When Manmohan Singh wrote a cheque for gains accruing from rupee devaluation!

PTI, Dec 27, 2024, 7:17 PM IST

Manmohan Singh (PTI / File)

New Delhi: He held an overseas bank account that had his earnings from working abroad. The value of his savings, in rupee terms, went up following the July 1991 decision of the government to devalue the Indian currency.

Instead of pocketing the gains, Manmohan Singh, who was the finance minister in the PV Narasimha Rao government at that time, just wrote a cheque for the incremental gains and had it deposited in the Prime Minister National Relief Fund.

Recounting the incident, Ramu Damodaran, who was Private Secretary to the then Prime Minister PV Narasimha Rao, said shortly after the devaluation decision, Manmohan Singh visited the PM’s office.

He walked straight into the PM’s room from his car, but on the way out, he detoured to come to Damodaran’s room.

“Maybe a couple of days after the devaluation. He came for a meeting (with PM), and on the way out, he handed over a small envelope to me and asked me to deposit it in the PM’s National Relief Fund,” Damodaran told PTI from New York, where he is currently posted as Permanent Observer for the University for Peace to the United Nations.

The envelope contained a cheque for “a huge amount”.

“I don’t recall the sum mentioned, but it was a significant amount,” he said.

Singh did that on his own volition.

He went on to explain that Singh had an overseas bank account when he worked abroad.

The former prime minister, who died on Thursday at the age of 92, served as Secretary General of the South Commission, an independent economic policy think tank headquartered in Geneva, Switzerland, between 1987 and 1990.

The government of the day, in which Singh was the finance minister, devalued the rupee by 9 per cent on July 1, 1991, and by an additional 11 per cent on July 3, 1991. This was to avert a financial crisis – India had very limited foreign exchange reserves to carry out international trade like buying oil and fertiliser, while exports had reduced.

The devaluation meant that every US dollar or any other foreign currency and overseas assets when converted into Indian rupees would get more value.

Damodaran, an IFS officer who served in the PMO from 1991 to 1994, said Singh thought it was prudent to deposit the gains.

“He (Singh) did not publicise it, just quietly deposited what he thought was the difference in rupee value of his assets abroad consequent upon devaluation,” he said. “I am sure he would have told Prime Minister Rao later, but he just did not make a big deal about it ever.” Singh, according to Damodaran, carried “quite an authority about silent persona”.

The Oxford-educated economist was not a politician by profession, but he commanded respect from veterans of the trade.

“None showed any resentment towards him. He would not get into any kind of arguments, just present facts, and they were accepted (by the senior politicians in the government),” he added.

Singh opened up the economy as finance minister in the Rao government and then went on to serve as prime minister of India for two consecutive terms — from 2004 to 2014.

Soft-spoken Singh studied at Cambridge University before heading to Oxford, where he earned a doctorate with a thesis on the role of exports and free trade in India’s economy. He served as Reserve Bank of India (RBI) governor (1982-85) and an economic advisor to the government before being made the finance minister in 1991.