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Will India go back to 1991 situation? Suggest some measure to rescue the economy from its

current state of economic turmoil (To increase the rupee value)

India's present situation of rapid fall in rupee value is caused by

ersistent inflation of past fe! years

"igh current account deficit of about #$%billion (&'% of *)

1991 situation

Western economies were stronger and looking forward to deepen the process of

economic globalisation

Big bang reforms like LPG worked for India

+,1- situation

• Maor !"#$ economies are looking much more inward to stabili%e their economy

•  &egative impact of global financial crisis began to affect the emerging nations like India

• (fter )*+*,e-cess li.uidity flowing from west caused the

/igh international oil prices and commodity

• India's mismanage of supply of key resources such as .and/ 0oal/ Iron ore, #ritical

food items

(ll these problems had created India to face the

"igh inflation

.o! gro!th

ulging 02*

3ey difference bet!een 1991 4 +,1- are

• 2vailabilty of global financial inflo!s to India during +00+ and )*+1

• 5S federal reserve !ithdra!l of li.uidity

India needs to understand6

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• #heap financial capital inflowing from the west is double edged weapon if not used

 udiciously to enhance productivity of domestic economy it leads to e7ternal debt trap'

(s said before, present situation of the India's economy is different from +00+ situation 2o India

will never go back to +00+ situation because India3s fundamentals of economy are stronger

8easures to revive Indian economy (To increase the rupee value)

1' To contain 02*6

• By discouraging imports and supporting e-ports

• Large amount of #($ is caused by import of coal 45+6 billion7 8 It can be reduced by

increasing domestic coal production because India is having largest coal reserves in (sia

+' educing subsidies6

• 9eduction in the government consumption : subsidies and a loosening of monetary policy

to increase government saving

-' Import oil from Iran6

• Increase oil imports from Iran as we can pay in rupees 

&' *ollar S!ap facility to oil companies6

• 9BI has to give direct access to large dollar buying oil companies 8to bypass the spot

market

%' 0orrecting non:oil trade deficit6

• India's biggest trading partner #hina accounts for half of the non8oil trade deficit

• ;his can be offset by capital inflows from #hina into India's infrastructure, such as metro

or road proects

< ;ncouraging 0apital Inflo!s

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• 9BI has removed administrative restrictions on investment schemes  offered by banks to

non8resident Indians, and removed ceiling on interest rates on deposit accounts held by &9Is

• 9BI increased the current overseas borrowing limit  for banks from 6*= to +**=,  and

allowed it to be converted into rupees and hedged with the 9BI at concessional rate

• 9BI also allowed banks to swap fresh &9I dollar deposits  with a minimum duration of 1

years with the 9BI

<' Strong push to e7ports6

• Widening the focus market and focus product scheme

•  India's iron ore e-port can be restored to more than 5+* billion

annually

$' Selling of gold bonds 

• 2ell a gold bond with a five year maturity , which can act as a gold

substitute ust like >isan ?ikas Patras

9' International 0ooperation

• Government increased its currency swap limit with @apan from

A2$+6 billion to A2$6* billion

1,' =ational manufacturing policy

• To increase the sectoral share of manufacturing in GOP to at least 25% by 2022  

• To increase the rate of job creation so as to create 100 million additional jobs by2022;

• Industrial tonshi!s called "ational In#estment and $anufacturing ones &"I$s'

"ffective and rapid implementation of &MP is necessary at this stage to enhance the economic

situation

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 by 2A;/(& 2P

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• ;he /indu editorial

• Prsindiaorg