June 30, 2016 12:00 pm JST
Chaitanya Kalbag: Manmohan Singh has some words of advice for Modi
India's former prime minister Manmohan Singh (blue turban) and Congress party president Sonia Gandhi cross a police barricade during a "Save Democracy" march to parliament in New Delhi in May. © Reuters
The man who launched India's economic revolution 25 years ago, former Prime Minister Manmohan Singh, believes the country needs a stronger political consensus on reform to fuel double-digit growth and lasting prosperity.
India's economy expanded 7.6% in the fiscal year ended in March and is set to be the fastest-growing in the world this year, outpacing China's -- but Singh is not sanguine. "We need a growth rate of 8 to 10% to be sustained over a long period of time," he told the Nikkei Asian Review in a rare interview. "We must move forward, we must build a national consensus on reform. We have to make sure that multiparty democracy does not inhibit the growth factor, the reform process."
Singh, 83, noted that India's economy has grown by an average of 6.5% a year since economic reforms were launched in 1991. China, which began its own economic modernization in 1978, has far exceeded India in the speed of its expansion.
The roots of India's economic revolution go back to when P.V. Narasimha Rao, the Congress party prime minister in 1991, gave then-Finance Minister Singh crucial support in freeing what was a closed, Soviet-style economy. The two men overturned a protectionist industrial policy and started dismantling a corrupt and inefficient licensing regime.
Singh's tenure as finance minister ended when his party lost an election in 1996. He returned to government as prime minister in 2004, running quarrelsome coalition governments for a decade. He is pleased that Prime Minister Narendra Modi's Bharatiya Janata Party administration, which replaced the Congress party two years ago, is now taking forward most of his initiatives.
For instance, Modi has set up a ministry of skill development, giving more muscle to Singh's National Skill Development Agency. "Employment and skilling our people is the major problem, and the youth of the country are desperate for jobs," Singh said. "About a million young people enter India's workforce every month. Better vocational training will create a vast blue-collar army and provide manpower for millions of small and medium enterprises."
Anxious to expand the half-finished social sector reforms of the 1990s, Singh as prime minister kicked off financial inclusion for India's vast under-banked rural population. Modi has continued that process, opening nearly 300 million bank accounts with zero balances for the rural poor and creating a conduit for the direct transfer of subsidy payments to beneficiaries.
Modi has promised cooking-gas connections for the poor. Singh ended a gasoline subsidy; Modi ended subsidies on diesel. Singh's government launched the world's biggest unique identity project, Aadhaar. Modi has extended it to more than a billion Indians and given the ambitious program constitutional permanence.
"The BJP had opposed the universalization of these processes. They opposed the Aadhaar scheme," Singh said. "Now they've picked it up."
Singh opened up India to foreign direct investment, but Modi has flung the doors wide open, declaring after the latest burst of liberalization on June 20 that India was the world's most investor-friendly country.