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.


September 2012

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