An impeccable mistake.

By 1985, India had started having balance of payments problems. By the end of 1990, it was in a serious economic crisis. The government was close to default, its central bank had refused new credit and foreign exchange reserves had reduced to such a point that India could barely finance three weeks’ worth of imports. India had to airlift its gold reserves to pledge it with International Monetary Fund (IMF) for a loan. The economic crisis was primarily due to the large and growing fiscal imbalances over the 1980s. During mid eighties, India started having balance of payments problems. Precipitated by the Gulf War, India’s oil import bill swelled, exports slumped, credit dried up and investors took their money out. Large fiscal deficits, over time, had a spillover effect on the trade deficit culminating in an external payments crisis. By the end of 1990, India was in serious economic trouble.

This was a short outlook of the 1991 Balance of Payment Crisis in India which quitely miffed and vexed the whole nation. But still the question which has not been unraveled is that who should be attributed for this crisis, Former Prime Minister of India Mr. Rajiv Gandhi or Mr. Vishvanath Pratap Singh, another former Prime Minister of the nation.

The tapes recorded by RBI (Reserve Bank Of India) of interview of about 40 officers from the bank and Finance ministry reveals a lack of correct judgment and adjudication. There has been a humongous faux pa and goof up by the Indian administration in the 1991 crisis. If the matter would have been dealt with accurate and impeccable judgment by the authorities then there would not have been anything like that.

At the time of Rajiv Gandhi, the former Prime Minister, correct heed was not paid to this matter. Albeit the finance ministry officials allocated him a flawless suggestion but the advice was not aptly applied. The ministry proffered him to go to the IMF (International Monetary Fund) and the Managing Director of IMF then, Mr. Michael Camdessus told Mr. Prime Minister that the IMF could sympathetically view the matter, but Rajiv Gandhi at that time being accused of being embroiled in the Bofors Scandal (in which he was accused of taking kick back of Rs. 64 Crore) decided not to the IMF. By the middle of the year 1988 Rajiv Gandhi had been persuaded to complete his whole term and Rajiv Gandhi procrastinated the matter till the next national elections.

But in the year 1989 the Congress was trounced and V.P. Singh formed the National Front Government (backed by Bhartiya Janata party (BJP) and Commuinsts from the outside).

But this time everything got wrong and annihilated. The finance secretary committed a humongous blunder which was going to cost the nation much more. During the recording he confessed that he thought that it would not be a right thing for the PM to approach the IMF because the government was backed by the Communists and therefore thought of getting money from some other resources. And nothing was done in this crucial period of time, so the crisis resulted in a huge disaster and calamity for the whole nation. India was broken, the credits were dried up and now the country had nothing. The matter aggravated and completely exacerbated when the V.P. Singh’s government fell down and Rajiv Gandhi favored to support Chandra Shekhar as the Prime Minister of the country.

After that Yashwant Sinha, the then Finance Minister  went to Japan for help but the Japanese even didn’t receive him in a cordial manner as those days were haughty days for Japan. But everything gone futile and no money materialised. And it took country very long to come up triumphantly.

Jai Hind, Jai Bharat

Jai ma Bharti