# India's Backwards Liberalization: Why Elite Priorities Got It Wrong
I was not aware that there were conspiracy theories about Indians losing their gold in the 90s. Honestly, I'm not that surprised. Indians are very sentimental when it comes to gold. When I was growing up in the 2000s, there were a bunch of melodramatic Bollywood movies where basically the worst thing you could do to your family was to use your mom's jewelry as collateral. I always found it strange. Like the main character didn't even lose it—he just collateralized it. What the hell, mate.
The transition to freer markets in India is a lot more complicated than just the push by the IMF. Manmohan Singh had been writing about the failures of the old license Raj system since the late 60s. I think you can find a lot of his old papers online. In the 80s there was Rajiv Gandhi who did some very modest pro-business reforms, allowing imports of computers and such. But obviously everyone around him was still socialist, so they were still creating more state-owned enterprises back then.
What was particularly impressive around the 90s and 2000s was that Rao and Singh did such dramatic reforms in a coalition government. He even tried to increase federalism in India. They and their successor governments, which were also coalitions, did much more to accelerate liberalization than the IMF demanded. The Indian prime minister was clearly in the driver's seat and not just taking orders from the IMF.
I would recommend you look up Singh's 1991 budget speech. This doesn't have the victimhood nor the cowardice that you see in modern-day "Global South" leaders. The Modi decade in relation has been relatively less dramatic in comparison. Although he talked big game about privatization, other than the airline privatization, he mostly chickened out for the rest.
An often underexplored fact was how strange India's liberalization agenda was. In most post-communist countries, liberalization was concentrated in agriculture, low-skill manufacturing, and construction while more white-collar professions were insulated from free markets—like China and Bangladesh. Instead, in India you see liberalization concentrated in more white-collar and asset-heavy investments like telecoms, airports, private equity, etc. Agriculture in India is still mostly a shit show.
In fact, private equity was so regulated in Bangladesh that the government gave up and created their own state private venture capital fund to get the software startup ecosystem going. This kind of shows Indian elites have a big problem with pursuing Western fads instead of focusing on their own problems. They spend too much time on renewable energy or plastic straws or LLM stuff instead of hiring more judges and stopping teacher absenteeism.
Using your mom's jewellery as collateral is roughly like raiding your parents' retirement fund. The implications are similar, and hence the sentiments associated with it.
Regarding the "IMF stole Indian gold" idea: I've noticed that Indians online tend to be hypernationalists, prone to blaming foreigners at every opportunity, especially the US for some reason.
The hard reforms were executed primarily by Prime Minister PV Narsimha Rao. Since he became persona non grata for the family that rules his political party, Rao became a political orphan after his term ended, and consequently Dr Manmohan Singh's role in pushing those reforms through was exaggerated at his expense.
Dr Singh was a bureaucrat. He had zero political heft or wiles to get any of the reforms through parliament.
Narsimha Rao, not Singh, was India's Deng Xiaopeng.
Indians collectively hold 35-40,000 tonnes of gold but are too stupid to monetize it and put it into the economy. Gold-backed loans are a booming industry, a toxic mix of payday lenders and CDOs, and it traps people in a cycle of high-interest debt—but they still won’t sell their gold!
The result was mixed. The imf reforms helped diversify Uganda's exports from being almost a pure play coffee exporter. Museveni sold off a lot of Uganda's already bankrupt state owned enterprises. Some died and some needed bailouts to survive. Nothing spectacular or transformation, but diversification from pure coffee exports was a good thing. Museveni never suffered the coffee price crash like Idi Amin did because he didnt depend solely on coffee for foreign exchange.
Hasn't Museveni been a good effect on Uganda? I checked GDP figures a while back and Uganda has had an average of around 7% GDP growth rate for the last 30 years or so.
Look at gdp per capita. Uganda is still poorer than most african countries. The 80s and 90s, like for most of africa, Uganda was awful. Then in the 2000s was a boom like for most of Africa, then from 2014-2024 growth has been more stagnant. Over the past 30 years, 1994 to 2024, Uganda went from an average income of $198.4 per person to 1078 per person. Over 30 years that's 5.8% growth per year.
Isn't 5.8% growth per year for 30 years really good?
And as for GDP figures, their growth rate has been better than sub saharan Africa in the last 30 years. Of course per capita skews things because of population growth. Although, I don't see increasing population as a problem.
1) 5.8% growth is good and certainly beats the Black African average over the 30 years (which was 2.7%).
But I was judging Uganda from the last 10 years, which is very unimpressive.
Btw, Uganda in the 90s, even by African standards was exceptionally poor. Consant war from the Bush war and nonsense from the lord's resistence army. Museveni brought Uganda security and then grew his economy by stealing Congolese gold. That worked until gold prices stagnated fro. 2014- 2023
I was not judging Uganda by the last 30 years but rather the last 10 years where Uganda barely had any growth. Going from $830 (2014) to $1020( 2024), that's 2.1% growth. The United States grew faster than that over that time period, and US is already developed.
2) GDP is affected by population growth, not gdp per capita. You had it backwarda. The whole point of gdp per capita is that you are adjusting gdp by dividing by the population. If you have more bodies gdp always go up. If per person goes up, then the average person is getting richer.
