Lecture 2

T.N. Srinivasan

in Growth, sustainability, and India's Economic Reforms

Published in print August 2011 | ISBN: 9780198076384
Published online September 2012 | e-ISBN: 9780199080854 | DOI:
Lecture 2

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This chapter discusses the period from 1980–1 to 1991–2. In this period, fiscal and monetary conservatism of 1950–80 gave way to fiscal profligacy with rising fiscal deficits financed in part by borrowing from external lenders, particularly from the private capital market at a high and variable interest rate and domestic borrowing. This unsustainable fiscal situation along with the consequences of the first Iraq war contributed to a severe macroeconomic and balance of payments crisis in 1991. Roughly in the mid-1980s, a series of hesitant, piecemeal reforms of the planned, heavily state-controlled, and insulated economy was initiated. The 1991 crisis led to systemic reforms. This was the period when growth averaged around 5.7 per cent a year.

Keywords: fiscal deficit; borrowing; private capital market; interest rate; macroeconomic crisis; balance of payments crisis; growth

Chapter.  3282 words. 

Subjects: Economic Development and Growth

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