Illustrations by Santan

The WonderDECADESThirty years that changed India

It was in July 1991 that India, left with little time or options, made a tryst with pivotal reforms. The Indian economy, which goose stepped along fundamentally unchanged until then, would never be the same again. Here is a special throwback to that epoch.

No power on earth can stop an idea whose time has come…Let the whole world hear it loud and clear. India is now wide awake. Manmohan Singh

TheProtagonists

Narasimha Rao
Then prime minister of India

Credited with creating an appropriate political environment to help tackle the economic crisis. Rao empowered and backed his finance minister, bureaucrats and economists in the government who kick-started the liberalisation and privatisation of the Indian economy
Manmohan Singh
Then finance minister of India

Was entrusted with the responsibility of carrying out structural reforms that liberalised India’s economy. Singh, an apolitical appointee in the Cabinet and the ‘architect’ of the liberalisation process, had to dodge intense political opposition. He later went on to become the PM
Rakesh Mohan
Co-authored the 1991 industrial reforms

The chief economic adviser to the ministry of industry during 1988-96, authored the industrial reforms of 1991 along with then PM’s principal secretary. He is said to have had an impact on the industrial, trade and foreign investment policy
Montek Singh Ahluwalia
then Commerce Secretary

A key member of the reforms team, he has been credited for authoring the “M document” during his stint in the Prime Minister’s Office under VP Singh. Many final reform measures are said to be based on this document
Amar Nath Verma
Then principal secretary to the PM

He prepared the first draft of what became the New Industry Policy, along with the CEA. He played a key role in implementing the reforms and helped integrate India’s economy with the world. Manmohan Singh called him the “power centre in reforms”
Chandra Shekhar Singh
PM preceding PV Narasimha Rao

Chandra Shekhar Singh and his government have been credited for taking multiple steps towards economic liberalisation during their short tenure. These measures are seen as the foundation of the 1991 reforms
Naresh Chandra
Then cabinet secretary

He also served in Chandra Shekhar Singh’s government. Fought economic fires as the administration changed. He prepared a note of proposed reforms for incoming PM PV Narasimha Rao. The blueprint to avert default and liberalise the economy eventually formed part of the new policy
PJ Kurien
Then minister of state for industry

Tabled the historic statement on Industrial Policy in the Lok Sabha. This set the ball rolling for the finance minister to present the Union Budget later in the day
P Chidambaram
Then minister of state (independent charge) for commerce

Seen by many, including Manmohan Singh as ‘one of the strongest advocates’ of economic reforms in the Cabinet as well as in the country’s political sphere. He is credited with initiating the trade policy reform
S Venkitaramanan
Then Governor of the Reserve Bank of India

Credited for taking decisive actions and handling of the balance of payments crisis in the late 1980s and early 1990s

Reforms & They

Thirty years of liberalisation: Reforms lifted GDP growth but didn’t create enough jobs

Diaries of a rookie reporter on liberalisation: Nearly every day was historic in the 1990s

Reforms & They

Thirty years of liberalisation: Reforms lifted GDP growth but didn’t create enough jobs

Diaries of a rookie reporter on liberalisation: Nearly every day was historic in the 1990s

Industrial policy & trade reforms, supported by exchange rate, were game-changing.

Montek Singh AhluwaliaEconomist | Former Deputy Chairman, Planning Commission

Infosys was liberated post reforms to find its rightful place in the market.

NR Narayana MurthyFounder, Infosys

Sadly, the initial momentum petered out. Reforms became half-hearted.

RC BhargavaChairman, Maruti Suzuki

Reforms unleashed corporate & entrepreneurial energy into the system.

Harsh MariwalaFounder & Chairman, Marico

Liberalisation was an epochal step impacting industrial and financial sectors.

KV KamathFounder President, New Development Bank

Reforms unshackled the Indian industry from the ‘License Raj’ & benefitted every sector.

Kiran Mazumdar ShawExecutive Chairperson, Biocon

The reforms have helped millions climb the income ladder.

Keki MistryVice-Chairman & CEO, HDFC Ltd

Economic growth and human development haven’t always gone hand in hand.

Chandra Shekhar GhoshMD, Bandhan Bank

Bottom 10% of the population still do not have a dignified life.

Madan SabnavisSenior Economist

A sneak peek into the Press Trust of India terminal for stock prices was a privilege.

A BalasubramanianMD & CEO, Aditya Birla Sun Life Mutual Fund

Reforms were a bold strategic blueprint that propelled India ahead into the future.

