“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,” said Dr Manmohan Singh during his first budget speech on July 24, 1991, as India embarked on its journey of economic liberalisation.
And rightly so, since India has not looked back and scaled new heights to emerge as an economic powerhouse and ranks fifth globally in GDP for 2024.
The foundation for this growth was laid by Former Finance and Prime Minister Manmohan Singh, known as the architect of India’s economic liberalisation, who died in Delhi at the age of 92, leaving behind a lasting legacy.
His policies, introduced during a time of economic crisis in the early 1990s, reshaped India’s economy and transformed the Indian stock markets.
Singh’s policies came at a time of deep financial distress for India, with foreign reserves nearly depleted and the country on the brink of economic collapse. The reforms he introduced were historic, dismantling decades of restrictive controls and opening the economy to global markets.
TRANSFORMATIVE ECONOMIC REFORMS
Manmohan Singh’s tenure as Finance Minister saw the implementation of bold measures that liberalised India’s economy. The most notable among them were the abolition of the Licence Raj, opening the economy to foreign investment, reducing import tariffs, and introducing fiscal discipline.
“Singh also led various institutional reforms, including the formation of the Securities and Exchange Board of India (Sebi) as the regulatory authority, which marked a critical step in ensuring transparency and accountability in the stock market,” said Palka Arora Chopra. Director, Master Capital Services.
The reforms introduced back then laid the groundwork for the India we know today. They transformed India’s economic structure, making it more competitive and globally integrated. This also created a strong foundation for the Indian stock market to flourish.
A REMARKABLE RISE IN THE STOCK MARKET
The liberalisation measures had a direct and long-lasting impact on the Indian stock market. In 1991, the Sensex was trading at around 1,000 points. Today, it has surged past the 78,000 mark, delivering exponential returns to investors over three decades.
“As the nation pays homage to Manmohan Singh, the architect of liberalisation in India, investors must be acknowledging with gratitude the wealth created by the Indian stock market after the initiation of liberalisation in 1991. Sensex which was around 1000 in 1991 has multiplied about 780 times since then to trade above 78000 now delivering excellent returns to long-term investors. The market will continue to deliver superior returns to investors in the years to come since the India Growth Story, which liberalisation triggered, is very much intact,” said Dr. V K Vijayakumar, Chief Investment Strategist, Geojit Financial Services.
“Singh also took steps to strengthen Sebi in 1992, enhancing transparency and regulatory oversight, which in turn helped build trust among investors. By opening the market to Foreign Institutional Investors (FIIs) and Foreign Direct Investments (FDIs), he not only attracted essential capital but also positioned India as a key investment destination, laying the groundwork for sustained market growth,” said Trivesh, COO Tradejini.
ECONOMIC BOOM DURING HIS PRIME MINISTERIAL TENURE
Manmohan Singh’s contributions were not limited to his tenure as Finance Minister. As Prime Minister from 2004 to 2014, he oversaw a period of robust economic growth, with GDP growing at an average of 6.9% annually. His government’s focus on infrastructure development, increased foreign investment, and policy stability further boosted investor confidence.
“India’s GDP growth averaged around 6.9% during Singh’s first term as India’s Prime Minister, underpinned by a boom in major sectors and increased infrastructure spending. The stock market soared as businesses expanded and foreign investors began to view India as an attractive destination. The period witnessed one of the strongest bull runs in Indian stock market history, driven by a combination of economic growth, structural reforms and rapid expansion,” said Chopra.
The boom during this period saw increased participation from foreign institutional investors, significant growth in key sectors like IT, banking, and manufacturing, and the emergence of Indian companies as global players.
“Manmohan Singh’s contribution to the Indian economy, particularly in terms of GDP growth, has been extraordinary. His financial expertise in particular was crucial in devaluing the Indian rupee, which helped stabilise our economy. To us, he will always be a leader whose policies prioritise social equity and inclusive development,” said VLA Ambala, Co-Founder of Stock Market Today Explained.
As the nation mourns the loss of one of its greatest economic architects, his words, “India is now wide awake. We shall prevail. We shall overcome,” continues to resonate.