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Take any set of numbers, and they show up the stark difference between the various phases of Manmohan Singh’s career, as finance minister and then as the head of two governments. If it’s GDP you wish to look at, it rose from 1.4% in FY92, Dr Singh’s first year as finance minister, to 8% in FY97 when the party demitted office; it has been falling since, from 8.6% in FY10 when UPA2 began its second term to around 5% by the time it demits office in May.
The fiscal deficit fell from 7.9% of GDP in the year before Dr Singh became finance minister to 4.9% when PV Narasimha Rao’s regime came to an end; though it will fall from 6.5% in FY10 to 4.8% in FY14, this will be after deferring subsidy bills worth more than 1% of GDP. The current account deficit halved from 3% in FY91 to 1.6% in FY97; in UPA-2’s tenure it will remain flat at around 2.7%. Expenditure on subsidies fell from over 2% of GDP in the year before Dr Singh became FM to 1.1% in FY97; in UPA-2, it remained steady at around 2.1%…
These numbers, stark as they are, don’t really convey the magnitude of the change. When Dr Singh became finance minister, India was a shackled left-of-centre economy with most things from iron and steel prices to interest rates and even IPO prices and exchange rates determined by the government. In this environment, with the country having to hock its gold, Dr Singh slashed away at all administered controls, removed industrial licensing, brought down peak customs duties from 400% to 50% and floated the rupee. And though it had to be rescued by the next government, the telecom space was opened up to the private sector.
The peak rate of income taxes was almost halved from 56% to 30% and the corporate tax rate — 51.75% for Indian firms and 57.5% for foreign ones — was unified at 35%. Bank interest rates were largely decontrolled and the stock market freed by replacing the Controller of Capital Issues with Sebi, and cleaned up by introducing electronic and demat trading. With more emphasis on private investors, government expenditure was slashed, subsidies reduced… While GDP naturally responded, the main change could be seen in private sector fixed investments rising from 12.3% of GDP to 17.5% in