at the Johns Hopkins University School of Advanced International Studies and Senior Fellow at the Centre for International Development at Stanford University.
Copyright: Project Syndicate, 2025. www.project-syndicate.org