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India's Economic Crisis Essay

1638 Words7 Pages

By the end of 1990, India was facing its biggest economic crisis. The value of the Indian Rupee was going down. In order to slow down the decline, the Reserve Bank of India started expending international reserves. By mid-1991 there took place a sharp devaluation of the Indian Rupee against other major currencies. The foreign exchange reserves were depleted and the nation came to such a point that it could barely finance three weeks’ worth of essential imports. The government was close to defaulting on its external obligations.
The government, in order to come out if the crisis tried to obtain an emergency loan from the International Monetary Fund (IMF). To get this loan, the government had to pledge its entire gold reserve, which stood at 67 tons, as collateral security. They airlifted 47 tons to the Bank of England and 20 tons to the Union Bank of Switzerland and raised $600 million. They were able to secure a …show more content…

Due to its large market base, India today is one of the perfect markets for foreign investment. In 2015 India overtook China and USA as the top destination for FDI. More and more companies are investing in India with hopes of getting a good return. FDI in India has risen from around $75 million in 1991 to around $45 billion in 2015.
“We have moved from a world where the big eat the small to a world where the fast eat the slow”, -Klaus Schwab of the Davos World Economic Forum
Today every economics analysts agree that due to market growth, standards of living have been greatly improved. The technological advancements and its introduction to the global market have led to its increased demand and utilisation. It is FDI that opened up the way for technology in India and improved our standards of living. Increasing number of industries are being introduced in the market to cater for the increased demand. It has also helped in generating millions of new jobs and thus reduced

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