As finance minister in 1991, he presided over the economic liberalisation which rewrote India's destiny. Ten years on, still struggling to fit the politician's cap on his uneasy economist head, Manmohan Singh savours a mild afterglow of those tumultu
When did 'reforms with a human face' become a slogan?
That phrase is from my first budget speech; I said we are going to show the world a new path of adjustment and structural change with a human face. When people criticise me for being too enamoured of the market system, I call their attention to it. We need markets for wealth creation but it benefits mainly those within the system. Our approach was to have a blend of markets and a modern Indian state. In the latter, we still haven't succeeded.
What are the most urgent reforms pending?
In physical, social and financial infrastructure. The way our power system is managed is a national disgrace. Securitisation of state electricity board losses is not a viable idea. Take railways. In the '60s, the World Bank president cited it as a model system. But look at it now. A great deal has been done to modernise the financial system but the management of it is still abysmal. We're not investing enough in education and health. Unfortunately, the fiscal correction has not taken place.
Is the reforms-generated growth phase over?
Growth momentum has petered out, productivity has dropped and we're doing nothing really. This year's budget has a lot of arbitrariness, especially in customs tariff. You need reductions in real interest rate if a lot more investment has to happen in long-gestation projects and for that, government must draw less on household saving. I don't believe you can redistribute if you have low growth. We had a growth of 3.5 per cent from 1950-69 and poverty hovered at 50-60 per cent. You need at least 6-7 per cent, plus a strong commitment to social infrastructure, modern agriculture...
Why did Dr Singh the reformer decide to become a politician?
As a minister, you certainly have a lot of opportunities. But there is no such thing as abstract economics.I feel good politics is one that converts good economics into good politics. It doesn't happen all the time but I believe, wherever possible, economic rationality must prevail. I was once asked if I was a socialist. I said if by socialism you mean a passion for equity, then I'm one. I come from a very poor family. It's only because of scholarships I could go to school, college, then to England. It was the public education system that gave me the opportunity.
There's a feeling you failed the middle class, its aspirations. How do you react to that?
The people exercised their choice, we've to respect that. But I'm not entirely happy with what's happening. I like greater choice but the excessive consumerism worries me. We should moderate aping the post-industrial West's lifestyles. Our challenge is to abolish extreme poverty even if it means a per capita income level of, say, only $1,000.
(Read full text of this interview: 'I Was Prepared To Pay The Price')