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‘Everyone was surprised to see me…’: The 1991 phone call that put Manmohan Singh on the brink of history.


It was a glorious June night in 1991 when the telephone changed the economic history of India. Manmohan Singh, who was then the chairman of the University Grants Committee, had just returned from a meeting in the Netherlands and was sleeping that night.

His brother-in-law answered the phone. In the queue was PC Alexander, an aide to Prime Minister PV Narasimha Rao, and an unexpected invitation to Singh.

By June 21, Singh was at his UGC office, not knowing what lay ahead. The instruction came: go home, get ready, and go to Rashtrapati Bhavan for the swearing-in ceremony. Singh, an economist with no political experience, was shocked. “Everyone was surprised to see me as a member of the new team on the line to take the oath. My profile was given later, but immediately Narasimha Rao ji told me that I would be the finance minister,” Singh recalled in Strictly Personal: Manmohan & Gursharan, written by his daughter Daman Singh.

The wealth that Singh received was in free fall. Forex stocks fell to record lows in nearly two weeks from overseas. Inflation was double-digit, and international banks closed their doors in India. The problem was serious, but within days, Singh, with Rao’s steadfast support, introduced bold reforms that ended decades of economic stagnation.

On July 24, Singh presented the grand budget. The License Raj – a system that had crippled the industry with excessive regulation – was abolished. Industrial licensing was abolished in many sectors, foreign direct investment was accepted in 34 industries, and government bureaucracy began to dissolve. The rupee was devalued to boost exports, trade policy was liberalized, and currency controls were introduced.

This change, however, did not go ahead. One of the most vocal opponents was the Bombay Club, a group of industrialists who feared that liberalization would expose Indian businesses to more foreign competition. This informal agreement called for the government to continue to be protected through payments, subsidies, and other measures. They argued that Indian companies were not ready to face global giants on an equal footing.

Singh, along with Rao, remained steadfast. The changes went ahead despite resistance, proving the Bombay Club’s fears unfounded. Liberalization unleashed entrepreneurial power in India, transforming a controlled, slow-growing economy into one of the fastest-growing economies in the world.

“The price situation, which is worrying many people, poses a serious problem as inflation has doubled,” Singh warned in his first budget speech. But by stabilizing the economy and initiating structural reforms, he and Rao laid the foundation for the India we see today—a world economic powerhouse.



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