Abstract
The roots of the 1991 currency crisis in India can be seen during the entire decades that precede it. As a matter of fact it lies in the large and persistent macroeconomic imbalances that developed over the 1980s. A close examination of the government expenditures, over the 1980s, suggests that the cause of the crisis was due to the large and growing fiscal imbalance.
This imbalance finally leads to a large fiscal deficit resulting from an increase of the government expenditures. It finally resulted to a balance of payment crisis. Thanks to Manmohan Singh, the actual Prime minister in India who was the Finance minister at that time, the country managed to successfully take off again through a reform of the economical system. This led us to the following question: How did the 1991 crisis change the economical Policy of India?
I will try to answer to this question by first focusing on the causes of the crisis, we will see that it was caused by India's own government policy as well as international conjuncture and in a second time we try to understand how did the government react and what Policy did they apply.
