India's Singh fights for 'reformer' legacy as economy totters

Fri Aug 30, 2013 11:13am EDT
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By Frank Jack Daniel

NEW DELHI (Reuters) - Prime Minister Manmohan Singh fought for his reputation as the architect of India's economic reforms on Friday, insisting that the current growth and currency crunch was no repeat of the 1991 balance of payments crisis that made him a household name.

An economist by training, Singh's long political career has been book-ended by crises.

As finance minister 22 years ago, he deftly ushered in reforms of a state-shackled economy that helped launch years of rapid growth, earning himself a place in history as the man behind India's emergence as a new economic power.

Now 80 years old and heading into his last months as prime minister before elections, the growth bubble has burst. The latest GDP figures on Friday showed an economy growing at just 4.4 percent, the weakest pace since the global financial crisis and a far cry from ambitions for growth of 8-9 percent.

The country is saddled with hefty fiscal and current account deficits, and the rupee has fallen like a stone in recent weeks to successive record lows.

But Singh, struggling to make his thin voice heard above the din of bellowing lawmakers in parliament, said 2013 was not 1991: the exchange rate is now market set, and India has enough foreign exchange reserves to cover seven months of imports compared with just three weeks back then.

"There is no reason for anybody to believe that we are going down the hill and that 1991 is on the horizon," he said, in his first substantial comments since the rupee suffered its steepest-ever monthly fall in August.

India's currency predicament is partly due to an emerging-market selloff triggered by the U.S. Federal Reserve's plans to rein in its economic stimulus.   Continued...

India's Prime Minister Manmohan Singh speaks during a news conference at the Government House in Bangkok May 30, 2013. REUTERS/Chaiwat Subprasom