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COMMENT
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When the Indian economy was facing its deepest crisis
post-independence in the year 1991, we needed a Go-To Man
to pull the country out of the financial quagmire of that
time. In 1991, our foreign exchange reserves were down to
three weeks of essential imports. The panic buttons had
been pressed. The warning bells were loud. We were days
away from defaulting on our external balance of payment
obligations. Precipitated by the Gulf War, our oil import
bill had swelled, our credits had dried up, and investors
had turned their faces on the country. It couldn’t have
been the best of times.
In spite of a public outcry, we found a way to tide over
that crisis. 47 tons of gold were airlifted to London and
served as collateral with the Bank of England. Another 20
tons were pledged to the Union Bank of Switzerland. All
this helped raise USD 600 million, roughly Rs 3,300 crore
in today’s terms. And then the Chandra Shekhar
Government collapsed. And in came P.V. Narasimha Rao, and
with him the doctor that the economy needed—Manmohan
Singh.
Several economic reforms were ushered in at rapid pace.
The Caged Tiger, as the Indian economy was known then, was
freed. The doors to foreign investment were opened, albeit
with careful riders. Over the years liberalization has
brought us where we are today. Our children have access to
the world. We travel more. We buy more. We import more. We
export more. Thankfully, less questions are asked about
how we spend our money, including our foreign exchange.
Which also means red tape, that dreaded business hinderer,
is slowly on its way out.
According to latest RBI figures, our foreign exchange
reserves today are over USD 16,000 billion. Even though we
may not have the clouts of the erstwhile Spanish Empire
which in its heydays moved out 41,000 tonnes of silver
alone from Bolivia over a 200 year period, (16th to 18th
century), India’s foreign exchange reserves today are
enough to allow us to purchase hundreds of tonnes of gold
from the IMF at regular intervals.
In 2012, the country is divided over 51 per cent foreign
direct investment (FDI) in retail business. We allow 100
per cent FDI in several sectors, but doing so in retail,
say opponents to this reform, will take away the
livelihood of millions of our retailers. The big guns like
Wal Mart and Carrefour will come and take away their
economic space. So we hear.
The new FDI in retail reforms are being led by the change
doctor, Manmonhan Singh, India’s Go-To Man in 1991. In
2012, he must have thought out his plans thoroughly before
announcing the retail reforms. At the cost of weakening
the ruling alliance, he’s stuck to his guns.
The point is very simple: If in 1991 we could trust him
with our economy which was on the verge of collapse and
bankruptcy, then we should do so again in 2012. He’s
wiser today. He knows what is best for the Indian economy.
He’s pulled us out from our deepest ever economic crisis
post-independence once before. If there is a man who knows
better than Dr Singh, we don’t know his name. So let’s
give the retail reforms a chance. Chances are we’ll
start seeing the pluses, once we’ve started looking
beyond our fears.
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September 2012
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