That was merely one of a catalogue of drastic measures needed to deal with a situation which made the present difficulties of Mr Singh's British counterparts seem minor. India, weighed down by decades of slow growth, wasteful public spending and bureaucratic inertia, had been plunged into a balance of payments crisis by the impact of the Gulf war. Inflation was climbing towards a peak of 17 per cent in August 1991, and foreign currency reserves were sufficient to cover no more than two weeks' imports.
The Congress government of Narasimha Rao appointed Mr Singh, 59, one of the country's foremost economists, to tackle the crisis. Apart from emergency measures to curb imports and raise government revenues without further borrowing, Mr Singh undertook the most radical economic reforms the country had seen since independence in 1947.
The main thrust of Mr Singh's reform programme has been to deregulate international trade, private investment and financial markets. These eye-catching measures have won him the approval of many of the country's foreign critics and persuaded household names such as IBM and Coca-Cola to invest in India, but many others are wary.
'His programme is well-intentioned, and international lenders have backed it to the tune of more than dollars 7bn ( pounds 4bn), but the battle has not really started,' said a British economist. 'Government spending is still far too high, because New Delhi is afraid to reduce huge subsidies, particularly to agriculture, or to shut down loss-making state companies. Military expenditure is also hard to control, thanks to constant tension with Pakistan, and the recent stock market scandal has blown the reforms off course.'
Mr Singh, one of whose main aims in visiting Britain was to lure trade and investment, described the scandal as 'an aberration' which would not affect the government's commitment to economic reform. Even if the amount involved was dollars 1bn, he said, this was tiny in relation to the size of India's financial system. He was more anxious to highlight achievements such as getting inflation down to single figures and tighter control over the country's debt.
Mr Singh, a slight, mild-mannered technocrat in a Sikh turban, agreed with many of the criticisms levelled at India from abroad. Although his country could take pride in its democracy, education system and success in feeding itself, he told the Bank of England yesterday, 'the overall pace of progress has fallen short of the expectations of our people, of the objective potential of our economy, and also of the performance of many other economies endowed with far less natural and human resources than India'. Apart from the 'tigers' of East Asia, India is now being compared unfavourably with China, which is enjoying one of the fastest growth rates in the world.
'If you look at the manifestos of all the main parties, liberalisation is the buzzword,' he told a press conference. at India House. 'Even the Communists who run West Bengal do everything they can to attract foreign investment.'
Did this mean that socialism was dead in India? 'If you mean reneging on our commitment to social justice, then no. The aim of our reforms is to get government out of the areas where others can do the job and concentrate on things only the state can do.'
One Indian journalist complained that Mr Singh's government was allowing BBC satellite television to sweep millions of viewers away from the state broadcasting service, Doordarshan, a byword for dullness and inefficiency. The minister was having none of it: 'It is a challenge to Doordarshan to come up to international standards,' he said.Reuse content