Dr. Manmohan Singh - India’s 13th prime minister who died December 26 at the age of 92 - never really had a voice that could be called firm and vigorous. It always had a slight tremor to it which gave the impression of an unsure man. He was anything but that as became so quickly evident on July 24, 1991 when he made his first annual budget speech as the country’s finance minister.

I was in the press gallery of India’s parliament watching and reporting the speech for the New York-based weekly newspaper India Abroad and its international wire IANS.  Barely three or so months before, as the government of then Prime Minister Chandra Shekhar struggled for its political survival I had reported a debilitating crisis of India’s practically empty foreign exchange coffers. I was told by one of the highest sources in the finance ministry that India had barely enough foreign exchange reserves to pay for three to four weeks of imports. That was virtual bankruptcy for a country of some 890 million people in 1991.

With that as the backdrop and the new government of Prime Minister P V Narasimha Rao in the saddle after the grotesque assassination of former Prime Minister Rajiv Gandhi, it was clear that some profound changes were underway to India’s economy. I was curious to see whether he would make a reference to the desperate foreign exchange reserves situation.

Rao gave Singh a carte blanche  

He did almost immediately after this opening: “As I rise, I am overpowered by a strange feeling of loneliness. I miss a handsome, smiling, face listening intently to the Budget Speech. Shri Rajiv Gandhi is no more. But his dream lives on; his dream of ushering India into the twenty-first century; his dream of a strong, united, technologically sophisticated but humane India. I dedicate this budget to his inspiring memory.”

It was a 31-page speech that said, “The new Government, which assumed office barely a month ago, inherited an economy in deep crisis. The balance of payments situation is precarious. International confidence in our economy was strong until November 1989 when our Party was in office. However, due to the combined impact of political instability witnessed thereafter, the accentuation of fiscal imbalances and the Gulf crisis, there was a great weakening of international confidence. There has been a sharp decline in capital inflows through commercial borrowing and non-resident deposits. As a result, despite large borrowings from the International Monetary Fund in July 1990 and January 1991, there was a sharp reduction in our foreign exchange reserves. We have been at the edge of a precipice since December 1990 and more so since April 1991. The foreign exchange crisis constitutes a serious threat to the sustainability of growth processes and orderly implementation of our development programmes.”

To illustrate that he meant business from the get-go, Dr. Singh said, “There is no time to lose. Neither the Government nor the economy can live beyond its means year after year. The room for maneuver, to live on borrowed money or time, does not exist anymore. Any further postponement of macroeconomic adjustment, long overdue, would mean that the balance of payments situation, now exceedingly difficult, would become unmanageable and inflation, already high, would exceed limits of tolerance.”

The speech was delivered in a tone and voice much firmer and louder than what Dr. Singh later came to be associated with after he became prime minister in 2004. Boosting his confidence was the fact, not much recognized then, that his boss, Prime Minister Rao had given him a carte blanche to do what needed to be done on the economy even as he would deal with its potential political fallout.

Dramatic dismantling of license raj 

I remember almost immediately after the speech the press gallery was abuzz with conversations about the implications of the dramatic dismantling of the notorious ‘license raj’ of the four decades prior. He touched every aspect of the economy in a way that perhaps no other finance minister before him and perhaps since would have.

For good measure, he directly invoked Mahatma  Gandhi’s famous idea of trusteeship of wealth to talk about austerity.

“For the creation of wealth, we must encourage accumulation of capital. This will inevitably mean a regime of austerity. We have also to remove the stumbling blocks from the path of those who are creating wealth. At the same time, we have to develop a new attitude towards wealth. In the ultimate analysis, all wealth is a social product. Those who create it and own it, have to hold it as a trust and use it in the interest of the society, and particularly of those who are under-privileged and without means. Years ago, Gandhiji expounded the philosophy of trusteeship. This philosophy should be our guiding star. The austerity that Gandhiji practised and preached is a necessary condition for accelerated economic development in the framework of a democratic polity. The trusteeship that he prescribed for the owners of wealth captured the idea of social responsibility,” he said.

He made clear that the purpose of the reform he was proposing was not to “give a fillip to mindless and heartless consumerism we have borrowed from the affluent societies of the West.”

“The country’s needs for water, for drinking and for irrigation, rural roads, good urban infrastructure, and massive investments in primary education and basic health services for the poor are so great as to effectively preclude encouragement to consumerist behaviour imitative of advanced industrial societies. Our approach to development has to combine efficiency with austerity. Austerity not in the sense of negation of life or a dry, arid creed that casts a baleful eye on joy and laughter. To my mind, austerity is a way of holding our society together in pursuit of the noble goal of banishing poverty, hunger and disease from this ancient land of ours,” he said.

‘India is now wide awake’

It was an extraordinary speech delivered in the midst of a crisis that had brought India to the precipice of insolvency. Laying out an exhaustive prescription for how he would go about fixing a sick economy, Dr. Singh was sensitive enough to give it a highly optimistic and sanguine touch.

“I do not minimise the difficulties that lie ahead on the long and arduous journey on which we have embarked. But as Victor Hugo once said, “no power on earth can stop an idea whose time has come.” I suggest to this august House that the emergence of India as a major economic power in the world happens to be one such idea. Let the whole world hear it loud and clear. India is now wide awake. We shall prevail. We shall overcome,” he said.

One felt the enormity of what he had laid out immediately but in retrospect it feels even more so, especially because India had had to literally ship its gold to banks in London to avert a financial catastrophe. In saying those things, Dr. Singh’s voice was free of tremor and tentativeness.

(The author is a Chicago-based journalist, author and filmmaker. Views expressed are personal. By special arrangement with Indica)