Former Prime Minister Dr. Manmohan Singh is no more among us. People of the country are paying tribute to him in various ways. Some are talking about his politics, while some are remembering his simplicity, but one thing that everyone is talking about is his contribution to the country's economy. Everyone is connecting him to 1991, the economic reforms done then. It seems as if this year has become a symbol for Dr. Manmohan Singh and his contribution. This was such a year, which will keep Dr. Singh alive forever. This year was the beginning of a new era for India, a turning point that changed the country.

The economic crisis of 1991 was a turning point in the history of the Indian economy. This crisis arose mainly due to the depletion of foreign exchange reserves, trade deficit and fiscal deficit. However, it had started in the late 1980s itself, when India's economy became import-based and exports did not grow as expected. Rising debt and interest payments further increased the economic pressure. In addition, the Gulf War and the surge in oil prices complicated the situation. The foreign exchange reserves were left for only two weeks of imports, due to which the government had to mortgage gold reserves to take an emergency loan from the IMF.

Meanwhile, after the death of Rajiv Gandhi, a new government was formed under the leadership of P.V. Narasimha Rao. There were many contenders for the post of Finance Minister, then the name of Dr. Manmohan Singh was nowhere to be seen. Yet, destiny had chosen both this year and Manmohan Singh for a big change in India. Dr. Singh was in his office as UGC Chairman when a call came offering him to become the Finance Minister. Only after this the economic reforms of 1991 started.

What were the economic reforms of 1991?

The main objective of the economic reforms of 1991 was to recover the Indian economy from crisis and transform it into a free and competitive system. These reforms were based on the principles of liberalization, privatization and globalization (LPG). Under liberalization, the license Raj was abolished, which reduced the barriers of government approval for industries and businesses and made it easier to do business. Under privatization, public sector undertakings were disinvested and the private sector was encouraged for greater participation. Under globalization, foreign investment rules were simplified and import-export policies were relaxed, which promoted international trade and prepared the Indian market for global competition.

After the economic reforms of 1991, many major changes were seen in India, which completely changed the country's economy and social structure. These reforms transformed India from a mixed economy to a market-oriented economy, where the role of the private sector and global investment increased.

Economic reforms have played an important role in the expansion of the Indian economy

Today, when we talk about the major achievements of the Indian economy, it is clear on analysis that all these achievements have been possible only after the economic reforms of 1991. Currently, India has established itself as the fifth largest economy in the world, but if we look at the expansion of GDP, the change after 1991 is certainly unique. There was a change of about 786% in India's GDP from 1951 to 1990. India's GDP was $ 30 billion in 1951, which increased to $ 266 billion in 1991. The effect of the economic reforms that followed was that in just 30 years the size of the Indian economy changed from billion dollars to trillion dollars. Today, in 2023, India is an economy of 3.7 trillion dollars, which shows a total growth of 1231.3%.

Rapid changes in the service sector after economic reforms

India is today identified as a "service-driven economy", and the main reason for this is that the contribution of the service sector to the Indian GDP is constantly increasing. Currently, the service sector contributes more than 50 percent to India's GDP, while in 1991 it was only 39.19%. After the economic reforms of 1991, India has seen unprecedented growth in the field of service exports. According to World Bank data, India's service exports contributed only around 4.05% of GDP in 1991-92. However, by 2023 this figure increased to 14.46%, which shows the remarkable progress of India's service sector. The main reason for this is the rapid expansion of the information technology and business process outsourcing (BPO) industry. India made its mark in the global market through software development, technical services, and customer support services. Cities like Bengaluru, Hyderabad, Pune, and Noida have strengthened their position as major hubs of the IT and service industry.

The telecom sector also saw significant changes after 1990. The end of government monopoly and the advent of private companies increased competition, making mobile phone and internet services accessible to a wider population. This change also impacted e-commerce, digital marketing and online services, creating new employment opportunities. Open market policies further accelerated this expansion, leading to a revolution in the entertainment and media industry as well. Starting from satellite TV and cable networks, this change has now reached OTT platforms.

The foreign currency for which India once struggled is today at a record level

India faced a foreign exchange crisis in 1991, when the foreign exchange reserves were only $1.2 billion, which was sufficient for just three weeks of imports. This situation became a serious challenge for the country's economic stability. But today, the same India is witnessing an unprecedented increase in foreign exchange reserves, and this reserve has now reached $655 billion. This increase is the result of India's economic liberalization and development process. There have

been several important phases of this reserve growth. First, from 1991 to 1996, economic reforms led to an increase in exports and capital inflows, which strengthened the foreign exchange reserves. After this, the increasing demand for global outsourcing in the IT and service sector between 2000 and 2010 led to a rapid increase in the reserves. Finally, from 2014 to 2023, the foreign exchange reserves continued to increase through FDI (Foreign Direct Investment), FII (Foreign Institutional Investment) and remittances, which has further strengthened India's economic position.

Economic reforms accelerated urbanization and increased middle class population

India witnessed major changes after 1990, particularly urbanisation and the expansion of the middle class. These changes gave a new outlook and direction to the Indian economy. Urbanisation was fuelled by the growth of industries, expansion of new services and privatisation after the economic reforms in 1991. These changes increased job opportunities, creating new employment opportunities in sectors such as the service sector, IT, banking, telecom and manufacturing in big cities and metropolises. This resulted in a large population migrating to cities, and this accelerated the expansion of the middle class. The attractiveness of urban life also increased, as roads, metros, urban transport and housing sector developed. India's urban population was about 26% in 1991, which increased to 31.2% in 2011. According to estimates, today it has reached 35-40%. In addition, the expansion of the middle class has been an important event for India. The economic reforms after 1990 developed a large and strong middle class. According to available data, the Indian middle class population was relatively small in 1991, estimated at around 68 million. But today, in 2023, the size of the Indian middle class has grown to around 31% of the total population, equivalent to around 432 million people. This growth has changed the structure of the Indian market and significantly increased the demand for consumer apparel, services, and other products. A significant contribution to the major changes we see today is the economic reforms of 1991. These reforms established India on the global economic stage and highlighted our economic strength. At that time India was not looking at the world to revive its economy, but the world was looking at India. The two decades following the economic reforms saw increased employment opportunities, increased capital investment, improved incomes and also significant changes in infrastructure. These reforms gave India a new direction and made us recognised on the global stage as a new economic power. All this was made possible due to the vision of a man who said in his Budget speech of 1991 that "No force can stop an idea whose time has come."