Manmohan Singh’s Legacy and Economic Reforms

• Singh initiated economic reforms in 1991, which he continued during his Prime Ministership.

• The period 2004-14 saw five key outcomes:

– Structural change could have led to India becoming a high-income/high-human development index country by 2040s.

– Rise in savings rate and investment to GDP rate due to macroeconomic policies.

– Overall growth rate over 2004-14 averaged 7.8% p.a.

– Growth encompassed all sectors, leading to unprecedented growth in non-farm jobs.

– Fall in agriculture workers post-2004 led to a tightening of the labour market in rural areas.

– Rise in real wages due to new non-farm jobs and tightening rural labour market.

• Growth rate averaged 5.8% per year over the last decade due to policy-induced shocks: demonetisation, the Goods and Services Tax, and national lockdown.

– Unemployment increased from 2.2% in 2011-12 to a 45-year high of 6.1% in 2017-18.

– Manufacturing, especially unorganised, took the brunt of job losses.

– Share of manufacturing in the economy fell since 2015, reaching an all-time low of 13% in 2022.

– Modi government neglected exports, leading to a four-fold growth in merchandise exports.

– Wage growth suffered, with the share of regular salaried workers in total employment falling to 20.9%.