Indian Crisis

Topics: Central bank, Bretton Woods system, Foreign exchange reserves Pages: 3 (1056 words) Published: August 26, 2013
Partition of Bengal (1947)
The Partition of Bengal in 1947, part of the Partition of India, was a religiously based partition that divided the British Indian province of Bengalbetween India and Pakistan. Predominantly Hindu West Bengal became a province of India, and predominantly Muslim East Bengal became a province of Pakistan. The partition, with the power transferred to Pakistan and India on 14–15 August 1947, was done according to what has come to be known as the "3 June Plan" or "Mountbatten Plan". India’s freedom on 15 August 1947 ended over 150 years of British influence in the Indian subcontinent. East Bengal, which became a province of Pakistan according to the provisions set forth the Mountbatten Plan, later became the independent country of Bangladesh after the 1971 Bangladesh Liberation War. 1991 India economic crisis

By 1985, India had started having balance of payments problems. By the end of 1990, it was in a serious economic crisis. The government was close to default, its central bank had refused new credit and foreign exchange reserves had been reduced to such a point that India could barely finance three weeks’ worth of imports. The country had to airlift its gold reserves as a pledge with theInternational Monetary Fund (IMF) for a loan.[1] The crisis was caused by currency overvaluation; the current account deficit, and investor confidence played significant role in the sharp exchange rate depreciation.[2][3][4][5] The economic crisis was primarily due to the large and growing fiscal imbalances over the 1980s. During the mid-eighties, India started having balance of payments problems. Precipitated by theGulf War, India’s oil import bill swelled, exports slumped, credit dried up, and investors took their money out.[6] Large fiscal deficits, over time, had a spillover effect on the trade deficit culminating in an external payments crisis. By the end of 1990, India was in serious economic trouble. In mid-1991, India's exchange rate was...
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