Answer by Balaji Viswanathan:
1991 is a really hazy time for me. In fact, a good deal of economic news was subdued by massive changes across the world.
- Gulf war (1990-91). My uncle&aunt lived in the Middle east back then and it was a crazy time. Most the news stories were filled with Scuds & Patriot missiles. My father used to make frantic "trunk calls" to my uncle everyday.
- May 1991. Rajiv's assassination. Another major impact. I lived in an area where LTTE training camps were everywhere. In fact, in our school playgroup couple of the big boys wanted to join LTTE when they grow up. The fallout of the assassination was severe as Indian government went hard on the terrorist group.
- Dec 1991. Breakup of Soviet Union. My relatives were watching the news and were saying it all started to fall apart.
When Narasimha Rao came to the center, nobody was ebullient. The only thing people noticed in the new Prime Minister was his sullen mood (he never ever smiled in public). Everyone was in a confused state. I never went to the economics section back then and just directly went to the kid's section (Hindu's Young world just started then), where they were writing about some new kid named Sachin.
However, things started to change slowly as Manmohan started working his magical hands. The budget that year was a landmark one (only matched by Chidambaram's 1997 "dream" budget)
I do not minimise the difficulties that lie ahead on the long and arduous journey on which we have embarked. But as Victor Hugo once said, "no power on earth can stop an idea whose time has come". I suggest to this august House that the emergence of India as a major economic power in the world happens to be one such idea. Let the whole world hear it loud and clear. India is now wide awake. We shall prevail. We shall overcome. — Budget Speech, July 24, 1991
Main Things happened
- People were allowed to bring 5kg of gold duty-free. In one-shot, almost all of gold smuggling industry was destroyed.
- Communications were opened up. Star TV entered India and suddenly the Dish revolution caught on to India in no time. We found a new way to see the world, besides what Doordharshan gave us.
- Stock market freed up. In those times, people used to say "there is only one thing you must always do in stock market. Buy Reliance". IPO (called the initial issue back then) fever caught on. Suddenly, my parents and all my friend's parents started playing this new game. I found a new interest in this new kind of sports scores. 1994 was the peak (when Harshad Mehta ruled the market).
- Indian entrepreneurs began to dream. People found new ways to deal with the world. One of my uncles got on to the cover of Forbes (or Fortune, don't remember which) on their cover story about the rise of Indian executives.
- New Airlines came up. Until that time we had only Indian Airlines serving the local routes. In 1992 Jet Airways and other private airlines came up. Some of these new airlines (like the East West airlines, Damania, Modiluft) were very good in customer service. In 3 years from now, they would all be gone.
- Real estate shot up. In early 1990s real estate started getting giddy. The market peaked around 1995.
I would say the period of 1992-94 as the most exciting period of my childhood. The new economy gave new hope. People found that private sector doesn't just mean low paying jobs. In 1995 when Bill Gates came to India to promote Windows 95, there was a huge hoopla.
A lot of the new excitement was slowly wearing off by 1995. The bubble had burst. Narasimha Rao was caught on a series of scandals (fodder scam, Jain dairy, JMM), most new airlines went belly up, stock markets crashed (started to recover after ~ 10 years), real estate went to bottom (and remained that way for 8 years).
By 1997 Asian financial crisis, Indian economy's new found hopes and growth had slowly evaporated. We started worrying about Taliban (until they came Afghanistan was our ally), CTBT (nuclear test ban). Our politics was in full turmoil as no government was able to take majority.
The rebound started around 1999 (after the Kargil war) when Vajpayee gave stability to Indian politics. India had burst its nuclear bomb and stock market started slowly limping (Sensex was around 3000 back then).