Harsh GoenkaChairman, RPG Enterprises

Reforms facilitated long term GDP growth, productivity increases & development of a deep private savings pool.

Sanjay NayyarChairman, KKR India

The nation suddenly had access to the best the world had to offer.

Haigreve KhaitanSenior Partner, Khaitan & Co

Reforms removed the shackles which held back our predecessors and offered a generation the ability to aspire for more.

Rajiv MemaniChairman-India Region, EY

The 1991 reforms allowed FDI after a huge hiatus. This was really the reason for the growth and expansion of AZB.

Zia ModyCo-founder & Managing Partner, AZB & Partners

Reforms & You

At a time when many expected India to shut its doors to conserve its reserves, it bravely did the opposite. India might have been staring at the end of the proverbial barrel then, but the iconic reforms have put the gun in India’s hands now. The 1991 reforms turned out to be the turnaround scrip that changed the grammar of the country for ever.

Rush ofBrands

Before 1991

Hindustan Ambassador
After 1991

Hyundai Motor India (May 1996)
Before 1991

Premier Padmini
After 1991

Toyota (October 1997)
Before 1991

Maruti Suzuki
After 1991

Škoda Auto India (2001)
Before 1991

Parley (Gold Spot/Citra)
After 1991

Coca Cola (Oct 1993 re-entered)
Before 1991

Irani Cafes/Udupi Restaurants
After 1991

Mc Donalds(1996)/KFC (1995)
Before 1991

BPL/Onida Electronics
After 1991

Sony India (1994)/Samsung India Electronics (1995)
Before 1991

VSNL/MTNL (Landline - Telephone)
After 1991

Nokia Mobile (1995)
Before 1991

All India Radio
After 1991

Times FM (Radio Mirchi 1993)
Before 1991

Doordarshan
After 1991

Star Plus(1991)
Before 1991

Air India/Indian Airlines
After 1991

Spice Jet(2004)
Before 1991

SBI/Central Bank of India/Union Bank of India
After 1991

ICICI Bank (June 1994)

TheStories

Four charts explain how the 1991 Budget by Manmohan Singh transformed Indian economy

High growth of 8-9% to be driven by manufacturing, urbanisation: Kant

Exclusive | Lower regulatory costs helped NBFCs scale up over the last decade, says IIFL's Nirmal Jain

30 Years Of Reforms | What does the report card look like?

A case for going beyond economic reforms

TheVideos

KV Kamath: The runway for India is another 25 years, digital supercycle is going to come like a wave

Digital Super Cycle is creating millions of jobs in India, and we are not counting it: KV Kamath

If 1947 saw India’s independence, 1991 witnessed independence of economy: Ad Guru Piyush Pandey

Stock market, not mutual funds, was more in focus in early 90s: UTI's Vetri Subramaniam

Montek Singh Ahluwalia on why the 1991 reforms were a watershed moment for India's economy

TheSectors
Thenas per earliest data available.
NowData as of 2020.

Then*as per earliest data available.

Now*Data as of 2020.

Total revenue (US$ m)
150
194000
Share of GDP
0.4%
8%
Total exports (US$ m)
131
150000

After the reforms in 1991, India’s software industry turned into a superstar.

Business models continue to evolve and policy changes like relaxation of Other Service Provider license, the Survey said will catapult the sector to the next level of growth and innovation.

Deposits (₹ Lakh Cr)
2.32
151.13
Branches
60,220
1,58,373
Oustanding bank credit (₹ Lakh Cr)
1.44
109.51
Min loan rate
16%
6.65% - 7.3%
Credit-deposit ratio
60.8%
72.46%

The years soon after liberalisation saw the licensing of new private banks, one of which -- HDFC Bank -- is now the second largest in the country by assets.

A larger number of people have been covered by bank credit with the rise of unsecured personal loans and other products unknown in the early nineties.

Nominal GDP (₹ Lakh Cr)
6.74
197.4
Nominal per capita GDP (at current market prices in dollars)
303
1901
FDI ($ Billion)
0.07
81.72
Foreign Exchange Reserve ($ Billion)
5.8
610

Liberalisation has led to a massive economic boom in the past 30 years. Nominal per capita GDP in $ terms has jumped by more than 500 percent as more and more Indians had been pulled out of poverty.

Foreign Direct Investment jumped from a mere $70 million in 1991 to $81.7 billion in 2020-21, the highest ever FDI inflow in a year.

