Economic Crisis in 1990s: Causes and Impacts
Explore the origin and consequences of the economic crisis in the 1990s in India, including fiscal imbalance, fragile BOP situation, and mounting inflationary pressures. Discover the political and macroeconomic factors that contributed to this crisis and learn how it shaped the economy during that decade.
Download Presentation
Please find below an Image/Link to download the presentation.
The content on the website is provided AS IS for your information and personal use only. It may not be sold, licensed, or shared on other websites without obtaining consent from the author. If you encounter any issues during the download, it is possible that the publisher has removed the file from their server.
You are allowed to download the files provided on this website for personal or commercial use, subject to the condition that they are used lawfully. All files are the property of their respective owners.
The content on the website is provided AS IS for your information and personal use only. It may not be sold, licensed, or shared on other websites without obtaining consent from the author.
E N D
Presentation Transcript
ECONOMIC CRISIS IN 1990s www.presentationgo.com
ORIGIN OF ECONOMIC CRISIS IN 1990s Directly attributable to the cavalier macro management of the economy during 1980s Eroded international confidence in Indian economy- Credit rating in the international capital market declined sharply 01 06 02 Growing fiscal deficits and current account deficits- borrowings from abroad REASONS Political instability in the country 05 03 Internal imbalance in fiscal situation and external imbalance in payment situation- absence of prudence 04 Gulf crisis in the late 1990 accentuated macroeconomic problems www.presentationgo.com
MACRO ECONOMIC CRISIS: FISCAL IMBALANCE Interest payments alone had eaten up 39.1% of TR collections Fiscal deficit 1980-81 -5.1 rose to 7.8 in 1990-91 The danger of the government falling into debt-trap was real Fiscal deficit had to be met from resource borrowings- internal debt increased from 33.35 of GDP in 1980- 81 to 49.7% in 1990-91 Increased burden of servicing debt Interest payment increased from 2% to 3.8% 10% of TE to 22% of TE Unchecked growth of Non Plan revenue expenditure www.presentationgo.com
MACRO ECONOMIC CRISIS: Fragile BOP Situation The Current Account Deficit 1.35% of GDP in 1980-81 rose to 3.69% in 1990-91 Had to be financed by borrowing from outside- external debt rose from 12% to 23% of GDP Increased debt service burden from 10% of current account receipts to 22% A5% of export earning to 30% The level of foreign exchange reserves dropped to levels which were not sufficient to finance imports of even ten days www.presentationgo.com
MACRO ECONOMIC CRISIS: Mounting Inflationary Pressures Inflation during 10980s was not alarming- 6.7% in terms of whole sale price index Rate of inflation rose to 10.3% in 1990-91 In terms of CPI inflation climbed to 11.2% per annum Most disquieting feature of this inflationary situation- prices of food rose substantially in spite of good monsoons www.presentationgo.com
