Manmohan Singh
In June of 1991, India was four weeks away from defaulting on its external balance of payment obligations. India had $600 million in federal reserves, barely enough to pay for three weeks of essential imports. It was during this time that the former Prime Minister of India N. Rao elected Manmohan Singh as the Finance Minister. With the coming of Manmohan Singh came many economic reforms. These reforms helped pull India from massive debt and near collapse. This leads many to the question, “How did the economic policies of Manmohan Singh help India emerge from the 1991 economic crisis?”
Right before the Prime Minister Rao took office; the former Prime Minister had sought out an emergency loan of $2.2 billion from the International Monetary Fund, the Bank of England, and the Union Bank of Switzerland by pledging 67 tons of India’s gold reserves as collateral. A major influence on the decision to seek out the loan was Manmohan Singh. He had the foresight to seek out the loan, as heed had predicted that India would financially collapse without it. The move to pay off loans to the International Monetary Fund, the Bank of England, and the Union Bank of Switzerland with India’s federal gold reserve helped kick start his other economic reforms. Besides pledging their gold, India also had to accept many economic reforms, such as devaluing the rupee and opening industries and the economy to foreign capital among other things, as part of the condition set by the International Monetary Fund. Manmohan Singh had wanted to set up these reforms earlier, but could not due to lack of support and many legal obstacles, like not being able to have congress approve the reforms. He also sought out the loan for this reason. After the loan however, India was required to start implementing these reforms. The move to pledge the gold helped tide over the balance payment crisis that they could not reverse due to the lack of funds and income, and more importantly kick started Manmohan Singh’s
Right before the Prime Minister Rao took office; the former Prime Minister had sought out an emergency loan of $2.2 billion from the International Monetary Fund, the Bank of England, and the Union Bank of Switzerland by pledging 67 tons of India’s gold reserves as collateral. A major influence on the decision to seek out the loan was Manmohan Singh. He had the foresight to seek out the loan, as heed had predicted that India would financially collapse without it. The move to pay off loans to the International Monetary Fund, the Bank of England, and the Union Bank of Switzerland with India’s federal gold reserve helped kick start his other economic reforms. Besides pledging their gold, India also had to accept many economic reforms, such as devaluing the rupee and opening industries and the economy to foreign capital among other things, as part of the condition set by the International Monetary Fund. Manmohan Singh had wanted to set up these reforms earlier, but could not due to lack of support and many legal obstacles, like not being able to have congress approve the reforms. He also sought out the loan for this reason. After the loan however, India was required to start implementing these reforms. The move to pledge the gold helped tide over the balance payment crisis that they could not reverse due to the lack of funds and income, and more importantly kick started Manmohan Singh’s