Congress recalls Manmohan Singh’s ‘groundbreaking’ Liberalisation Budget

Congress president Mallikarjun Kharge reflects on the impact of the 1991 Liberalisation Budget and calls for second-generation reforms.

Congress president Mallikarjun Kharge on July 24 recalled the “groundbreaking achievement of the Liberalisation Budget of 1991” and asserted that there is a pressing need once again for meaningful and robust second-generation reforms.

July 1991 marked a watershed moment in India’s history as the Liberalisation Budget, spearheaded by then Prime Minister P.V. Narasimha Rao and Finance Minister Manmohan Singh, ushered in a new era of economic reforms, Mr. Kharge said in a post on X.

This visionary move revolutionised the country, empowering the middle class and uplifting millions from poverty and marginalisation, he said.

“The Congress party takes immense pride in this groundbreaking achievement, which catalysed India’s growth trajectory and continues to inspire progress and prosperity,” Mr. Kharge said.

“Today, once again, there is a pressing need for meaningful, robust second generation reforms, which help both the middle class and the deprived,” he said.

Former Union Finance Minister in the Narasimha Rao Government Dr. Manmohan Singh presented his first Budget on July 24, 1991. Budget 1991 together with the Industrial Policy of 1991 allowed private sector investment in almost all industrial sectors. The Reserve Bank of India stipulated a floor rate of interest and freed commercial banks to charge interest rates above the floor level based on their perceptions of risk.

The Government extend a similar freedom to term-lending financial institutions. Exchange control regulations were considerably liberalised with the repeal of the Foreign Exchange Regulation Act. It opened up the economy and Indians were exposed to foreign goods. To curb subsidy expenditure, for certain fertilisers prices were hiked by 40% overnight. Subsidised prices of PDS sugar and LPG cylinders were raised.