1991 Indian economic crisis

Additionally, the Gulf War, specifically the conflict between Iraq and Kuwait, caused a significant shift in the trade deficit as India relied on these nations for crude oil.

[4] The ratings declined further due to the unsuccessful passage of the budget, making it increasingly challenging and expensive for India to borrow money from international capital markets.

These actions limited the government's options to address the crisis and forced it to take drastic measures to avoid defaulting on its payments.

Critics viewed the decision to mortgage the country's gold as a sign of the government's limited options and inability to manage the crisis effectively.

[9] The economic crisis created a situation where India had to accept the conditions imposed by the World Bank and the IMF, which included structural reforms.

[10][11] India's liberalization policies since 1991 have led to significant economic growth and integration into the global economy, but have also faced criticism for uneven distribution of benefits, austerity, unemployment and negative impacts on the environment.

[12] During the 1970s, the International Monetary Fund (IMF) began to increasingly criticise capital controls and shifted its perspective away from the belief that high unemployment was primarily due to insufficient demand.

[14] This along with Gulf War oil price spike and the dissolution of the USSR and Eastern Bloc leaving the U.S. as the sole superpower gave the previously stated institutions the perfect opportunity to force its policies upon developing countries.

[13] The crisis was caused by currency overvaluation;[3] the current account deficit, and investor confidence played significant role in the sharp exchange rate depreciation.

Precipitated by the Gulf War, India's oil import bill swelled, exports slumped, credit dried up, and investors took their money out.

[19] There were also structural problems in the Indian economy that contributed to the crisis, including low savings and investment rates, and inadequate export growth.

[33] The economic reforms pushed by Prime Minister Rao were met with significant opposition from those who believed that they resulted in a reduction of India's autonomy.

As reported by the New York Times, "Mr. Rao, who was sworn in as Prime Minister last week, has already sent a signal to the nation—as well as the I.M.F.—that India faced no "soft options" and must open the door to foreign investment, reduce the bureaucratic red tape that stifles initiative, and streamline industrial policy.

The liberalization policies of the Indian government have facilitated this growth by attracting foreign investments, increasing trade relations, and promoting domestic economic reforms.

The success of these policies remains a subject of debate and continues to be a significant point of discussion among policymakers, economists, and civil society groups.

[36] In addition to the economic growth and development, access to basic necessities such as food, shelter, and healthcare have drastically improved for people in India.