It was in 1991 that India was hit by a major economic crisis resulting from a huge balance of payments deficit. The crisis was so deep and profound following Moody’s India downgrade that the then government of Chandrasekhar couldn’t pass the country’s annual budget.
The situation further deteriorated after the unsuccessful passage of the budget with both IMF and World Bank suspending their programmes for India.
One of the drastic measures taken by New Delhi to successfully avert sovereign default was to provide a large portion of the country’s gold reserves to the Bank of England and the Union Bank of Switzerland as collateral. But that crisis did throw up an opportunity for India to correct its economic direction for ever as it had, in turn, paved the way for liberalization of the Indian economy.
Not only did India successfully have its gold returned from the global banks, the Bretton Woods institutions resumed their programmes for the country. It is important to note that the foreign exchange reserves that India had prior to pledging its gold to global lenders could have barely financed three weeks’ worth of imports.
Be that as it may, our present situation in 2023 is perhaps worse than India’s in 1991. Moreover, we don’t have any P.V. Narasimha Rao or Dr Manmohan Singh to successfully steer the country out of crisis and put it on a path of economic progress and prosperity; unfortunately, we’ve too many thieves, thugs, racketeers, charlatans, and what not, among us.
Yasir Arain (New York, the US)
Copyright Business Recorder, 2023