# India's Backwards Liberalization: Why Elite Priorities Got It Wrong
I was not aware that there were conspiracy theories about Indians losing their gold in the 90s. Honestly, I'm not that surprised. Indians are very sentimental when it comes to gold. When I was growing up in the 2000s, there were a bunch of melodramatic Bollywood movies where basically the worst thing you could do to your family was to use your mom's jewelry as collateral. I always found it strange. Like the main character didn't even lose it—he just collateralized it. What the hell, mate.
The transition to freer markets in India is a lot more complicated than just the push by the IMF. Manmohan Singh had been writing about the failures of the old license Raj system since the late 60s. I think you can find a lot of his old papers online. In the 80s there was Rajiv Gandhi who did some very modest pro-business reforms, allowing imports of computers and such. But obviously everyone around him was still socialist, so they were still creating more state-owned enterprises back then.
What was particularly impressive around the 90s and 2000s was that Rao and Singh did such dramatic reforms in a coalition government. He even tried to increase federalism in India. They and their successor governments, which were also coalitions, did much more to accelerate liberalization than the IMF demanded. The Indian prime minister was clearly in the driver's seat and not just taking orders from the IMF.
I would recommend you look up Singh's 1991 budget speech. This doesn't have the victimhood nor the cowardice that you see in modern-day "Global South" leaders. The Modi decade in relation has been relatively less dramatic in comparison. Although he talked big game about privatization, other than the airline privatization, he mostly chickened out for the rest.
An often underexplored fact was how strange India's liberalization agenda was. In most post-communist countries, liberalization was concentrated in agriculture, low-skill manufacturing, and construction while more white-collar professions were insulated from free markets—like China and Bangladesh. Instead, in India you see liberalization concentrated in more white-collar and asset-heavy investments like telecoms, airports, private equity, etc. Agriculture in India is still mostly a shit show.
In fact, private equity was so regulated in Bangladesh that the government gave up and created their own state private venture capital fund to get the software startup ecosystem going. This kind of shows Indian elites have a big problem with pursuing Western fads instead of focusing on their own problems. They spend too much time on renewable energy or plastic straws or LLM stuff instead of hiring more judges and stopping teacher absenteeism.
Using your mom's jewellery as collateral is roughly like raiding your parents' retirement fund. The implications are similar, and hence the sentiments associated with it.
Regarding the "IMF stole Indian gold" idea: I've noticed that Indians online tend to be hypernationalists, prone to blaming foreigners at every opportunity, especially the US for some reason.
The hard reforms were executed primarily by Prime Minister PV Narsimha Rao. Since he became persona non grata for the family that rules his political party, Rao became a political orphan after his term ended, and consequently Dr Manmohan Singh's role in pushing those reforms through was exaggerated at his expense.
Dr Singh was a bureaucrat. He had zero political heft or wiles to get any of the reforms through parliament.
Narsimha Rao, not Singh, was India's Deng Xiaopeng.
Thanks I made the edit. I said Rao was India's Deng. Thank you!
Indians collectively hold 35-40,000 tonnes of gold but are too stupid to monetize it and put it into the economy. Gold-backed loans are a booming industry, a toxic mix of payday lenders and CDOs, and it traps people in a cycle of high-interest debt—but they still won’t sell their gold!
I think you should do a review of an African country implementing IMF reforms and failing regardless.
I more or less do that in Uganda part 3 when I go through Museveni's IMF structural adjustment program:
https://yawboadu.substack.com/p/the-economic-and-geopolitical-history-ad4?utm_source=share&utm_medium=android&r=garki
The result was mixed. The imf reforms helped diversify Uganda's exports from being almost a pure play coffee exporter. Museveni sold off a lot of Uganda's already bankrupt state owned enterprises. Some died and some needed bailouts to survive. Nothing spectacular or transformation, but diversification from pure coffee exports was a good thing. Museveni never suffered the coffee price crash like Idi Amin did because he didnt depend solely on coffee for foreign exchange.
Hasn't Museveni been a good effect on Uganda? I checked GDP figures a while back and Uganda has had an average of around 7% GDP growth rate for the last 30 years or so.
https://data.worldbank.org/indicator/NY.GDP.PCAP.CD?locations=UG-ZG
Look at gdp per capita. Uganda is still poorer than most african countries. The 80s and 90s, like for most of africa, Uganda was awful. Then in the 2000s was a boom like for most of Africa, then from 2014-2024 growth has been more stagnant. Over the past 30 years, 1994 to 2024, Uganda went from an average income of $198.4 per person to 1078 per person. Over 30 years that's 5.8% growth per year.
Isn't 5.8% growth per year for 30 years really good?
And as for GDP figures, their growth rate has been better than sub saharan Africa in the last 30 years. Of course per capita skews things because of population growth. Although, I don't see increasing population as a problem.
1) 5.8% growth is good and certainly beats the Black African average over the 30 years (which was 2.7%).
But I was judging Uganda from the last 10 years, which is very unimpressive.
Btw, Uganda in the 90s, even by African standards was exceptionally poor. Consant war from the Bush war and nonsense from the lord's resistence army. Museveni brought Uganda security and then grew his economy by stealing Congolese gold. That worked until gold prices stagnated fro. 2014- 2023
I was not judging Uganda by the last 30 years but rather the last 10 years where Uganda barely had any growth. Going from $830 (2014) to $1020( 2024), that's 2.1% growth. The United States grew faster than that over that time period, and US is already developed.
2) GDP is affected by population growth, not gdp per capita. You had it backwarda. The whole point of gdp per capita is that you are adjusting gdp by dividing by the population. If you have more bodies gdp always go up. If per person goes up, then the average person is getting richer.