India’s IMF Programmes—1966 and 1981: An Analytical Review

Published date01 June 2018
Date01 June 2018
Subject MatterArticles
Indian Journal of Public
64(2) 219–227
© 2018 IIPA
SAGE Publications
DOI: 10.1177/0019556117750897
1 Chairman, Board of Revenue, Ajmer, Rajasthan.
Corresponding author:
V. Srinivas, Chairman, Board of Revenue, Ajmer 305001, Rajasthan.
India’s IMF
and 1981: An
Analytical Review
V. Srinivas1
India was one of the most closed economies in the world during the period of
1947–1991. India’s fiscal deficits were high, and foreign exchange reserves were
precipitously low and the exports were non-competitive. On three occasions,
India had to avail external assistance from the International Monetary Fund
(IMF) to overcome the balance of payments (BOP) crisis. India negotiated IMF
programmes in 1966, 1981 and 1991. This article examines the events of 1966
and 1981. While India sought significant IMF assistance, gradualism reigned in the
reforms programme. This article appraises the macro-economic conditions of
1966 and 1981 programmes, the choices that governments of the day faced and
the reasons for the decisions taken.
Fiscal def‌icit, foreign exchange, exports, reforms
In 2017, India is among the fastest growing major economies in the world.
With US$400 billion foreign exchange reserves, a stable exchange rate regime
and considerable global integration of the economy, India is one of the bright
spots representing democracy and global growth. The dark days when the Indian
economy faced severe balance of payments (BOP) crisis and had to seek external
financing are distant memory. That the Indian economy has moved significantly
forward on the reforms path is a tribute to the Indian policymakers in the Reserve
Bank of India (RBI) and the Ministry of Finance.

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