Manufacturers/brands with national presence
20
70
Total Sales ($ Millions)
1.87
18.61

The 1990s saw the entry of most of the world’s automakers – General Motors, Hyundai, Daewoo, Ford, Harley-Davidson, Kawasaki – kickstarting the formation of a manufacturing enabling ecosystem.

2008 was a monumental year when the government launched the sub 4-meter rule with attractive tax rates. Such vehicles still control 50 percent of the market.

Exports ($ Billions)

17.9

291.2
Imports ($ Billions)

19.5

393.6
Total Trade ($ Billions)

37.4

684.8

Top trading partners($ Billions)

US
4.8
Japan
3
Germany
2.8

China
86.4
US
80.5
UAE
43.3

Top Exports($ Billions)

Non-industrial diamonds
2.3
Non agglomerated iron-ores & concentrates
0.54
Processed petroleum
0.41

Processed petroleum & other light oils
25.31
Pharmaceuticals
19.4
Industrial machinery
18.9

Top Imports($ Billions)

Crude Oil
3.1
Processed petroleum
2.1
Unsorted diamonds
1.9

Petroleum & other Bituminous oils
59.4
Industrial machinery
37
Gold
34.6

Production of Steel (MT)
14.33
91.44
Consumption (MT)
14.84
88.54
Import (MT)
0.97
4.46
Export (MT)
0.37
10.15

Crude steel production has grown by 7%on a CAGR basis from 1991-2020. India has set a target of 300 million tonnes capacity by 2030.

On the back of higher capacity utilisation and growing demand for steel products, many players are putting up expansion.

Number of telephone subscribers (MM)
5.07
1,173.8
Teledensity
0.6%
84.9%
Call rates (₹)
> Rs 16
0.01

Technological advancement and heightened competition led to dramatic reduction in calling, data rates and higher penetration of mobile phones

Wider internet penetration helping in achieving National e-Governance (NeGP) objectives opening the doors for e-commerce and extensive spread of social media

Share of agriculture in Gross Value
34%
16%
Share of crops
65%
55.9%
Share of livestock
18.5%
29.3%

The share of the agriculture sector in the gross value added (GVA) halved over the last 30 years as services grew faster.

Freed exports of farm produce such as rice, wheat and sugar, and allowed easier import of oilseeds, edible oil and pulses.

ThePodcasts

D-Street Talk: Fund manager who manages about $4bn of AUM shares insight on 30 years of reforms, midcaps & advice for Robinhood investors

Simply Save | 30 years since 1991 reforms | How Nilesh Shah of Kotak Mahindra mutual fund saw markets and mutual fund industry grow

HeadlinesThat Day

A look at the headlines on some of the papers, preceding and following, the historic budget on July 24, 1991.

The WonderDECADESThirty years that changed India

TheProtagonists

Reforms & They

Thirty years of liberalisation: Reforms lifted GDP growth but didn’t create enough jobs

Diaries of a rookie reporter on liberalisation: Nearly every day was historic in the 1990s

Reforms & They

Thirty years of liberalisation: Reforms lifted GDP growth but didn’t create enough jobs

Diaries of a rookie reporter on liberalisation: Nearly every day was historic in the 1990s

Reforms & You

Rush ofBrands

TheStories

Four charts explain how the 1991 Budget by Manmohan Singh transformed Indian economy

High growth of 8-9% to be driven by manufacturing, urbanisation: Kant

Exclusive | Lower regulatory costs helped NBFCs scale up over the last decade, says IIFL's Nirmal Jain

30 Years Of Reforms | What does the report card look like?

A case for going beyond economic reforms

TheVideos

KV Kamath: The runway for India is another 25 years, digital supercycle is going to come like a wave

Digital Super Cycle is creating millions of jobs in India, and we are not counting it: KV Kamath

If 1947 saw India’s independence, 1991 witnessed independence of economy: Ad Guru Piyush Pandey

Stock market, not mutual funds, was more in focus in early 90s: UTI's Vetri Subramaniam

Montek Singh Ahluwalia on why the 1991 reforms were a watershed moment for India's economy

TheSectorsThen*as per earliest data available.Now*Data as of 2020.

ThePodcasts

D-Street Talk: Fund manager who manages about $4bn of AUM shares insight on 30 years of reforms, midcaps & advice for Robinhood investors

Simply Save | 30 years since 1991 reforms | How Nilesh Shah of Kotak Mahindra mutual fund saw markets and mutual fund industry grow

HeadlinesThat Day

TheSectors
Thenas per earliest data available.
NowData as of 2020.