New Delhi: As his government battles a steep fall in the value of the Rupee and a stock market meltdown, Prime Minister Manmohan Singh today dismissed the possibility of a throwback to 1991 balance of payments crisis situation and reversing the path of globalisation of the economy.
“There is no no question of going back to 1991 (balance of payment crisis). At that time foreign exchange in India was a fixed rate. Now it is linked to market. We only correct the volatility of the rupee,” he told PTI.
In 1991, Singh said, the country had only foreign exchange reserves for 15 days. “Now we have reserves of six to seven months. So there is no comparison. And no question of going back to 1991 crisis.”
Asked if there was no basis to fears of a return to the 1991 situation, Singh said, “No. There is no question.”
Against the backdrop of the high Current Account Deficit (CAD) and the all-time low value the Rupee has touched, the Prime Minister was asked about fears in some quarters that the country may be witnessing a throwback to 1991 crisis when gold was pledged and the country was forced to adopt a reforms programme that put it on the path of globalisation of economy.
He was speaking after release of the fourth volume of RBI history titled “RBI History-Looking Back and Looking Ahead” at a small function at his Race Course residence.
When pointed out that the Current Account Deficit was still high, Singh acknowledged the problem saying high imports of gold was one of the major factors contributing to it.
“We seem to be investing a lot in unproductive assets,” he added.
Asked about criticism that the Indian economy was too much linked to the global economy and that was the reason for current problems and whether there would be a reversal of the progress, he said, “There was no such possibility.”
He then turned to a leading economic journalist and said, “Ask him. He is the guru.”