Chandra Shekhar's Dilemma: How Socialism Almost Crushed India in 1991

India's economic turnaround is often attributed to the reforms brought about by P V Narasimha Rao and Manmohan Singh in 1991, but a recently released movie on an OTT platform highlights the role played by Prime Minister Chandra Shekhar in resolving India's massive balance of payments crisis.

The film shows how in early 1991, India's forex reserves tumbled below $1 billion, prompting RBI governor S Venkitaramanan to suggest mortgaging the country's gold reserves to borrow dollars. Chandra Shekhar, who began his career under socialist stalwarts like Acharya Narendra Dev and Ram Manohar Lohia, faced an ideological dilemma.

However, Venkitaramanan convinced him that the country was more important than his socialism. The crisis was eventually resolved, but not before India's gold reserves were on the brink of being seized.

The events of 1991 serve as a reminder of the lost decades after Independence due to the fad of socialism. Jawaharlal Nehru's visit to Moscow in 1927 and his subsequent declaration that 'India will have to go the socialist way' led to a revolt in the Congress Working Committee in 1936.

Despite this, Nehru persisted with his rhetoric, leading to a series of disastrous policies that emphasized state-led growth and discouraged individual entrepreneurship. The results were evident soon, with poverty rates rising from 52.66% to 58.60% by 1965.