Question

Crisis of 1991 and its impact on world as well as on india

Answer 1

Answer:

Given below:

Explanation:

A bit long story but can be informative if interested in India’s economic history. The worst financial crisis, India faced was the Balance of Payment crisis in 1991.

The economic reform of 1991 brought the global transition in India. The transition towards a newer India, and a change in perspective of government towards the role of private players and markets in the economy. The Balance of Payment crisis followed by pledging of Gold reserves, taking loan from IMF and other structural adjustment programme (sponsored by IMF and World Bank) were the initial steps towards the economic reforms that were launched. The BOP crisis was the result of decades of imprudent economic policies that India followed. The institutional arrangements of the economy, pre 1991, were adequate then but were eventually deteriorating the fiscal situation of the country. The role of fiscal policy in India’s history is significant. In 1991, India ran into an unsustainable deficit in balance of payments. The country ran into large deficits for long time and as a result faced the balance of payment crisis.

Hope this helps :)