The 1991 Reforms: Context and Timing

Suresh D. Tendulkar and T.A. Bhavani

in Understanding Reforms

Published in print August 2012 | ISBN: 9780198085584
Published online September 2012 | e-ISBN: 9780199082087 | DOI:
The 1991 Reforms: Context and Timing

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This chapter presents a discussion of the fiscal and external payments crises of the 1980s that provided the context for the post-1991 reforms, and other contingent factors that contributed to the timing of the reforms. It shows that there was a rising trend of current revenue expenditure and a downward trend in capital expenditure since the mid-1980s, despite a slower but rising trend in both revenue and (total debt and non-debt) capital receipts. The external payments crisis that erupted in India towards the end of the 1980s is elaborated. It suggests that two international and two domestic contingent events contributed to the timing of reforms in 1991. The external payments crisis was turned into an opportunity. The opposition parties were strident in their criticism of reforms, but did not allow the minority government supported from outside to fall while passing the three successive budgets of Manmohan Singh.

Keywords: economic reforms; International Monetary Fund; World Bank; fiscal crisis; external payments crisis; revenue expenditure; capital expenditure; capital flows; Manmohan Singh

Chapter.  5888 words.  Illustrated.

Subjects: Economic Development and Growth

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