Manmohan Singh Passes Away At 92: A Look Back At His Transformative Tenure As RBI Governor

India mourns the loss of Dr Manmohan Singh, who passed away at the age of 92 on Thursday, December 26, 2024. Admitted to AIIMS Delhi in critical condition, the former Prime Minister’s demise marks the end of an era.

Known for his towering contributions to India’s economic and political landscape, Dr Singh’s legacy spans decades. Among his many roles, his tenure as the Governor of the Reserve Bank of India ( RBI ) from September 16, 1982, to January 14, 1985, stands out as a foundational period for modern banking and monetary policymaking in India.

A Visionary at the Helm of RBI
Appointed as the 15th Governor of the RBI, Dr Singh brought his academic brilliance and administrative acumen to the forefront. During his tenure, India’s banking sector witnessed comprehensive legal reforms that laid the groundwork for future economic liberalisation.

Under his leadership, amendments to the Banking Laws in 1983 expanded the scope of activities banks could undertake, including leasing services. These amendments also introduced nomination facilities for account holders, streamlined banking returns, and prohibited unincorporated entities from accepting public deposits beyond specified limits.

Dr Singh’s tenure also saw the establishment of the Urban Banks Department, a critical step in improving the regulation of urban cooperative banks. These reforms aimed to modernize India’s financial systems and enhance the efficiency of banking operations, setting the stage for the liberalisation era he would later spearhead as Finance Minister. 

Monetary Policy Foundations
One of Dr Singh’s most notable contributions during his RBI tenure was laying the groundwork for a robust monetary policy framework. He emphasized the need for policies that balanced high economic growth with financial stability. His leadership saw the setting up of the Chakravarty Committee in 1985, which was tasked with reforming India’s monetary and financial systems. Though established shortly after his tenure, the committee’s recommendations were rooted in ideas that he championed.

By mid-1985, the statutory preemption on banks’ resources through the Statutory Liquidity Ratio (SLR) and Cash Reserve Ratio (CRR) exceeded 45%, highlighting the tight control the government exercised over banking resources. Dr Singh’s efforts during his tenure paved the way for easing these constraints in subsequent years, facilitating greater credit availability to fuel economic growth.

A Legacy of Economic Reforms
Dr Singh’s expertise in macroeconomic management as RBI Governor served as a precursor to his historic role as Finance Minister during the 1991 economic crisis. His tenure at the RBI was instrumental in shaping policies that would later be pivotal in dismantling India’s License Raj and liberalizing the economy.

From Academia to Politics
Beyond the RBI, Dr. Singh served as Deputy Chairman of the Planning Commission (1985-1987), Advisor to Prime Minister Chandra Shekhar on Economic Affairs, and eventually as Finance Minister under Prime Minister P.V. Narasimha Rao. His tenure as Finance Minister is widely regarded as a turning point in Indian economic history, where he played a key role in liberalizing trade, reducing state control, and opening up key sectors to foreign investment.

Manmohan Singh: A Champion of India’s Economic Growth
Dr Singh’s contributions extended far beyond his roles as an economist and policymaker. His legacy includes landmark initiatives like the Indo-US Civil Nuclear Agreement and social welfare schemes such as the Mahatma Gandhi National Rural Employment Guarantee Act (MGNREGA) and the Right to Information Act (RTI).